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For years, employers have successfully outsourced healthcare plan administration to manage costs, reduce compliance risk and improve employee outcomes. A similar approach is emerging in the retirement space, serving as a logical next step in benefits management strategies.
Applying a familiar strategy to retirement plans
HR leaders have long partnered with medical carriers, pharmacy benefit managers (PBMs) and third-party administrators (TPAs) to handle the complexities of healthcare benefits. This model allows companies to focus on their core operations while ensuring employees receive quality coverage. The result? Streamlined administration, regulatory support and cost savings through scale.
Until recently, retirement plans lacked a comparable outsourcing model. Employers were left to manage most aspects of their defined contribution (DC) plans in-house, often without the specialized expertise needed to navigate fiduciary responsibilities and compliance requirements.
See also: Why outsourcing your leave program isn’t quite what you think
Pooled Employer Plans (PEPs) are changing this by allowing employers to join a pooled retirement plan overseen by a Pooled Plan Provider (PPP). The PPP takes on administrative and fiduciary responsibilities, centralizing plan management in much the same way TPAs do for healthcare benefits.
The following are some of the ways PEPs parallel the healthcare outsourcing model:
