New PEP Made Available by Ascensus, American Funds

Ascensus and American Funds, which is owned by Capital Group, have brought their pooled employer plan announced last year to market.

The multi-fund Ascensus | American Funds Pooled Employer Plan is available to plan sponsors and advisers, featuring an open architecture plan menu designed by investment advisory Wilshire that can include funds from American Funds, BlackRock Inc., T. Rowe Price and Principal Financial Group, among others, according to the Wednesday announcement.

The PEP is the first to offer American Funds Target Date Plus, which provides “personalized allocation advice” that meets savers’ needs and objectives “more closely than a traditional TDF allocation based on age,” according to the firms. The savers’ inputs are provided by the recordkeeper, and their portfolio is then managed by Morningstar Investment Management LLC’s personalized glide path.

Ascensus has been an active player in the PEP market since the savings vehicles was established with the Setting Every Community Up for Retirement Enhancement Act of 2019 with the goal of providing lower-cost pooled plans that manage the fiduciary risk for adopting employers. Dresher, Pennsylvania-based Ascensus has $1.2 billion in PEP assets under administration, representing about 28,000 savers, according to the firm.

Another PEP provider, Aon, announced AUA of $2 billion in PEPs in November 2023, with 70 participating employers and 50,000 employees.

American Funds, meanwhile, is one of the country’s largest TDF providers by assets, seeing the most inflows among the largest 10 providers in 2023, according to the latest data from Simfund, which, like PLANADVISER, is owned by ISS STOXX. The Los Angeles-based firm has the third most overall assets in TDF funds, behind the Vanguard Group and Fidelity Investments, according to Simfund.

Through their collaboration, both Ascensus and American Funds will offer the PEP to employers and advisers through their distribution networks, according to the announcement. The firms tout the PEP as being a “streamlined solution” with efficient use by advisers and plan design flexibility for the employers.

The PEP offers 3(16) fiduciary services to manage fiduciary exposure and assist with plan administration. Financial Finesse is providing a financial wellness offering to participants.

“We’re thrilled to expand our alliance by launching the Ascensus I American Funds Pooled Employer Plan, inclusive of Target Date Plus, and support American Funds entering this growing market,” Jason Crane, Ascensus’ head of core retirement, said in a statement.

Ascensus has more than $723 billion in AUA, with brands including retirement services and consulting firm Newport and third-party administrator FuturePlan by Ascensus.

Capital Group managed more than $2.5 trillion in equity and fixed-income assets.