- Business

What is a PEP? (Pooled Employer Plan)

When you’re running a business, no matter the size, you have tons of different things to deal with every single day. One of the major, big picture items that you need to consider in order to keep your employees happy, is your company’s retirement plan. 

However, creating a retirement plan for your employees is no small task. In fact, you may find that it costs you hours just researching the different types of plans and the benefits of each.

Luckily, with a PEP or Pooled Employer Plan, business owners have no need to stress about whether or not they are keeping on top of all the deadlines and important considerations when it comes to the company retirement plan. All of these tasks are taken care of by a Pooled Plan Provider.

What is a PEP?

A Pooled Employer Plan enables small businesses within multiple different industries to “pool” their resources and create a compelling retirement plan for all eligible employees. Often, these plans appeal to companies with less than 100 employees and they allow the business owner to have a reduced level of responsibility and stress, as there is an appointed Pooled Plan Provider who takes care of all the fiduciary and other retirement plan requirements.

How Does a PEP Differ from a Standalone 401k?

There are a number of differences between a PEP and a Standalone 401k.

  • Simplicity

Standalone 401k plans allow businesses and contributing members to customize their plans in a variety of ways. While this can be nice for a number of reasons, these plans require business owners to act as fiduciaries and often require a huge time commitment to ensure that plans are compliant with all laws and regulations.

Pooled Employer Plans, on the other hand, are simple plans that appeal to a wide range of people. There is little customizability, however, this is not always a bad thing. The simplicity and “one size fits all” approach of a PEP allows business owners and employees alike the ability to breathe a sigh of relief that they don’t have to spend time modifying and perfecting their plans.

  • Cost Options

Often, because PEPs work with multiple different companies, individual plans can have better pricing options for investments. This is due to the large scale of such a plan which enables access to better deals that might be unattainable in a standalone 401k plan.

  • Better Visibility for Employees

Through PEP platforms, employees can easily view and manage their investments, along with their financial plans based on the performance of their 401k fund. Again, having a great retirement plan is one of the most important factors for many employees. In fact, this aspect alone can help employees decide between working for one company or another. 


In the end, it comes down to the nature of your business and what your employees want. If you need to use a standalone 401k, for one reason or another, you have the option to do so. However, most small businesses benefit from a Pooled Employer Plan. If you have questions, call a plan provider today!

About Jermaine Jones

Read All Posts By Jermaine Jones