Small employers are more open to pooled retirement plans

Nearly half of small employers without a standalone retirement plan say they would consider joining a pooled structure — and in a growing number of states, the alternative to that conversation is a compliance deadline. That combination is reshaping how financial advisors approach retirement plan consulting for small and midsize business clients.

The 48 percent interest figure comes from Transamerica Institute's May 2026 Employers, Workers, and the New World of Work report, published alongside Transamerica's 25th anniversary in the pooled plan market. The baseline against which it sits is stark: four in 10 private-sector employees at businesses with fewer than 100 workers have no access to a workplace retirement plan, according to the Bureau of Labor Statistics' (BLS) September 2025 Employee Benefits Survey.

What pooled structures actually offer small employer clients

A pooled employer plan (PEP) allows multiple unrelated employers to participate in a single retirement plan administered by a pooled plan provider. The provider assumes most administrative and fiduciary responsibilities — investment oversight, compliance testing, and Form 5500 filing — while the adopting employer retains only the duty to select and monitor the provider. For a small business owner without dedicated HR or finance staff, that fiduciary transfer is the core value proposition.

The market has responded accordingly. PEP assets totaled $34 billion at year-end 2025, with 10,797 adopting employers across 330 plans — a 44.8 percent increase in adopting employers in a single year, according to the 2026 PLANSPONSOR Recordkeeping Survey. That represents substantial growth from approximately $2 billion when the PEP structure launched in 2021 under the Setting Every Community Up for Retirement Enhancement Act (SECURE Act).

State mandates: the conversation that can't wait

As of 2026, 17 or more states have enacted legislation requiring employers above a minimum size to either sponsor a qualified retirement plan or automatically enroll workers in a state-run auto-individual retirement account (auto-IRA) program. For advisors working with small business clients in those states, PEPs are a concrete private-market alternative that offers employer matching, plan design flexibility, and higher contribution limits that state IRA programs do not provide.

The compliance deadline angle changes the nature of the conversation. An employer who might indefinitely defer the retirement plan decision now has an external trigger — and an advisor who raises it proactively, with a specific solution, is positioned differently than one who waits to be asked.

What the growth data doesn't show

The PEP growth trajectory carries a caveat worth raising with clients. A June 2026 analysis by Georgetown University's Center for Retirement Initiatives, produced with Gallagher Fiduciary Advisors, found that the majority of PEP assets reflect migrations from existing single-employer plans rather than coverage extended to previously unserved employers. The PEP participation rate recorded in Department of Labor data stood at 36.2 percent, against a Vanguard plan-weighted average of 82 percent for traditional plans.

Kelsey Mayo, chief of retirement policy and regulatory affairs at the American Retirement Association, noted at a Georgetown webinar in August 2026 that small employer PEP adoption had not been as robust as originally intended, and that further policy reforms and industry coordination would be needed to reach the employers the SECURE Act was designed to serve.

That context matters. The PEP structure is sound and the demand is real, but conversion from interest to adoption — especially among the smallest employers — still requires active outreach, education, and enrollment support that does not happen without an advisor in the room.