Aon, one of the industry's biggest proponents of pooled employer plans, has amassed $1 billion in assets and commitments in its own pooled plan, Aon announced Wednesday.
Aon's PEP, which launched amid great fanfare on Jan. 1, 2021, now serves 40 employers with more than 30,000 employees. The participating employers represent a mix of industries, including biotech and life sciences, manufacturing, services, consumer products, energy and technology, and transportation.
"We're seeing broad appeal, which is encouraging," said Rick Jones, senior partner in Aon's wealth solutions group, in an interview.
Mr. Jones said employers were looking to lower their 401(k) costs, reduce their workload and offload their fiduciary responsibility, the three main components of what Mr. Jones described as the pooled plan's "value proposition."
Mr. Jones estimates that participating employers in the PEP that ditched their stand-alone 401(k) plans are seeing plan cost savings of 48%.
"Every dollar that they were spending or their participants were spending before joining would be down to 52 cents on average after joining," he said.
Aon's PEP costs 20 to 30 basis points "all in," which includes a per-participant charge as well investment management, fiduciary services, record-keeping and audit fees, Mr. Jones said.
Pooled employer plans such as Aon's are a relatively new type of plan that began coming online on Jan. 1, 2021, thanks to the SECURE Act, which greenlighted their creation. The new pooled plans give employers in unrelated businesses the opportunity to combine their 401(k) plans into a single pooled plan so as to lower their costs through economies of scale.
West Marine, a marine retailer that joined Aon's PEP in 2021, said the move saved the company about 65% in 401(k) program costs. "Our crew members are saving, we're saving, and it makes it easier to offer bigger and better things that will help us with retention and getting the right talent in place," Jasmine Simkins, the company's director of human resources operations, said in the news release.
Aon has long trumpeted its belief in the power of pooled employers plans to reduce costs and lower employer's fiduciary and administrative responsibilities. "We expect more than half of U.S. employers to merge their traditional 401(k)s into pooled employer plans by 2030," Mr. Jones said.
The firm is now urging Congress to enact the Securing a Strong Retirement Act of 2022, which among other things would allow 403(b) plans to join pooled employer plans.
"Employees and employers in the non-profit sector should also benefit from pooled employer plans," Mr. Jones said.
