Mid-to-large market plans increasingly joining small businesses in taking advantage of PEP launched in January

Within the first several months of the Principal Financial Group^® and Lockton Investment Advisors, LLC launch of a new pooled employer plan (PEP), dozens of employers with plans ranging from $10M to more than $300M in assets under management have adopted the plan or are looking to do so. This interest in a PEP from mid-to-large employers indicates the potential of more widespread uptake of these plans in addition to use by small businesses. These adopting businesses have liked the PEP’s ease of use, the ability to outsource administrative and fiduciary work, and institutional investment cost savings.

Known as the (k)Praetorian^TM Retirement Plan, Principal and Lockton’s new PEP provides access to innovative investment management and transfers administrative and fiduciary burdens to specialized industry professionals. The plan seeks to meet the pressing needs of employers looking to strengthen retirement savings outcomes for their employees. Principal^® research shows that only 16% of U.S. businesses feel confident that their employees are saving enough for retirement.¹

“The SECURE Act and PEPs can help boost smaller plans that have less time and financial resources to spend on benefits, but the success of this new offering indicates the need for more efficient and impactful retirement plans for the larger employer market as well,” said Jerry Patterson, senior vice president, Retirement and Income Solutions at Principal. “Tom Clark and Mike Duckett from Lockton shared an early vision for how to approach the PEP market. We chose to collaborate with them to leverage Lockton’s extensive plan and investment insight to create a unique and innovative solution for the mid-to-large market that is already being proven to be of interest for dozens of employers.”

The (k)Praetorian^TM plan is attracting employers across diverse industries ranging from medical and pharmaceutical to technology, manufacturing, and financial services. In addition to (k)Praetorian^TM’s tailored plan design, employers say they are switching to the plan because it removes much of the plan administration and fiduciary stress of ERISA compliance and liability, as well as providing education and services that help employees build a more secure retirement.

More sophisticated retirement options

Lockton’s client-focused consulting services and access to exclusive institutional investment option pricing help make more sophisticated retirement options accessible to mid-market businesses. Participating (k)Praetorian^TM employers benefit from industry leading features including:

• Flexible plan design specific to their unique demographic needs
• Integrated operational capabilities
• Individualized web insight per employer and holistic participant experiences
• Specialized investment access and institutional pricing through key Lockton arrangements

“We founded our administrative outsourcing practice to help clients manage the rapid retirement industry changes brought on by legislative and COVID impacts,” said Mike Duckett, Director of Outsourced Administrative Responsibilities at Lockton. “We’re thrilled to have so quickly delivered these new client solutions, especially in a marketplace that still struggles to understand the new status quo. We remain committed to independent consulting and staying at the innovation forefront.”

Lockton serves as independent 3(38) Investment Fiduciary for the PEP, strategically crafting and monitoring the investment lineup. They also provide financial wellness and plan design consulting. Duckett and Tom Clark, JD, co-founders of Lockton’s Outsourced Administrative Services practice, serve as strategic advisors to (k)Praetorian^TM and will participate in the PEP’s continued evolution.

Principal serves as the pooled plan provider (PPP) that oversees the operation of the (k)Praetorian^TM PEP as well as 3(16) Plan Fiduciary and recordkeeper. The plan also integrates the extensive administrative capabilities of National Benefit Services, LLC (NBS) to carry out plan administration and 3(16) services under the direction of Principal.

Advancing PEP Solutions

Since announcing their entry into the PEP market in late 2020, Principal and Lockton have both advanced PEP product solutions, quickly positioning themselves as leaders in this new segment designed to bring retirement security to more workers.

“Principal has been an integral part in developing the (k)Praetorian^TM PEP. They are extremely perceptive to client needs, which is reflective of the results we’re seeing in such a short timeframe,” said Duckett. “We’re hearing positive input from participating employers about their transition to (k)Praetorian^TM.”

In light of expected plan growth, Principal and Lockton are exploring enhancements to the (k)Praetorian^TM PEP for both plan adopters and participants, including an advisor managed account option.

“The past year has been a stark reminder of the importance of saving for retirement,” said Patterson of Principal. “The need for retirement and income solutions in the U.S. and globally is growing rapidly and will continue to do so in coming years. PEPs are just one of the many ways we are delivering on our commitment to meet both the short- and long-term needs of plan providers, businesses and individuals.”

About Principal Financial Group^®

Principal Financial Group^® (Nasdaq: PFG) is a global financial company with 17,000 employees² passionate about improving the wealth and well-being of people and businesses. In business for more than 140 years, we’re helping more than 34 million customers³ plan, insure, invest, and retire, while working to support the communities where we do business, improve our planet, and build a diverse, inclusive workforce. Principal^® is proud to be recognized as one of the World’s Most Ethical Companies⁴, a member of the Bloomberg Gender Equality Index, and a Top 10 “Best Places to Work in Money Management⁵.” Learn more about Principal and our commitment to sustainability, inclusion, and purpose at principal.com.

About Lockton

Lockton is a global professional services firm with 7,000 Associates who advise clients on protecting their people, property and reputations. Lockton has grown to become the world’s largest privately held, independent insurance broker by helping clients achieve their business objectives. For nine consecutive years, Business Insurance magazine has recognized Lockton as a "Best Place to Work in Insurance." To see the latest insights from Lockton's retirement experts, check our website.

Investment advisory services offered through Lockton Investment Advisors, LLC, a SEC registered investment advisor.

Lockton and NBS are not affiliates of any member of the Principal Financial Group^®

The decision to delegate to and ongoing monitoring of the Pooled Plan Provider (PPP) and 3(38) investment manager is the fiduciary responsibility of the adopting employer.

©2021 Principal Financial Services, Inc. Insurance products issued by Principal National Life Insurance Co (except in NY) and Principal Life Insurance Co. Plan administrative services offered by Principal Life. Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc. Securities offered through Principal Securities, Inc., 888-774-6267 , member SIPC and/or independent broker/-dealers. Referenced companies are members of the Principal Financial Group®, Des Moines, IA 50392.

¹ Principal® Retirement Security Survey, Q1 2021 (PDF).

² As December 31, 2020.

³ As December 31, 2020.

⁴ Ethisphere Institute, 2021.

⁵ Pensions & Investments, 2020.

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