Products September 29, 2023

Ascensus Hits $1B AUA in PEPs, Showing Continued Adoption

The firm cites almost 650 employers in their pooled employer plans; meanwhile, Ameritas is launching a 403(b)-specific offering.

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Ascensus, the third largest retirement plan provider for plans with less than $10 million in assets, has more than $1 billion in assets under administration in its 30 pooled employer plan offerings, the firm announced Wednesday.

The assets come from almost 650 plan sponsors adopting the option as their retirement plan, and they average almost $2 million in assets per company, according to Ascensus.

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In some ways, PEP adoption has been gathering steam: Ascensus joins recordkeeper Aon PLC in reaching the threshold of more than $1 billion in assets, and Paychex Inc. reported a doubling of plan sponsors in its PEP over the past year to 25,000, though it declined to give assets under administration.

Yet the growth of listed PEPs has actually slowed in 2023, according to recent analysis by Robb Smith, president of RS Fiduciary Solutions, PEP-HUB and PEP-RFP. But plan sponsor use and asset growth have been burgeoning for some, as the much-discussed plan option continues to mature.

“We have seen a significant uptick in audited plans coming into our PEPs over the past 18 months,” Mindy O’Connor, head of retirement business development at Ascensus, said via email.

Adviser Partners

Ascensus’s PEP is offered to plan sponsors by partner advisories that include Creative Planning, UBS, Wealth Enhancement Group and others, according to the announcement.

“While Ascensus provides marketing and distribution support to our PEP partners, we closely collaborate to help millions save for a better future and take a synergistic approach in promoting growth of PEPs in the market,” O’Conner said.

PEPs, introduced with the Setting Every Community Up for Retirement Enhancement Act of 2019, are designed to take on the fiduciary and administrative burden for plan sponsors, as well as reducing cost, by leveraging a collective pool run by a pooled plan provider. Newport, owned by Ascensus, was one of the first PPPs to market in 2021.

“We’re delighted to achieve this milestone in our PEP partnerships, confirming our focus on growing this important offering,” Nick Good, Ascensus’s recently named president, said in a statement.

Newport acts as the PPP; 402(a) named fiduciary; 3(16) administrative fiduciary; trustee and custodian; recordkeeper and administrator; and participant servicer. Ascensus also offers 3(38) services and integration of other plan benefits, such as nonqualified savings programs. 

A PEP for 403(b)s

In a separate announcement Thursday, Ameritas retirement plans brought to market a pooled employer plan for 403(b) providers, giving what it called “the underserved nonprofit retirement plan market an option that is usually reserved for large companies.” The 403(b) PEP will offer nonprofits fiduciary oversight, compliance, administration, reporting and investment strategies, according to the company.

Ameritas will serve as the recordkeeper, LeafHouse as the 3(38) investment fiduciary and FiduciaryxChange as the PPP, according to the announcement.

“We can do the heavy lifting for nonprofits, giving a retirement plan option while they do what they do best,” Jim Kais, Ameritas executive vice president for retirement plans, said in a statement.

The firm brought a 401(k) PEP to market in June. In its announcement, the firm stressed the PEP as an option for both specialist 401(k) advisers and financial professionals to offer it to clients.

“What’s great about the new pooled employer plan from Ameritas is that both specialist advisors and generalist financial professionals can grow their practice while streamlining administration,” Scott Holechek, Ameritas institutional sales leader and pooled employer plan thought leader, said in a statement at the time. “With our flexible platform and managed account options, financial professionals can satisfy varying investment appetites and offer personalized plans.”

Compliance September 28, 2023

Inflation Data Will Be Unavailable for 2024 Social Security COLA With Shutdown

The Social Security COLA would not be updated on the scheduled timeline of October 12 during a government shutdown.

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Absent legislation to fund the federal government, all non-essential staff compensated from discretionary funding will be furloughed. This includes the staffing needed to produce inflation data necessary to calculate the 2024 Social Security cost-of-living adjustment and other economic indicators key for investors and the Federal Reserve.

The Senate approved a measure on Tuesday by a vote of 77 to 19 to begin debate on a continuing resolution that would keep the government funded at current levels through November 17. If the Senate and House of Representatives cannot agree on a continuing resolution, the government will shut down on Sunday, October 1, the start of the government’s next fiscal year.

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According to the Department of Labor’s shutdown contingency plan, finalized Wednesday, the Bureau of Labor Statistics would furlough all employees.

There would therefore be nobody available to process and publish September employment and inflation data, due to be published on October 6 and October 12, respectively.

In the absence of September inflation data, the Social Security Administration would lack the data necessary to update the COLA for 2024, since the cost-of-living adjustment relies on inflation data from the third quarter, which includes September.

According to a DOL spokesperson, “In the event of a federal government shutdown, the Bureau of Labor Statistics will suspend data collection, processing and dissemination. Once funding is restored, BLS will resume normal operations and notify the public of any changes to the news release schedule on the BLS release calendar.”

The calculation of the COLA would be postponed until the BLS could resume its normal operations. A continuing resolution would permit the BLS to continue operating, but negotiations between the parties and chambers have not produced a timeline for final floor votes.

Inflation and employment data are also key metrics for the Federal Reserve’s monetary policy. Other agencies, such as the Census Bureau and the Bureau of Economic Analysis, both organs of the Department of Commerce, would also be shuttered.

The Employee Benefit Security Administration would furlough 743 of its 908 employees. The 165 who would remain include essential employees not subject to furlough and those employed using other funding.

EBSA would only be empowered to bring enforcement actions if missing a statute of limitations is at stake or if human life is at stake, such as denial of medical benefits in life-threatening situations, according to the DOL’s contingency plan. EBSA can also continue to administer the Mental Health Parity and Addiction Equity Act and the No Surprises Act, both funded separately.

The Pension Benefit Guaranty Corporation would be unaffected by a government shutdown, including all customer service and support services. The PBGC is funded primarily through insurance premiums and therefore does not rely on the annual appropriations process.

SEC Chairman Gary Gensler said on Wednesday that the Securities and Exchange Commission would be unable to process new IPOs or take new enforcement actions if a federal shutdown happens.

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