The bundled offerings also give plan sponsors more flexibility in their investment lineups than do pooled employer plans, according to Mercer's Mr. Traverse. He explained that Mercer Wise provides plan sponsors with a couple of choices of target-date funds and if they're large enough, the option of a brokerage window. Mercer's pooled employer plan, in contrast, will offer one lineup and "that's the lineup that you're going to get," Mr. Traverse said.
The new bundled offerings, however, do have one drawback. Plan sponsors in a group of plans must file separate Form 5500s and if they have more than 100 participants, they must conduct their own formal audits, which experts say cost anywhere from $8,000 to $20,000 a year. In a pooled employer plan, there's only one Form 5500 and only one audit, eliminating a huge administrative headache for participating sponsors.
Providers of bundled services might soon overcome even this drawback, though, with a provision in the SECURE Act of 2019 that allows certain groups of plans to file a single, consolidated Form 5500 starting in 2022, according to Ms. Neri. The provision applies only to defined contribution plans that have the same trustee, named fiduciaries, administrator, plan year and investment option offerings, she said.
There's a chance, too, that the audit requirement could potentially be applied to the group and not to each plan separately. Ms. Neri noted that while the audit requirement is not specifically addressed in the SECURE Act, "it would appear that given the intent of the rule," it would be applied that way.
"I am expecting that the Department of Labor will issue guidance about this," Ms. Neri said.
Indeed, the new law is one of the driving forces behind the emergence of the new bundled offerings popping up in the marketplace, she said.
The newcomers follow earlier pioneers. Mercer Wise 401(k), for example, launched in 2017, making Mercer "one of the first to offer a fully delegated bundled solution with an institutional approach," Mr. Traverse said.
Mercer Wise 401(k) provides plan sponsors with 3(16) administration and 3(38) investment management services through Mercer Investments LLC and record-keeping services through Empower Retirement. As of Oct. 31, Mercer Wise had 40 sponsors with $1.6 billion in assets and has another 13 plans with $450 million being brought on through April, Mr. Traverse said.
The recent new offerings are mainly geared to the needs of smaller plans. Franklin Templeton's group plan solution, for instance, is designed for the micro to small plan market from startup plans to those with less than $3 million in assets, the firm's Mr. Ahmed said.
FuturePlan GPS, meanwhile, is "designed to fit many types of plans from employers looking for a startup solution to those with seasoned retirement plans," said Teresa Hassara, president of FuturePlan in Carlisle, Mass.
The newcomers declined to disclose how many plan sponsors have expressed interest in the programs, saying only that the programs have been well-received.
"The proposal volume far outpaced our expectations," Franklin Templeton's Mr. Ahmed said.