Broadcast Retirement Network’s Jeffrey Snyder discusses the growth of Pooled Employer Plans (PEPs) with Pentegra Retirement Services’ Bruce Harrington.
Jeffrey Snyder, Broadcast Retirement Network
Well, Bruce, it is so great to see you. Thanks for joining us on the program this morning. Thanks for having me, Jeff.
And I’m so glad we could talk about pooled employer plans, Bruce. This was part of the SECURE Act, and your firm has had a substantial role with the development and expansion of pooled employer plans. Now that we’re several years in, I wanted to just get a sense from your perspective and the firm’s perspective, how are PEFs doing?
Are they really taking off?
Bruce Harrington, Pentegra Retirement Services
Yeah, I would say they are. And in fact, when SECURE first came out with PEFs, we obviously had a lot of activity, a lot of interest, people trying to understand them. But 2025 and so far in 2026, it’s kind of been a renaissance.
A lot more activity, a lot of interest, a lot of new firms that hadn’t thought about PEFs in the past are thinking about them now. And some of those early adopters have done very well. I can think of some regional broker dealers and RA firms that have hundreds of adopting employers in some of the PEFs that we offer.
Jeffrey Snyder, Broadcast Retirement Network
So it sounds like the intent of Congress was to expand retirement offerings to smaller plans. The challenge have always been the economics. It sounds like the intent and the actuality are kind of aligning here.
I don’t wanna put words in your mouth, but that’s at least what I’m hearing. It sounds like that.
Bruce Harrington, Pentegra Retirement Services
You know, I think PEFs are expanding the adoption. I don’t think that they’re necessarily less expensive than a single plan, but what they do do is reduce fiduciary liability for the plan sponsors. And I think a lot of sponsors are embracing them for that.
They’re embracing them for the simplicity of the setup. You know, think about the reduction in liability from an investment management, right? Every PEF has a 338 in it.
And so take some of that investment work away from the plan sponsor. And then audit fees, right? There’s a substantial cost savings for plans in a PEF in terms of audit versus being in a single employer plan.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, and it sounds like, you know, I know you said that maybe the economic differences aren’t as substantial, but it sounds like, you know, if you can dephrase like audit expenses, I think a plan over a hundred lives has to perform an audit, a certified audit for 5,500. I mean, that can make or break a smaller employer.
Bruce Harrington, Pentegra Retirement Services
Yeah, yeah. So maybe a better way to say it is the record keeping 316 fees aren’t substantially less, but the audit fees are substantially less. And then you get the risk reduction.
The other thing, you know, if I put my broker dealer hat on, having lots of plans that work the same way under a centralized 338 is a huge benefit to me from a compliance and risk perspective.
Jeffrey Snyder, Broadcast Retirement Network
In terms of, if I could shift to maybe setup, and I wanna talk a little bit about how difficult for all the broker dealers and the financial advisors and the firms out there who maybe haven’t contemplated a PEP as an offering for their, as one of their services, how difficult is it to set up the different pieces, the investment advisor, the record keeper, get the agreement in place, attract the employers?
Bruce Harrington, Pentegra Retirement Services
You know, I think attracting the employers is probably just like marketing to single plans, but now you’re generally marketing to either affinity groups or clients of a similar scope. The setup process, I think the challenges in that is really just the newness, right? Not everyone understands how a PEP works.
Not everyone understands the role of a triple P. And so it’s really understanding how those things are different than a single employer plan. But we educate people on that all the time.
And in fact, you know, we’ve developed a continuing education presentation that we can deliver to advisors and others for CE credit that just understand the basics of PEPs.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, it sounds to me, if I were an advisor wanting to branch this out and be at service the 401k marketplace, this would be a great way to go because I think by the last number I saw, Bruce, there were like 70 million people, working people in the United States who weren’t covered by a retirement plan. I suspect that number has gone down because of the PEPs, but there’s plenty more people out there that need these benefits.
Bruce Harrington, Pentegra Retirement Services
Yeah, a hundred percent. And you’re seeing payroll companies embrace PEPs as ways to expand distribution and get to more clients. You’re even seeing larger companies that see the benefit and the risk reduction of being in a PEP, even though I think originally the industry thought, hey, it’s going to be smaller midsize companies.
Now, some of these very large employers are thinking about it for the cost reduction and the risk reduction.
Jeffrey Snyder, Broadcast Retirement Network
Let me ask you, our industry is famous for past performances are not indicative of future results, right? And I want to make sure I get that out there. We’re not here to provide any advice.
We’re just talking about some generalities here. But when you look out maybe five years, 10 years, what do you see for the pooled employer marketplace? Do you still see it growing at the same rate?
Or do you think that it kind of tops off and a little bit and doesn’t grow at the same rate?
Bruce Harrington, Pentegra Retirement Services
You know, it’s a great question, Jeff. I think if PEPs came first and single employer plans came second, I think we would have a whole lot more plans in PEPs than we do today. So I think the growth is going to continue to be exponential for at least the next 10 years.
Whether they even out or not, you know, is anybody’s guess, but the growth is substantial.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, I mean, clearly there’s opportunity. I mean, your firm is benefiting, there may be some others, and hopefully we’re making a dent into defraying some of the risks that is producing challenges for fiduciaries. Bruce, we’ve covered a lot of things.
I want to ask, and we’ve had a great conversation. And certainly, you know, in seven and a half minutes, you can’t give that much time to every topic. And I think we’re going to have to have you back in the coming weeks and months.
But let me just ask you to take the last minute. What are some of the key takeaways you think the audience should know about pooled employer plans and their growth over the last four or five years?
Bruce Harrington, Pentegra Retirement Services
Yeah, I mean, number one, it’s really about distribution, right? So the financial advisor is a critical part of a PEP, whether it’s at the broker dealer level or the individual advisor, these still need to be sold, right? And 401ks aren’t getting less complicated, they’re getting more complicated.
The risk of making a mistake is substantial. The penalties continue to rise. So you really need a professional fiduciary who’s there to help you.
And you need someone who understands the PEP business. You know, we’ve been in the MEP business and transition to the PEP business since 1943. So as an institutional fiduciary, we think we’re well-suited for this, but it’s a partnership.
It’s a partnership between us, the record keeper, the financial advisor, and everybody needs to work together to make a successful PEP and to deliver on the goals of risk reduction and cost savings.
Jeffrey Snyder, Broadcast Retirement Network
Bruce, I couldn’t have said any better. Thank you so much for joining us. We really appreciate it.
And look, we look forward to having you back again very soon, my friend.
Bruce Harrington, Pentegra Retirement Services
All right, Jeff, thank you.