US. New PEPs targeting firms without retirement plans
As providers of pooled employer plans scramble to attract sponsors of small- and midsize 401(k)s into their new pooled plans, at least two are taking a different tack. Rather than pursuing employers already offering workers a retirement plan, they’re chasing those not offering one at all.
Payroll provider Paychex Inc. has already signed up 1,000 such employers into its PEP — a milestone it hit in February, a month after its launch on Jan. 1, said Michael Majors, senior director of national retirement sales at Paychex in Seattle.
“We didn’t expect for it to take off that fast,” Mr. Majors said.
Fidelity Investments, too, launched a PEP in January that’s restricted to employers with between five and 50 employees that don’t have retirement plans. The company declined to disclose how many employers have joined its PEP, saying it was too early to share a business update.
While employers without retirement plans — and therefore no assets — are not the most attractive from a business perspective for providers of pooled employer plans, they offer a relatively easy way to enter the marketplace and establish a base from which to grow, industry experts said. It’s also faster and easier to move an employer without a retirement plan into a PEP than it is to move one with an existing plan, they said.
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