Why More Employers Are Switching to Pooled Employer Plans (PEPs) in 2026

Over the last few years, a quiet shift has been taking place in the retirement plan industry. More and more employers—especially small and mid-sized businesses—are moving away from traditional standalone 401(k) plans and into Pooled Employer Plans, or PEPs. What started as a new option under the SECURE Act has now become one of the fastest-growing retirement plan structures in the country. And in 2026, that momentum is only accelerating.

The reason for this shift is simple: the 401(k) landscape has become too complex for most businesses to manage alone. Employers are expected to navigate ERISA regulations, oversee investments, ensure timely contributions, maintain current plan documents, pass nondiscrimination testing, monitor fees, and communicate effectively with employees. For a business owner juggling multiple responsibilities, these requirements don’t just create administrative strain—they introduce real fiduciary risk. A single error can lead to penalties, corrections, or worse. PEPs solve that problem by consolidating the fiduciary and administrative responsibilities under a single professional provider.

Cost is another major driver behind the move to PEPs. Historically, small businesses paid disproportionately higher fees for retirement plans because they lacked scale. Recordkeepers charged more, investment options were more expensive, and advisory costs added up quickly. In a PEP, employers gain access to institutional pricing by pooling together. The size of the combined plan brings down investment costs and administrative fees, making the plan more affordable for both employers and employees. With SECURE 2.0’s generous tax credits on top of that, many employers discover that a PEP is not only better—it’s cheaper.

Simplification might be the most underrated benefit. Employers who switch to a PEP often describe it the same way: once the transition happens, the plan “just works.” Contributions flow automatically, compliance is handled centrally, and investment oversight is performed by fiduciary professionals. Instead of managing vendors, filing forms, and troubleshooting payroll files, the employer focuses on what matters—running the business and supporting employees. A PEP frees internal teams from hundreds of small administrative tasks that added no strategic value but carried significant risk if done incorrectly.

The employee experience is another area where PEPs stand out. Modern PEPs are built on technology that gives participants real-time access to their accounts, personalized savings insights, and a clearer understanding of their long-term goals. When employees feel supported and informed, they engage more, save more, and view the company’s retirement plan as a meaningful benefit—not an afterthought. Employers that move into a PEP regularly see higher participation rates and stronger savings behavior across their workforce.

For employers who have previously managed a standalone 401(k), the contrast is immediate. Instead of worrying about contribution errors or filing deadlines, the Pooled Plan Provider takes on the role of 3(16) administrative fiduciary and 3(38) investment fiduciary, removing the heaviest legal and operational burdens from the business. Everything from compliance testing to annual filings to investment monitoring is centralized, consistent, and professionally overseen. The employer maintains control over plan design—eligibility, match structure, vesting—but the complex operational pieces are handled by experts.

At Apex Wealth Path, we see firsthand why employers are making this transition. The combination of cost efficiency, fiduciary protection, and operational simplicity is hard to ignore—especially for businesses without large HR or finance teams. Our PEP model takes the complexity out of retirement plan management and replaces it with a streamlined, high-performing system that enhances both employer and employee outcomes. For many businesses, switching to a PEP isn’t just a retirement plan upgrade—it’s a strategic shift that strengthens the entire benefits package.

As we move deeper into 2026, the companies that succeed are the ones that adapt early. The question for employers isn’t whether PEPs will become the standard—it’s how long they can afford to wait before making the switch.

👉 Learn how Apex Wealth Path can help your business transition to a PEP and experience a more efficient, compliant, and cost-effective 401(k) solution.