U.S. Department of Labor Blog
Pursuant to President Trump’s Executive Order to lower the cost of living for American families, the Department of Labor has issued guidance to help small employers join high-quality, low-cost retirement plans called “pooled employer plans” or PEPs. 
PEPs allow participating employers a way of banding together to offer their employees a workplace retirement savings option. By transferring administrative and fiduciary responsibilities of retirement plans to a pooled plan provider, these otherwise unrelated employers can avoid the unnecessary costs associated with sponsoring their own separate retirement plans. If a pooled plan provider, as named fiduciary, were to appoint an investment manager as defined in section 3(38) of ERISA, the manager would be responsible for the prudent investment and management of the plan’s assets – not the participating employers. Further, PEPs have the potential to offer diversified investment lineups at a lower cost than what small plans could likely negotiate on their own behalf.
Estimates show that the total cost to participate and invest through the three largest PEPs was between .23% and .42% for a typical participant in 2023. In contrast, Morningstar finds that the median total cost for each participant in a small retirement plan is .84%, accounting for likely investment expenses and other administrative costs charged directly to participants. These differences in fees may appear small, but they add up over time. For example, an employee could retire with around 13.6% more in assets at retirement if the participant paid .23% in yearly investment fees compared to .84% over a 35-year career.
Our interpretive guidance addresses the limits of a participating employer’s responsibility in selecting and managing a PEP, including how it can be further alleviated, and offers some commonsense suggestions for how that responsibility might ultimately be satisfied. In addition, we’re asking the public to submit comments on market practices associated with PEPs, which we intend to consider as a basis for a regulatory safe harbor that will further encourage market participants to offer and employers to join well designed PEPs.
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Janet Dhillon is the acting assistant secretary of labor in the U.S. Department of Labor’s Employee Benefits Security Administration.