Paychex introduces a Pooled Employer Plan, a brand new cost-effective retirement plan for US firms and their staff
ROCHESTER, NY, December 9, 2020 / PRNewswire / – In response to the provisions of the SECURE Act, Paychex, Inc. will be one of the first in the retirement benefits industry to sponsor and maintain a Pooled Employer Plan (PEP) to help businesses provide an affordable retirement option for companies across the country their authorized employees. The Paychex PEP will include lower employer fiduciary liability, simplified plan administration, and reduced plan expenses compared to individual employer pension plan offerings.
“Not only has the COVID-19 pandemic made business more complex than ever, but it has also seriously affected the financial security of millions of Americans. Expanding access to retirement plans is critical to the long-term financial well-being of workers across the country “, he said Tom Hammond, Paychex vice president of corporate strategy and product management. “Our new PEP offers business owners a cost-effective plan option that takes off the compliance and administrative burdens of a traditional 401 (k) plan, gives their employees access to a solid retirement plan, and allows them to safely prepare for their finances in the future.”
Using a PEP, employers can jointly participate in a 401 (k) plan that is managed by a Pooled Plan Provider (P3). The P3 acts as both a plan sponsor and a formal plan administrator, relieving employers of significant fiduciary and administrative burdens. In particular, the PEP provides a solution for small and medium-sized businesses that may not have previously been able to offer a retirement plan due to a lack of cost-effective plan options or the time or resources required to manage complex plan administrations. Companies currently offering an employer-sponsored qualified retirement plan can also benefit from merging their plan and assets into one PEP, potentially saving time and money.
Further advantages of the Paychex PEP are:
- Reduced administrative tasks through the need to contract and monitor third party escrow service providers
- Reduced risk as Paychex takes on many fiduciary duties in its role as P3
- Potential for greater efficiency by integrating Paychex payroll into the PEP
- Opportunities to reduce compliance costs as Paychex does the necessary independent financial review for the PEP to meet the requirements of the IRS and Department of Labor, which can cost large employers between them $ 10,000 and $ 15,000 yearly
“According to PLANSPONSOR magazine, Paychex has been named the number one 401 (k) record holder in the country by number of plans for ten consecutive years,” added Hammond. “As an industry leader, we are uniquely qualified with the experience, technology and resources to be the provider of choice for this new type of plan.”
Paychex is partnering with two other leading companies in the pension industry to provide services for the PEP offering. Mesirow Financial will serve as 3 (38) investment managers for PEP and Mid Atlantic Trust Company as trustees.
“Over the past five years we’ve seen a shift from 3 (21) to 3 (38) fiduciary services, especially at the smaller end of the retirement plan market. These small and medium-sized employers seem to be signaling an openness to, and likely to be, signaling an openness to fully outsourcing fiduciary duties Be interested in the escrow assistance a PEP provides, “he said Mike Annin, Senior Managing Director of Fiduciary Solutions at Mesirow Financial. “We are excited to serve as 3 (38) Trustees in the Paychex PEP and, together with Paychex, are leveraging this unique solution to facilitate access to retirement plans for millions of Americans who do not currently have one.”
“We are very excited to play a role in Paychex’s product response to the SECURE ACT. As PEP trustees for the emerging Paychex offering, we share the motivation of collective purchasing power with the common goal of making retirement planning more accessible to employers and their staff, “said Tim Friday, Group CEO of the Mid Atlantic Capital Group and President of the Mid Atlantic Trust Company.
Paychex plans to make its PEP available immediately January 1, 2021, the first day PEPs can be offered. Visit www.paychex.com/retirement-services/pooled-employer-plans to learn more about the unique features of this new retirement plan option.
Paychex, Inc. (NASDAQ: PAYX) is a leading provider of integrated human capital management solutions for human resources, payroll, benefits and insurance services. By combining its innovative software-as-a-service technology and mobility platform with dedicated, personal service, Paychex enables small and medium-sized businesses to focus on growing and managing their business. Paychex has more than 45 years of industry expertise and is now serving more than 680,000 payroll customers May 31, 2020 in more than 100 locations in the US and Europeand pays one of 12 employees in the American private sector. Learn more about Paychex by visiting paychex.com and staying connected on Twitter and LinkedIn.
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SOURCE Paychex, Inc.