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The retirement industry and business media alike have taken notice of the Pooled Employer Plan (PEP) and how it will change the retirement landscape. But to better understand PEPs and its impact on employers, administrative staff, and auditors, it’s important to understand how PEPs first came to be. The PEP was created out of changes made in the SECURE Act which eliminated the Unified Plan Rule, better known as the “one bad apple” rule, for Multiple Employer Plans (MEPs). But this relief only applied in certain situations, which led to the creation of the PEP.

Much of the discussion around PEPs has centered around the cost benefits that they are expected to deliver to small employer plans, with the economies of scale from a growing PEP resulting in better pricing than can be achieved in a traditional single employer plan. However, there is one word that will likely outweigh lower costs and other PEP advantages when the disruptive impact of this innovation is better understood: Focus.

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