Combating Inflation and Market Volatility with Pooled Employer Plans (PEPs)

Combating Inflation and Market Volatility with Pooled Employer Plans (PEPs)
March 26, 2025 5 mins

Combating Inflation and Market Volatility with Pooled Employer Plans (PEPs)

The Aon Pooled Employer Plan: An Inflation Fighter Hero Banner

Inflation and market volatility continue to pose significant challenges for employers and their employees. Health care cost increases continue to be a headline issue for many, as does the general cost of living.

Key Takeaways
  1. Employees wanting to save for their retirement find it increasingly difficult as costs for essentials continue to rise.
  2. Employers face challenges to recruit and reward employees as inflation erodes profit.
  3. PEPs produce cost savings for employers and employees – leaving more money in accounts and helping American businesses be leaner.

As the name implies, PEPs provide pooling of plan assets and administration, resulting in less work and risk for American companies. The leverage created by pooling allows organizations to provide a compelling 401(k) benefit and, at the same time, take advantage of economies of scale to decrease costs. This leads to more money in 401(k) accounts. Average total plan cost savings for the Aon PEP specifically are more than 30%.

Improving Retirement Outcomes for Employees

The growing size of the Aon PEP generated a year-over-year decrease in individual costs for plan participants that helps to offset the impacts of inflation. On average, employees participating in the Aon PEP saw a 4% decrease in their participant fees in 2024. This compares to an increase in costs due to inflation for all urban consumers (CPI-U) of 3.0% for 2024, yielding a net difference of 7%. In addition, the power of pooling plan assets in the Aon PEP allows to negotiate lower investment fees with some fund fees decreasing up to 50%. These savings are passed directly to plan participants – helping them overcome inflationary pressures and making more of their money work towards pursuing their retirement goals.

Plan participants are also finding value in the tools, resources, and education available through the Aon PEP with 78% engaging with financial wellbeing content in 2024. Individuals who utilize financial wellbeing tools contribute nearly two times more to their retirement savings versus those that do not.

Streamlining Retirement Plan Management Through PEPs

PEPs provide the opportunity for employers to do less work to offer a competitive 401(k) benefit to their workers. On average, participating employers in the Aon PEP indicate that their retirement plan-related workload decreases 50-75% after joining the plan. This is another example of the inflation-fighting ability of the PEP model — helping American businesses and employers be leaner, more productive, and more strategic. PEPs also relieve company executives from the fiduciary duties associated with monitoring and managing 401(k) investment line-ups, which can be especially challenging and taxing during volatile markets.

The PEP solution continues to enhance retirement savings for American workers during these years of inflationary pressure. Learn more about how a PEP could benefit your organization and your people.

30%

Average total plan cost savings are more than 30%

Source: Based on internal Aon PEP data as of December 31, 2024

  • 4.0%

    Average decrease in the per-participant fee of 4.0% in 2024

    Source: Per participant fees for the Aon PEP based on participants with an account balance during 2024

  • 78%

    Participant engagement with financial wellbeing outreach

    Source: Based on internal Aon PEP data as of December 31, 2024

  • 50%

    50-75% Average reduction in retirement plan workload for HR staff

    Source: Participating employer survey results as of October 11, 2024

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Investment advice and consulting services provided by Aon Investments USA Inc. (“Aon Investments”). The information contained herein is given as of the date hereof and does not purport to give information as of any other date. The delivery at any time shall not, under any circumstances, create any implication that there has been a change in the information set forth herein since the date hereof or any obligation to update or provide amendments hereto. This document is not intended to provide, and shall not be relied upon, for accounting, legal or tax advice or investment recommendations. Any accounting, legal or taxation position described in this presentation is a general statement and shall only be used as a guide. It does not constitute accounting, legal, and tax advice and is based on Aon Investments’ understanding of current laws and interpretation. This document is intended for general information purposes only and should not be construed as advice or opinions on any specific facts or circumstances. The comments in this summary are based upon Aon Investments’ preliminary analysis of publicly available information. The content of this document is made available on an ‘as-is’ basis, without warranty of any kind. Aon Investments USA Inc. disclaims any legal liability to any person or organization for loss or damage caused by or resulting from any reliance placed on that content. Aon Investments USA Inc. reserves all rights to the content of this document. No part of this document may be reproduced, stored or transmitted by any means without the express written consent of Aon Investments USA Inc. Aon Investments USA Inc. is a federally registered investment advisor with the U.S. Securities and Exchange Commission. Aon Investments USA Inc. is also registered with the Commodity Futures Trading Commission as a commodity pool operator and commodity trading advisor and is a member of the National Futures Association. The Aon Investments USA Inc. ADV Form Part 2A disclosure statement is available upon written request to: Aon Investments USA Inc. ATTN: Aon Investments USA Inc. Compliance Officer 200 E Randolph ST STE 700 Chicago, IL 60601

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