Retirement plans remain a core element of total rewards, critical to attracting and retaining talent. What’s changing is not their importance, but their complexity and the associated risks. The way HR governs and resources 401(k) plans has become a higher stakes decision.

For CHROs and HR leaders, today’s question isn’t whether to offer a competitive 401(k), but how to manage the growing risk, cost and complexity that come with it. Regulations more demanding and scrutiny of fees, data quality and outcomes more intense. Excessive fee and fiduciary lawsuits have driven nearly $2 billion in settlements since 2020,¹ underscoring how quickly governance and pricing can become legal and reputational issues.

The New HR Reality: Strategic, but More Complex

Retirement plans now sit at the intersection of three major pressures:

• Tighter total rewards budgets
  Healthcare and wellbeing costs consume a growing share of spend. Retirement programs bring employer contributions plus investment, recordkeeping, advisory, audit and compliance costs. When every dollar is scrutinized, inefficiencies and uncompetitive fees become strategic issues, not just line items.
• Higher regulatory and fiduciary expectations
  ERISA, evolving DOL/IRS guidance and SECURE 2.0 require tight coordination across HR, payroll, finance and vendors. Payroll errors, late contributions or other oversights and mistakes can threaten plan status, trigger corrections and draw audit attention.
• More complex investment decisions
  Menus now commonly include defaults, target date funds, managed accounts and even private market exposure. That raises the bar for prudent selection and monitoring, fee benchmarking and documentation—often without more time or in-house expertise.

The value of retirement benefits isn’t in question. The challenge is enhancing that value while controlling cost, managing risk and reducing day-to-day strain on lean teams. Isn’t that a continual imperative for nearly all business issues today?

When “Doing It All Internally” Starts to Strain the System

For many organizations, the internal model is under stress. HR and benefits teams are:

• Coordinating recordkeepers, TPAs, advisors and auditors
• Reconciling payroll, deferrals and loan payments
• Managing audits and Form 5500 filings
• Implementing regulatory changes and corrections

All of this sits alongside broader responsibilities in talent and workforce strategy.

The result is familiar: audit and correction fire drills, recurring payroll issues and concern that fees, governance and documentation may not withstand scrutiny. Independent reviews confirm how common these problems are, with one finding ERISA “red flags” in 84% of plans² and another finding errors in about 75% of payroll files.³ For CHROs, the question is whether the current operating model is really the best use of scarce HR, payroll and finance capacity.

Rethinking the Operating Model: The Role of Pooled Employer Plans

Pooled employer plans (PEPs) are a model built for today’s complexity. A pooled arrangement can offer:

• Fiduciary expertise and risk transfer
  Specialist fiduciaries set and maintain a governance framework, monitor investments, benchmark fees and oversee vendors. HR retains control over plan design while shifting much of the risk and technical fiduciary and operational burden.
• Built-in administrative discipline
  Mature pooled arrangements embed payroll and data validation, standardize correction processes and streamline audits, reducing error risk and reactive cleanup work.
• Scale driven economics and experience
  By aggregating assets and participants, large pooled plans can secure institutional level investment and recordkeeping fees and deliver fund lineups and tools that smaller standalone plans may not access.

The Aon Pooled Employer Plan aggregates more than $6 billion in live and committed assets across over 140 participating employers. The program has delivered approximately 33 percent lower participant fees and about 55 percent savings on investment fund fees, on average, compared with typical standalone plans.⁴ Participating organizations also report cutting more than half of the internal time previously spent on 401(k) management—helping sponsors demonstrate prudent fee oversight, reduce operational strain and improve participant value.⁴

A Practical Path Forward for HR Leaders

To determine whether a pooled model is right for your organization, HR leaders can:

• Assess your current model
  How much time do HR, payroll and finance spend on administration, audits, fee reviews and corrections? Where are the recurring pain points?
• Put retirement in total rewards context
  How are rising healthcare and wellbeing costs pressuring your budget? Would simplifying retirement free capacity and budget for people, health and wellbeing initiatives?
• Benchmark against pooled arrangements
  How do your fees, governance, documentation and internal workload compare with leading pooled plans?

The question for CHROs and HR leaders is whether their current 401(k) can truly compete on cost, oversight and outcomes—and whether, after comparing it with a pooled employer plan like the Aon PEP, refining the existing structure or moving to a pooled model will better serve their organization and workforce.

Sources

1. Aon, analysis of public ERISA litigation data, including Bloomberg Law and PLANSPONSOR coverage, 2020–2025.
2. Abernathy Daley 401(k) Consultants, analysis of 764,729 Form 5500 filings (2025).
3. FuturePlan/Ascensus, payroll data quality review (internal analysis, 2025).
4. Aon, “Aon PEP Passes $5 Billion in ‘Live and Committed’ 401(k) Assets,” Plan Sponsor Council of America, August 28, 2025.