Staff in the Securities and Exchange Commission’s Divisions of Investment Management and Corporation Finance issued guidance addressing certain questions regarding the application of the federal securities laws to pooled employer plans (PEPs), which help American workers save for retirement.
In 2019, Congress passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act. Through this legislation, Congress created PEPs, which enable multiple small businesses to band together to provide their employees with access to high-quality, low-cost retirement plans.
PEPs allow multiple, unrelated employers to join a single retirement plan, thereby reducing some of the costs, administrative burdens, and potential liability attached to sponsoring a plan on their own. The SEC staff guidance provides the staff’s views on the applicability of the federal securities laws to these plans.
The guidance from the Division of Investment Management states that the SEC staff will not object if PEPs avail themselves of the existing exemptions widely applicable to tax-qualified ERISA retirement plans. The Division of Corporation Finance also published guidance that PEPs may use a Form S-8 registration statement if employers choose to offer employees securities as part of these plans.
“Commission staff has made it easier for Main Street employees to invest their retirement savings on Wall Street,” said SEC Commissioner Mark T. Uyeda. “By providing straightforward guidance on pooled employer plans and related structures, we are helping sponsors and service providers navigate their obligations with confidence. Regulatory clarity strengthens markets, supports innovation, and ultimately expands access to retirement options for workers across the country. The SEC continues its efforts to support small businesses and President Trump’s agenda to strengthen retirement opportunities for American workers.”
The coordinated staff actions addressing the treatment of PEPs under the federal securities laws should assist PEP sponsors, providers and participants as they seek to make use of these pooled investment vehicles, consistent with the SECURE Act and the administration’s broader policy goal of expanding access to retirement savings options for American workers.