The Aon Pooled Employer Plan: An Inflation Fighter

February 24, 2023 4 mins

The Aon Pooled Employer Plan: An Inflation Fighter

While market volatility has decreased the value of 401(k)s, pooled employer plans can produce savings.

Key Takeaways

As inflation takes a bigger chunk out of paychecks, market volatility has decreased the value of 401(k) accounts and other savings.
Despite this double whammy, Aon and its pooled employer plan (PEP) for 401(k) benefits produce cost savings, 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. All of this leads to more money in 401(k) accounts. In fact, average total plan cost savings are in excess of 40% for participants from the 50 organizations that have joined or committed to the Aon PEP.

In addition, a year-over-year decrease in cost for Aon PEP participants is helping offset the impacts of inflation. On average, employees participating in the Aon PEP will see an additional decrease in the per-participant PEP fee of 5.7% in 2023. This compares to an increase in costs due to inflation for all urban consumers (CPI-U) of 6.5% through December 2022. The net difference is over 12%.

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The Aon PEP offers the opportunity for employers to do less work to offer a competitive 401(k) benefit to their people. This is another example of the inflation-fighting ability of PEPs — helping American businesses and employers be leaner, more productive, and more strategic. The Aon PEP also relieves 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.

Aon is pleased to be able to offer this solution to enhance retirement savings for American workers during these challenging economic times. To learn how the Aon PEP could benefit your organization and your people, please visit Aon's PEP product page or contact your Aon consultant.

5.7%

On average, employees participating in the Aon PEP will see an additional decrease in the per-participant PEP fee of 5.7% in 2023.

40%

Average total plan cost savings are in excess of 40%
5.7%

Average additional decrease in the per-participant PEP fee of 5.7% in 2023

Source: Per participant fees for the Aon PEP based on participants in both 2022 and 2023. Fee determinations are based on participation information as of September 30, 2021, and September 30, 2022.

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