Plan consultants and advisers will play a pivotal role in the development of the pooled employer plan market, according to a panel discussion held Thursday at Pensions & Investments' four-day Defined Contribution Spring Virtual Series.
"Plan advisers are almost like the catalyst," said Joan Neri, an attorney with Faegre Drinker Biddle & Reath. "They're going to plan sponsors, they're going to meetings and then they're presenting this as an option."
Panelists agreed that small plan sponsors would be the earliest to move into pooled employer plans for a variety of reasons, including the ability to quickly transition their plans.
Transitioning a small plan can happen in three or four months, unlike larger plans with longer, more difficult implementations, said Beth Halberstadt, senior partner and U.S. defined contribution solutions leader at Aon.
Ms. Halberstadt reported seeing broad interest among plan sponsors of all sizes and across all industries.
"It makes a ton of sense for the small plan sponsor, but we're finding it just as compelling for a large plan sponsor. It's less work, less risk and lower costs, resulting in better outcomes for the participants," she said. "It resonates with just about everyone."
Ms. Neri, however, did not see pooled employer plans as appealing to large plan sponsors with complicated plan structures, saying pooled plans are better suited for "employers that are looking at a more cookie-cutter approach."
Ms. Neri also noted that while pooled employer plans help relieve plan sponsors of their fiduciary responsibility, they're not completely off the hook and still must "make sure that they prudently select and monitor the PEP and the pooled plan provider."
Still, Ms. Halberstadt was optimistic about pooled employer plans, seeing them as a game-changer.
"Our prediction is that half of the plans in the U.S. in the next 10 years could be going toward a PEP," she said, adding that she expects to see some midsize and larger plans joining PEPs in the next two years.
"The larger plan sponsors are saying, 'Let's wait and see what 2021 brings, but I wouldn't be surprised if we see larger plans taking a step in definitely as we get into 2022,'" she said.