Key Takeaways
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Multiple Employer Plans (MEPs) and Pooled Employer Plans (PEPs) can streamline retirement plan administration but may reduce plan design flexibility, transparency and employer control.
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Employers adopting pooled retirement plans retain fiduciary duties including selecting and monitoring providers, fees and services despite delegated investment or administrative roles.
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Plan sponsors should evaluate workforce fit, total cost, governance structure and conversion risk before joining a pooled plan to ensure measurable benefits over an existing single-employer plan.
Multiple Employer Plans (MEPs) and Pooled Employer Plans (PEPs) are gaining attention as employers look for ways to simplify retirement plan administration. While these pooled retirement plan structures may reduce administrative burdens, plan sponsors must evaluate governance, fiduciary responsibility and total cost before making the transition.
About MEPs and PEPs
A MEP lets unrelated employers join one retirement plan. A PEP is a newer type of MEP run by a professional pooled plan provider. A MEP/PEP can reduce internal workload and standardize administration, but for many plan sponsors with already well-run retirement plans, it often trades control, transparency, and participant fit for convenience and may shift – rather than reduce – fiduciary responsibility and risk.
Plan sponsors are being pulled toward pooled arrangements because they promise:
- Outsourcing day-to-day administration and “committee fatigue” relief
- Perceived fiduciary relief (especially related to investments and overall operations)
- Administrative simplification (one platform, standardized processes)
- Promises of lower costs because the pooled plan is larger (“big plan = better pricing”).
- Relief from compliance complexity and concern about operational errors or litigation
These are real pain points. The key question is whether pooling improves outcomes not just whether it appears simpler.
The Real Positives
A MEP/PEP may deliver meaningful benefits when a plan struggles with capacity or consistency:
- Streamlined administration through standardized processes and integrations
- More formal governance than a smaller Plan Sponsor can sustain alone
- Reduced internal workload (fewer vendor touchpoints, centralized services)
- Possible fee efficiencies in recordkeeping and investments (sometimes)
The Under-Discussed Tradeoffs (often the deciding factors)
For plan sponsors with stable operations and thoughtful plan design, these issues frequently outweigh the headline benefits:
1. Loss of plan design control (structural, not cosmetic)
Pooling can limit your ability to tailor: employer contributions (match/nonelective), eligibility, loan rules, Roth and automatic features, distribution flexibility, investment menu choices, and vendor/service options. Standardization may conflict with how a plan sponsor recruits, retains and supports its workforce because the retirement plan is often part of the organization’s overall compensation strategy and reduced flexibility can limit the sponsor’s ability to align plan features with workforce needs and incentives.
2. “Average employer” standardization may not fit your workforce
Workforce patterns (hourly vs. salaried, seasonal cycles, multiple payroll groups, turnover dynamics, union/non-union, multi-location operations) can require customization. A pooled plan’s defaults may be “reasonable” but not right for your population and the mismatch can show up as lower match utilization, reduced deferral adequacy, and increased leakage.
3. Fiduciary responsibility isn’t “gone” it’s reallocated
Even if key functions are delegated, adopting employers typically retain duties to prudently select and continuously monitor the MEP/PEP arrangement, including fees, services, and provider performance. The work changes form (monitoring reports, service metrics, controls) but does not disappear.
4. Fee transparency and fee shifting
Headline pricing can look attractive while total cost increases through: asset-based overlays, revenue sharing, managed account/advice add-ons, per-transaction fees, recordkeeping minimums, or bundled “wrap” charges. The fiduciary standard is reasonable total cost for services, with transparency sufficient to monitor.
5. Conversion and participant-experience risk
Conversions can introduce payroll mapping errors, eligibility/vesting issues, loan/Qualified Domestic Relations Order (QDRO) complications, distribution delays, blackout-period frustration, and investment mapping concerns. Participant trust is hard to regain once damaged.
6. Exit risk
Leaving a pooled plan can be disruptive and expensive (timing constraints, fees, data migration, blackout periods). The decision should presume you may be in it longer than expected.
When a MEP/PEP Might Make Sense
Pooling can be a strong option when the plan sponsor has: very small scale, limited staff capacity, recurring operational failures, chronically high costs with low service, difficulty attracting competent vendors, or a committee that cannot function despite repeated attempts to fix governance.
What to Do before Signing: MEP Decision Checklist
Use a governance lens to measure outcomes and evaluate whether current trends suit your needs.
- Benchmark participant outcomes: participation, deferrals, employer contribution utilization, leakage, loans/defaults
- Compare total cost today vs pooled (plan + participant + add-ons + asset-based layers)
- Test plan design fit for your workforce realities and employment classifications
- Validate the conversion plan: payroll mapping, data testing, blackout, error remediation ownership
- Confirm service model quality: escalation paths, education cadence, responsiveness
- Document a monitoring program: fees, service metrics, controls, issue tracking
- Understand exit provisions: timing, fees, transition support, operational burden
Questions to Ask before Signing (10 essentials)
- Who is the named fiduciary for investments/administration and what duties do we retain?
- What is the total fee structure (including asset-based layers, revenue sharing, add-ons)?
- What services are included vs extra-cost (loans, QDROs, distributions, corrections)?
- What investment lineup changes are required, and how will mapping be handled?
- What is the conversion timeline, blackout expectation and testing protocol?
- How are eligibility, vesting and service history validated post-conversion?
- What participant support model is provided (hours, escalation, education)?
- What monitoring reports will we receive, and how often?
- What controls/cybersecurity standards apply and what reporting will we get?
- What are the exit terms (fees, notice periods, transition support)?
Strategic Overview
If your current plan is already well-run, moving into a MEP/PEP should be evaluated carefully because it can involve meaningful tradeoffs particularly around plan design flexibility, fee transparency, service accountability, and the ability to tailor the participant experience. While pooling may streamline certain administrative functions, it does not eliminate fiduciary obligations and may introduce different oversight considerations, including provider monitoring, layered fee structures, conversion-related operational risk and more limited exit flexibility.
For those reasons, sponsors should proceed only where they can document clear, measurable net benefits beyond a lower headline fee or reduced internal workload when compared to maintaining and improving the existing single-employer plan.
We Can Help
Plan sponsors considering structural changes to their retirement plans — including pooled arrangements such as MEPs or PEPs — should evaluate governance, operational readiness and total cost transparency before making a transition. PKF O’Connor Davies works with plan sponsors to strengthen plan governance, address compliance and operational risks and support informed decision-making around retirement plan oversight.
Contact Us
If you have any questions, please contact your PKF O’Connor Davies client service team or:
Joseph J. Farrenkopf, CPA
Partner
jfarrenkopf@pkfod.com | 914.341.7002