Many small and midsize business owners focus daily on cash flow, talent acquisition, and competitive pressures, often leaving retirement benefits as a secondary concern. Yet recent data shows that only 37% of workers feel confident about their retirement readiness, leading to under‑contributions and overly conservative investment choices.
1. Reevaluate Your Record‑Keeper Every Few Years
By the end of 2024, five firms controlled roughly 70% of defined‑contribution assets in the United States. This concentration resulted from years of consolidation and margin pressure, prompting large providers to invest heavily in technology and pricing efficiency. However, more than 60% of plans stay with the same record‑keeper for eight years or longer, well beyond the industry best practice of a comprehensive review every three to five years.
Benchmarking studies consistently show that administrative fees can be reduced through competitive repricing, often accompanied by improved participant tools and education. Sponsors who revisit legacy relationships frequently discover that market evolution has shifted pricing power in their favor.
2. Consider a Pooled Employer Plan (PEP)
For employers lacking the internal resources to meet growing fiduciary and compliance demands, a pooled employer plan offers a practical alternative. PEPs allow unrelated employers to join a single, professionally managed plan while retaining control over core design features such as eligibility, matching formulas, vesting schedules, and benefit levels.
Participating employers report a 50% to 75% reduction in internal time spent on plan administration. Economically, PEPs have lowered per‑participant fees by about 4% on average, thanks to consolidated administration and institutional pricing. Assets in PEPs now exceed $17 billion, covering more than one million employees, and adoption is accelerating among small and mid‑market firms.
3. Use Lower‑Cost Investment Vehicles Like Collective Investment Trusts
Many institutional investment strategies are available only within ERISA‑qualified retirement plans. Historically, smaller plans struggled to access these options, but the growth of collective investment trusts (CITs) is changing that landscape. CITs function similarly to mutual funds but are bank‑maintained vehicles designed exclusively for retirement plans, avoiding many marketing and distribution expenses.
The result is often a meaningfully lower expense ratio. By the end of 2025, CITs had surpassed mutual funds as the dominant vehicle for target‑date strategies. Lower expenses translate directly into higher net compounding for participants, improving long‑term retirement outcomes without increasing investment risk.
Getting Started
Employers interested in strengthening their 401(k) offerings should begin with a benchmarking analysis. Compare your plan’s fees, governance model, vendor relationships, and investment structure against similar plans in today’s market. Modest adjustments—such as switching record‑keepers, joining a PEP, or adding CIT options—can materially improve employee outcomes without adding complexity.
These strategies do not require higher employer contributions or greater investment risk; they rely on disciplined cost management, professional expertise, and the use of lower‑cost, ERISA‑approved investment vehicles. By taking a proactive approach, business owners can turn retirement plans from a compliance checkbox into a strategic asset that supports their workforce’s long‑term financial security.
Original reporting: KRDO (Colorado Springs metro) — read the source article.
