Voya Will Recordkeep Aon’s New Pooled Employer Plan

The pooled employer plan (PEP) will utilize Aon Investments USA Inc., Aon’s investment solutions group.

Aon and Voya Financial are teaming up to launch a pooled employer plan (PEP) of the type recently authorized by the Setting Every Community Up for Retirement Enhancement (SECURE) Act.

Aon will operate the PEP, while Voya Financial will serve as the recordkeeper for the new plan, which will be available January 1, 2021.

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Aon’s leadership says the PEP will relieve employers of many fiduciary duties they have today. Due to the economies of scale, it also has the potential to lower fees for plan participants and provide access to state-of-the-art features that may be difficult for individual employers and fiduciary committees to both assess and access independently, Aon says.

The firm notes that the SECURE Act, which passed into law in December, was designed to encourage broader 401(k) plan participation and greater retirement savings. With the law’s passing, the firm says, employers will no longer need to sponsor their own individual 401(k) plan and absorb the risks and workload associated with that role.

The PEP will utilize Aon Investments USA Inc., Aon’s investment solutions group.

“We are pleased to have Voya as a partner in this initiative to provide the very best in retirement services to PEP members starting in 2021,” says Rick Jones, a senior partner at Aon.  

“We believe PEPs will transform the retirement landscape, similar to how 401(k) plans transformed the pension landscape 40 years ago,” adds Paul Rangecroft, North America retirement practice leader for Aon. “We are thrilled to enter this important market and are pleased to provide this plan as a service to employers as they look to increase efficiency, reduce risks and most importantly—create better retirement outcomes for participants.”

More information about the pending launch of the PEP is available on Aon’s website.

Custodia Financial Introduces Two Additional 401(k) Loan ‘Insurance’ Options

One option provides a ‘bridge’ while the participant secures new employment; the other provides the bridge followed by full repayment if the participant remains unemployed.

Custodia Financial is enhancing its Retirement Loan Eraser (RLE) program with two new, lower-cost coverage levels to meet the increased demand for a “safety net” protecting participants from 401(k) loan defaults, and to provide plan sponsors with more choice and flexibility.

The new options expand on Custodia Financial’s original Full Repayment option that repays a 401(k) borrower’s entire outstanding loan principal if he or she is laid off, becomes disabled or dies. Going forward, depending on the needs of an organization’s workforce, plan sponsors can choose this baseline coverage level or one of two new options:

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Continuance: Six months of loan repayments following involuntary separation, providing a “bridge” while the borrower secures new employment; or

Continuance + Full Repayment: Six months of loan payments followed by full repayment if the participant remains unemployed.

Six months of loan payments provide a separated borrower with up to 12 months to get on their feet financially, as most plans offer “cure periods,” or grace periods, that extend until the last day of a calendar quarter following the calendar quarter when a missed payment was due.

While specific pricing varies by industry, the Continuance option is less than 40% of the cost the Full Repayment option, and the Continuance + Full Repayment option is roughly 80% of the cost of the Full Repayment option.

“With new legislation under the CARES [Coronavirus Aid, Relief and Economic Security] Act providing expanded access to retirement savings through 401(k) loans, 401(k) borrowers have never been more in need of a safety net to protect them from defaults caused by job loss,” says Tod A. Ruble, CEO of Custodia Financial. “Plan sponsors were already concerned about loan leakage, but the global pandemic and CARES Act have now put an unprecedented focus on this issue. We designed these new coverage levels to give participants the protection that the research tells us they’re asking for, while also giving plan sponsors the flexibility that they want for implementation.” 

To learn more about RLE, visit Custodia Financial’s website at www.loaneraser.com.

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