Pooled employer plans are growing – but keep it in perspective

Pooled employer plans have posted remarkable growth since their launch in 2021. But benefits advisors looking to understand where PEPs fit in the retirement landscape should remember that, while the trajectory is genuinely impressive for a five-year-old product, the overall defined contribution (DC) market remains overwhelmingly dominated by the single-employer plans that have existed for half a century.

The pooled employer plan (PEP) market grew from roughly $2 billion in assets in 2021 to an estimated $34 billion by the end of 2025, according to research published by Cerulli Associates in January 2026.

Steve Chappell, Assistant Vice President of Retirement Plan Sales at The Standard in Portland, Oregon, spoke with Insurance Business Benefits US and noted that PEPs account for a small share of total DC plan assets in the United States, which the Investment Company Institute estimated at approximately $51 trillion as June 30, 2026.

“The single employer plan has a 50-year head start on PEPs,” said Chappell. “But the reality is PEPs are making too much of an impact on employers’ lives for them not to be a meaningful portion of that business.”

A product finding its footing

PEPs were created under the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 but could not be legally launched until January 1, 2021, meaning the product is still in its early years. The original legislative rationale was cost reduction through scale: pool smaller employers together so they could access retirement plan pricing previously available only to large organizations.

That cost argument has largely given way to a different value proposition as the market has matured. Plan costs across the industry had already been declining for roughly 15 years before PEPs launched, making fee reduction a less compelling differentiator than Congress originally anticipated. What has resonated instead is the ability to delegate fiduciary responsibility and administrative burden to a pooled plan provider.

“When PEPs were created, really the idea from Congress was how do you extend coverage,” Chappell said. “But I think the interesting part about PEPs is really what it allows employers to do – to really outsource and delegate so much of their fiduciary responsibilities.”

However, joining a pooled plan does not mean walking away from fiduciary responsibility entirely. Chappell was clear that employers always retain at least two residual fiduciary decisions – determining whether a PEP is appropriate for their organization at the outset, and ongoing monitoring of whether the pooled plan provider is delivering on its obligations.

Critically, he noted that PEP agreements can delegate risk back to the employer if the terms are not read carefully. “Employers need to understand what their responsibilities actually are in any given PEP that they decide to join,” he said.

For a fuller examination of how fiduciary liability is structured within pooled plans and what it means for benefits brokers, IBB has covered the fiduciary risk implications of pooled employer plans for advisors and their clients along with a more general warning for brokers who may believe a disclaimer is enough to absolve their fiduciary risk.

Signs of mainstream traction – with caveats

Some data points suggest PEPs are gaining genuine momentum among employers and advisors.

Chappell cited record keeper data showing that between 25 percent and 50 percent of new employer retirement plan sales at some platforms are now going into PEPs – a striking figure given that overall annual plan turnover runs at approximately 10 percent industry-wide. He also noted that employer-initiated inquiries – plan sponsors proactively asking advisors to quote a PEP – have become more common.

“Anytime anything in the marketplace crosses that threshold where clients are bringing it to their advisors instead of the other way around, that’s when you know it’s mainstream,” Chappell said.

But that record keeper data requires context. It reflects new plan sales at platforms already active in the PEP space – a subset of the broader market – and does not capture the enormous stock of existing single-employer plans, which show no signs of disappearing.

Looking out five to 10 years, Chappell anticipates PEPs could represent 50 to 60 percent of the DC market but frames that as a long-term trajectory, not an imminent reality. “I really don’t think single employer plans are going anywhere,” he said. “There’s just too much history with them.”

The education gap that remains

Perhaps the most significant barrier to broader PEP adoption is not cost or product design but employer understanding of what PEPs actually deliver.

Research conducted by The Standard at the start of 2026, which the company plans to refresh in 2027, found a clear perception divide: employers who have not yet joined a PEP overwhelmingly cite cost savings as the primary reason they would consider doing so. Employers already in PEPs tell a different story.

“When you start looking at what the feeling is on why they joined a PEP, employers who have already decided to join report back about creating better outcomes for their HR staff, offloading risk, and offloading administrative responsibility,” Chappell said. “And that’s what they’re talking about.”

That gap represents a direct opportunity for benefits advisors. Brokers who lead with a fee-reduction pitch risk losing the sale to a plan sponsor who feels their current costs are acceptable. The more effective conversation, Chappell argued, reframes the discussion around soft-dollar costs – the internal time and resources consumed by retirement plan governance – rather than hard-dollar fees alone.

The Department of Labor (DOL) requires Employee Retirement Income Security Act (ERISA) plans with 100 or more participants to undergo an independent annual audit, with costs typically starting at $10,000 according to DOL Employee Benefits Security Administration guidance. For employers and particularly nonprofits, where The Standard recently launched an ERISA 403(b) PEP, eliminating that cost is a concrete and immediate selling point.

“When you could put $10,000 or $15,000 back into their operating budget, that’s significant resources that tends to resonate with them really quickly,” Chappell said.

What advisors should take away

For benefits brokers and advisors, the PEP market in 2026 offers a clear-eyed opportunity as a product with genuine employer demand and a compelling value proposition around risk and administrative relief, operating against a backdrop where single-employer plans remain firmly entrenched.

The Standard holds approximately $5.5 billion in PEP assets – roughly 10 to 12 percent of the estimated total market – and Chappell anticipates advisor firms will increasingly offer multiple PEP options to employer clients, shifting the question from whether to join a PEP to which structure best fits a given organization.

“You’re going to start seeing advisor firms bring multiple PEP solutions as opportunities to employers so they can start choosing not if PEP, but which PEP is the best fit for their organization,” he said.