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Some of the hubbub over PEPs is nonsense

In terms of the 401(k) plan business, I think the hype over pooled employer plans (PEP) will be the most over hype since the release of Crystal Pepsi.

 

I don’t believe PEPs will eliminate the need for single-employer plans because I don’t think the hype will ever come close to the interest in them by plan sponsors. The idea behind PEPs is cost savings and delegation of fiduciary liability. Only the latter will materialize.

 

Principal (in its PEP announcement) says 38% of defined contribution plan sponsors say they might consider joining a PEP or a multiple employer plan (MEP) in the next two years. I don’t believe 38% of plan sponsors know what a PEP is.

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