The pooled employer plan market is growing faster than most people expected. Here is what is driving it, and why payroll data is at the center of making it work.
Not long ago, Multiple Employer Plans (MEPs) and Pooled Employer Plans (PEPs) were niche structures that most payroll providers and TPAs could comfortably ignore. That is no longer the case.
The PEP market has grown from under $6 billion in assets in 2022 to $21 billion by the end of 2024, according to Cerulli. The number of active PEPs rose from 109 in 2021 to 339 in 2024. More than 50,000 employers now participate in a PEP. And two-thirds of employers surveyed by Mercer say they are considering switching to a MEP or PEP or may do so in the future.
That is not niche anymore. That is a market in transition.
For payroll providers and TPAs, the growth of MEPs and PEPs is not just an interesting industry trend. It has direct implications for how you deliver services, how your clients' plans are administered, and whether the payroll data infrastructure you rely on today can handle what the pooled plan structure actually requires.
Let's dive into what MEPs and PEPs are, why they are growing, and where payroll data fits into the picture.
MEPs and PEPs: The Basics
A Multiple Employer Plan is a retirement plan adopted by two or more unrelated employers. The employers share a single plan document, a single Form 5500, and in many cases a single recordkeeper — but each employer still runs its own payroll, and each employer's employees participate in the shared plan.
A Pooled Employer Plan is a specific type of MEP created by the SECURE Act of 2019. PEPs are designed to be more accessible than traditional MEPs by removing two significant barriers: the requirement that participating employers share a common bond, and the "bad apple" rule, which previously meant that one employer's compliance failure could disqualify the entire plan.
In a PEP, a designated Pooled Plan Provider takes on the role of named fiduciary and plan administrator. This is a significant shift: instead of each employer bearing full fiduciary responsibility for their own plan, the PPP absorbs most of those obligations. For small and mid-size employers who lack dedicated HR or benefits staff, that relief from administrative and fiduciary burden is genuinely attractive.
SECURE 2.0 extended the PEP structure to 403(b) plans and added provisions making it easier for PEPs to collect contributions, further broadening their appeal.
Why Employers Are Moving This Direction
The growth of MEPs and PEPs is not happening by accident. It is being driven by several converging forces.
Cost and scale. Individual retirement plans, particularly for small employers, are expensive to administer relative to their asset base. A PEP pools assets across many employers, creating economies of scale that reduce per-participant costs. For plans serving 100 or more employees facing mandatory audit requirements, cost savings from joining a PEP can exceed $15,000 to $30,000 annually before accounting for reduced legal exposure.
Fiduciary relief. Sponsoring a retirement plan comes with significant fiduciary obligations. The PEP structure transfers most of those obligations to the Pooled Plan Provider, which is increasingly appealing to business owners who want to offer competitive retirement benefits without becoming retirement plan experts.
SECURE 2.0 compliance pressure. The new mandatory auto-enrollment requirements, auto-escalation provisions, and expanded eligibility rules for long-term part-time employees have added administrative complexity to standalone plans. Many employers are concluding that a pooled structure with professional administration makes more sense than managing it in-house.
Adviser influence. Research from The Standard found that nearly six in ten employers considered a PEP because their adviser or consultant recommended it. As adviser awareness and comfort with the pooled structure grows, so does adoption.
The global context is worth noting. In countries with mature pooled employer arrangements such as Australia, Denmark, and New Zealand, adoption rates have reached 80 to 100 percent.Given that 86 percent of US 401(k) plans serve small businesses, experts suggest PEPs could match single-employer plan adoption in the US within the next five to ten years.
The Payroll Data Problem Inside Every MEP and PEP
Here is where the conversation becomes directly relevant to payroll providers and TPAs.
In a single-employer plan, the data flow is relatively contained: one payroll system, one plan, one recordkeeper. When that connection is automated via direct API, data moves cleanly and automatically every payroll cycle.
In a MEP or PEP, that structure multiplies. A single PEP serving 50 participating employers maybe receiving payroll data from 50 different payroll systems. Each employer has its own payroll provider, its own pay schedules, its own data formats, and its own approach to transmitting contribution and census information.
All of that data has to flow accurately to a single centralized plan. Enrollment changes, deferral amounts, compensation data, hours worked, eligibility status, terminations — everything that drives plan administration has to arrive correctly, on time, and in a format the recordkeeper can process.
When that data flow is manual, the complexity compounds rapidly. Every employer in the plan is a potential source of data errors. Every payroll cycle is an opportunity for a file upload to fail, anew hire to be missed, or a deferral change to be lost in transmission.
When the data flow is automated via direct API, those risks are eliminated at the source. Payroll runs, data moves, contributions land — for every participating employer, every cycle, without manual intervention.
This is the technology layer that makes MEP and PEP growth operationally viable at scale.
What This Means for Payroll Providers
If you serve small and mid-size employers, a meaningful portion of your client base is either currently in a MEP or PEP, or will be in one within the next few years. When one of your clients joins a PEP, the data expectation does not go down. It goes up. The Pooled Plan Provider needs clean, timely payroll data from every employer in the pool.
Payroll providers who have direct API connectivity to the major recordkeepers are positioned to be the preferred payroll partner for employers in pooled plans. Those still relying on manual file transfers will find themselves increasingly difficult to work with as the MEP and PEP market grows.
What This Means for TPAs
MEPs and PEPs are reshaping the TPA role significantly. As pooled plans become less niche, the administrative work is consolidating around fewer, larger plan structures. TPAs who understand the MEP and PEP landscape and who have the technology infrastructure to support accurate, automated data flows across multiple participating employers are well positioned to grow with the market.
How Payroll Integrations Supports MEP and PEP Data Flows
Payroll Integrations connects 200+ payroll partners to 75+ recordkeepers via direct API —including the major recordkeepers actively building out their PEP infrastructure. For payroll providers whose clients participate in MEPs or PEPs, this means the data flow from payroll to the recordkeeper can be automated regardless of which pooled plan the employer has joined.
No file uploads. No manual contribution updates. Automated enrollment, deferral, and census data flowing directly from payroll to the recordkeeper every cycle.
As the MEP and PEP market grows, that connectivity becomes increasingly valuable — not just for compliance, but as a competitive differentiator for payroll providers who want to be the preferred partner for employers in pooled plans.
Ready to Add Retirement Connectivity to Your Platform?
Payroll Integrations works with payroll providers of all sizes to deliver seamless 401(k) data integration — with no development work required on your end.
Become a partner or reach us directly at partnerships@payrollintegrations.com.