New Revenue Opportunities with Pooled Retirement Plans

Exploring Pooled Retirement Plans to Uncover New Revenue Opportunities

Retirement readiness has been a long-standing battle cry for the retirement services industry.

And yet, 55 million American workers still do not have access to retirement savings plans at work.¹

Pooled retirement plans are poised to help financial professionals close the gap due to their ability to increase plan access and reduce barriers for companies to provide retirement benefits to their employees.

The Secure Act of 2019 has moved the industry forward by providing clarity surrounding pooled plan arrangements. Specifically, the Act:

• Makes it easier to establish a multiple employer plan (MEP).
• Provides protection against the MEP “One Bad Apple” rule.
• Establishes a new form of MEP called a pooled employer plan (PEP) – effectively removing any affiliation requirement.

What is a MEP?

A MEP is a retirement plan design for businesses that have a common interest or connection, such as a professional employer organization or association. The association or professional organization is the MEP sponsor and members may join the MEP as an “adopting employer.”

What is a PEP?

A PEP allows unrelated plan sponsors to pool their retirement resources with those of other employers and delegate a majority of fiduciary and administrative responsibilities to a third party. The PEP is sponsored by a pooled plan provider, who is registered with the IRS and Department of Labor as a pooled plan provider and is named plan administrator and 402(a) fiduciary. The pooled plan provider is also the person/entity responsible for overall qualification and performance of the PEP.

MEPs and PEPs are ideal for businesses of any size and offer similar benefits to plan sponsors, which include²:

• Simplified administration by outsourcing to experts.
• Economies of scale through group buying power.
• Fiduciary risk mitigation and risk offset.
• Plan design flexibility as an adopting employer under one master plan document.
• The potential for operational efficiencies and cost reduction through one master plan document, one IRS Form 5500 filing and single audit (if necessary), participant notice distribution, compliance testing and document preparation expenses.
• The inclusion of fiduciaries and experts serving the plan [e.g., 3(16) administrative fiduciaries, 3(38) investment fiduciaries, third party administrators, record keepers and custodians].
• Payroll integration to increase productivity and streamline manual efforts.

Growing your practice with pooled plans

If you are looking to establish recurring revenue streams for your practice and serve more plan sponsors, pooled plans are worth a look. They offer the following opportunities for you.

1. An untapped market: According to the Secure Retirement Institute’s 2021 research study, 82% of DC advisors report that they do not work with MEPs in any capacity³. This offers you the ability to become an early adopter into this space.
2. Additive revenue: Once a pooled plan ecosystem is established, these plans can grow significantly with proper planning, marketing and sales processes. Furthermore, managing multiple plans inside of a single contract can offer time and cost efficiencies.
3. Brand name recognition: You may co-brand and control the relationship in a pooled plan arrangement, providing you with a distinct advantage and competitive edge in the marketplace.
4. Cross selling: Pooled plans establish efficient hubs for service expansion (e.g., wealth management, insurance, etc.). What’s more, have ongoing contact with new people as you are needed to provide education and support participants as the number of plans and employees swell.

As a main street market leader, Ameritas is committed to helping you fulfill the retirement needs of both large- and small-business owners nationwide, and sometimes pooled plan arrangements are the right fit for those business owners. Our systems are custom-built to respond to and address the nuances and complexities of onboarding, servicing and growing these distinctive plans.

To further dialog, please reach out to Ameritas retirement plans at RPSales@Ameritas.com or 800-923-2732.

Disclosures:

¹January 2020 article by CNBC: New programs aim to help the 55 million people without workplace retirement savings plans.
²There are important and unique differences between PEPs and MEPs that should be considered. Contact Ameritas for more information about implementation.
³Secure Retirement Institute (SRI) also known as LIMRA.

About Ameritas

Ameritas is a marketing name for Ameritas Mutual Holding Company and its affiliated subsidiary companies, including Ameritas Life Insurance Corp. and Ameritas Life Insurance Corp. of New York. Founded in 1887, Ameritas offers a wide range of insurance and financial products and services to individuals, families and businesses. These products and services include life insurance; annuities; individual disability income insurance; group dental, vision and hearing care insurance; retirement plans; investments; asset management; and public finance. Securities offered through affiliate Ameritas Investment Company LLC., member FINRA/SIPC and investment advisory services offered through the business name of Ameritas Advisory Services.