The growth of pooled employer plans (PEPs) has already transformed how many employers think about retirement plan administration. PEPs can offer several advantages including reduced fiduciary burden, streamlined administration, and lower fees. A PEP structure can provide the investments, experience, tools and support to help employees confidently manage their retirement savings, while allowing employers to spend less time managing retirement plan operations and more time focusing on their workforce.
Those benefits have dominated the narrative in recent years and remain important as the PEP market has experienced rapid growth with over 50,000 employers delivering retirement benefits through a PEP and total assets estimated to have surged to over $50 billion as of the end of 2025[1].
Now, recent guidance and market expansions are making PEPs a reality for employers where PEPs were once not an option. With employers looking for ways to simplify retirement plan management while maintaining a high-quality employee experience, we believe PEPs are an obvious consideration. As the PEP market continues to expand, PEPs will play a meaningful role in shaping the future of retirement.
The growing 403(b) PEP market
SECURE 2.0 allowed 403(b) plans to participate in PEPs. However, in contrast to the 401(k) PEPs which have grown quickly, to date there has been little movement in the 403(b) PEP market. One reason is that collective investment trusts (CITs), which can help PEPs provide lower-cost institutional investment options, are not currently available in 403(b) investment lineups. Many PEP providers are waiting for collective investment trusts (CITs) to be allowed in 403(b) investment lineups before launching 403(b) PEPs.
WTW is at the forefront of advocacy for expanded access to CITs in 403(b) investment lineups. However, with continued uncertainty, rather than continuing to wait, the market is beginning to move forward. Leveraging the success of our LifeSight PEP, WTW can now also support 403(b) plans through our LifeSight 403(b) PEP.
Just like 401(k) plan sponsors, many non-profit employers are seeking a more streamlined approach to plan management, fiduciary oversight and greater support to enhance participant outcomes. With the 403(b) PEP market starting to show signs of growth, PEPs may present the opportunity to rethink plan management that 403(b) plan sponsors are looking for.
Opening the door to employer stock
Historically, PEPs have not supported individual employer stock as an investment option. For employers that offer employer stock within their retirement program, this limitation often prevented employers from considering PEPs as a viable option, regardless of the broader potential benefits.
Recent SEC guidance has helped clarify the ability for PEPs to accommodate employer securities, should a given PEP choose to offer that level of flexibility. In our experience, this comes as a welcome change for employers with company securities in their retirement program, who can now fully consider the potential value of a PEP.
Perhaps more importantly, it demonstrates how the PEP market is evolving beyond the needs of smaller or less complex plans. As providers continue to address practical barriers, more employers are finding that features once thought to be unavailable within a pooled structure may no longer be out of reach.
Expanding access for self-employed individuals
To-date, many PEPs have not permitted retirement plans covering self-employed, or K-1, workers, limiting access for law firms, other professional employers and the gig economy broadly. Although SEC Rule 180 permits self-employed individuals to invest in CITs through qualified retirement plans without requiring SEC registration, the applicable registration exemption did not specifically address PEPs. As a result, many PEP providers restricted participation of self-employed individuals while pushing for guidance.
Recent SEC guidance confirms that PEPs may be treated similarly to single employer retirement plans for purposes of the exemption. This clarification enables PEPs to include self-employed individuals while continuing to leverage institutional CIT investments. As a result, the PEP market has become simpler, lower cost, more inclusive, and able to meet the needs of law firms, professional partnerships and other self-employed individuals of all kinds.
A broader future for PEPs
Many employers historically viewed themselves as outside the target market for PEPs. Some believed their workforce demographics were too unique. Others assumed their investment lineup, plan design or operational requirements were too complex. Increasingly, those assumptions deserve a second look.
WTW and other industry stakeholders have advocated for and helped to effect change by engaging regulators and policymakers to address practical challenges that once limited adoptions among certain employer groups. Recent examples include advocacy efforts related to self-employed participants, employer stock and other issues affecting broader PEP accessibility.
For plan sponsors that may have previously assumed a PEP was not designed for their workforce, plan design or organizational complexity, the landscape is evolving quickly. The PEP market today looks very different than it did just a few years ago, and we believe the next phase of growth will be defined not only by cost savings and fiduciary delegation, but also by the ability to solve for the broader retirement challenges for plan sponsors and plan participants continue to face.
Employers should not have to choose between strong governance and operational simplicity, innovation and low fees, or efficiency and a high-quality participant experience. As the PEP market continues to mature, the most effective solutions will be those that can deliver all these outcomes simultaneously.
Want to learn more? Contact WTW to discuss how PEPs may create new opportunities for your organization and whether recent regulatory and market developments have expanded the range of options available to your retirement plan.
Footnotes
- Based on 2025 plan year 5500 filings, filed as of October 15, 2026. Estimated assets as of year-end 2026 reflect growth approximately on pace with growth of >$15B seen in 2025. Return to article
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This document provides information on LifeSight Pooled Employer Plan (PEP) services that are being offered to you by WTW. Willis Towers Watson US LLC and Towers Watson Investment Services, Inc. or their affiliates are not acting in the capacity of providing “Investment Advice” within the meaning of 29 C.F.R. § 2510.3-21. It is your decision whether to engage WTW to provide any services or to invest in any investment available through WTW’s LifeSight PEP offering.
This document was prepared for general information purposes only and does not take into consideration individual circumstances. The information contained herein should not be considered a substitute for specific professional advice. In particular, its contents are not intended by Willis Towers Watson US LLC and Towers Watson Investment Services, Inc., and their parent, affiliates, and their respective directors, officers and employees (WTW) to be construed as the provision of investment, legal, accounting, tax or other professional advice or recommendations of any kind, or to form the basis of any decision to do or to refrain from doing anything. The information included in this presentation is not based on the particular investment situation or requirements of any specific trust, plan, fiduciary, plan participant or beneficiary, endowment, or any other fund; any examples or illustrations used in this presentation are hypothetical. As such, this document should not be relied upon for investment or other financial decisions and no such decisions should be taken on the basis of its contents without seeking specific advice. WTW does not intend for anything in this document to constitute “investment advice” within the meaning of 29 C.F.R. § 2510.3-21 to any employee benefit plan subject to the Employee Retirement Income Security Act and/or section 4975 of the Internal Revenue Code.
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