For CFOs and finance leaders, the pressure to deliver greater value with fewer resources has never been higher. Retirement plan management—often ranked among the top three employee benefits—is becoming a focal point as organizations grapple with rising costs, increasing compliance complexity, and heightened expectations from employees and regulators. Many employers still manage their 401(k) plans in isolation, bearing all administrative and fiduciary risks alone without enjoying the benefits of scale. Today, with intensifying regulatory scrutiny and litigation, and employees demanding greater retirement security, the traditional standalone operating model is facing unprecedented challenges.

Challenges Facing Retirement Plans

Financial anxiety and retirement underpreparedness are real issues: an estimated 40% of American households will run out of money in retirement1. Employees increasingly expect employers to provide support, with more than half believing it is the company's responsibility to help employees save for retirement2. At the same time, finance and HR teams are stretched thin—84% of companies cite rising costs as their biggest benefits challenge3, and 58% of HR departments cite lack of time and dedicated staff as the primary obstacle to achieving priorities4。

Against this backdrop, standalone 401(k) plans are particularly vulnerable. Limited scale typically means higher administrative and investment costs, and internal teams must spend significant time on compliance, audits, payroll integration, and plan oversight.

Leveraging Scale for Greater Impact

The SECURE Act and SECURE 2.0 introduced Pooled Employer Plans (PEPs), offering a new path. By pooling resources, unrelated employers can share the burden of plan administration, compliance, and investment oversight. PEPs have quickly gained market acceptance, managing $9.4 billion in assets and serving over 1 million participants as of the end of 2023, with assets projected to approach $25 billion by the end of 20255。

Take the Aon Pooled Employer Plan, for example, which has surpassed $5 billion in assets, serving over 130,000 eligible employees across more than 130 employers—assets have more than doubled in two years6. Participating employers achieve average plan cost savings of approximately 30%7. Investment fee ratios are 55% lower than the corresponding peer median8(based on asset-weighted analysis9). These efficiencies stem from PEPs leveraging collective bargaining power, securing lower fees and better pricing as more employers join.

Flexibility Without Compromise

A common misconception is that PEPs require employers to sacrifice plan customization. In reality, leading PEPs offer both scale and flexibility. Employers retain control over key plan features—including matching and profit-sharing formulas, eligibility criteria, vesting schedules, and loan provisions—ensuring alignment with workforce structure and business objectives. Employees benefit from institutionally priced investment options, including active and passive funds, target-date solutions, and self-directed brokerage windows, all overseen by experienced fiduciaries.

The Hidden Costs of Going It Alone

Resource constraints are an ongoing challenge. In a pooled arrangement, much of the day-to-day administration—including compliance, payroll integration, and participant education—is handled by experienced professionals, freeing internal resources for strategic initiatives. For example, employers in the Aon PEP report saving more than 50% of their 401(k) administration time6。

Cost and Administrative Efficiency

Thirty percent of plan sponsors cite simplified administration and compliance as the primary reason for exploring PEPs; nearly 20% seek lower investment and administrative costs10. As more employers join PEPs, the combined participant count and asset base strengthen bargaining power, driving further savings and efficiency gains for all participants.

Risk Reduction and Enhanced Governance

The risk environment is also intensifying: excessive fee litigation surged 35% in 2024, with 520 cumulative lawsuits since 2016 and settlements exceeding $1.1 billion since 202011—many targeting plans with assets under $1 billion. Most organizations lack the expertise to navigate this. PEPs transfer much of the day-to-day fiduciary and operational risk to experienced professionals, reducing liability and the need for deep in-house expertise.

Key Considerations for CFOs

While PEPs are attractive in terms of cost, efficiency, and risk management, potential transition complexity, service provider quality, and ongoing governance needs must be evaluated. A prudent due diligence process—assessing service models, investment lineups, and fiduciary support—will ensure alignment with organizational goals.

A New Era of Retirement Security

The adoption of PEPs marks a fundamental shift in how organizations support employees' financial futures—from fragmented, resource-intensive administration to collective solutions that enhance efficiency, value, and security. As more organizations embrace the pooled model, and market leaders set new standards for flexibility and scale, the industry is poised for continued growth and innovation.

Is your organization ready to harness the power of scale—providing stronger retirement security for employees? Now is the time to evaluate whether a pooled approach fits your benefits strategy.

Sources

  1. Morningstar Center for Retirement & Policy Studies. Beyond the Retirement Crisis Headlines: Why Employer-Sponsored Plans Are the Key to Retirement Adequacy for Today's Workers. 2025.
  2. Aon plc. Employee Sentiment Studies, 2024 and 2025.
  3. CFO.com. “84% of Companies See Rising Costs as Their Biggest Benefits Challenge: Costs Displace Talent Management as the Top Benefits Decision Driver.” 2025.
  4. Society for Human Resource Management (SHRM). 2023–24 SHRM State of the Workplace Report. 2024.
  5. Georgetown Center for Retirement Initiatives. "Are PEPs Reshaping the Retirement Plan Market?" 2025.
  6. PLANSPONSOR. "Aon PEP Surpasses $5B in Assets and 100K Participants." 2025.
  7. Aon plc. "Combating Inflation and Market Volatility with Pooled Employer Plans (PEPs)." 2025.
  8. eVestment Alliance; Morningstar. Peer universes are provided and calculated by eVestment Alliance, as of July 31, 2024. Peer universe fund expense information has been sourced from eVestment for all asset classes (Passive and Active) except the Target Date Fund universe, which uses Morningstar databases. For those Target Date Funds with multiple share classes through Morningstar, AIUSA selects the share class with the lowest cost option for purposes of the peer universe. For the eVestment data, managers provide only a single “rack rate” for each asset class. Information provided by third-party sources is believed to be reliable and has not been independently verified for accuracy or completeness and cannot be guaranteed.
  9. Aon plc. 55% on an asset-weighted basis (assets as of June 30, 2025); 45% on an unweighted basis.
  10. Optavise. Employer Report: Survey Highlights Challenges and Opportunities Among Benefits Professionals. 2024.
  11. PLANADVISER. "401(k) Excessive Fee Litigation Spiked to ‘Near Record Pace’ in ’24." 2025.