Bill Seeks to Help Gig Workers with PEPs
Several U.S. senators recently introduced a package of bills designed to boost retirement plan savings and healthcare coverage for gig workers and other independent contractors. Although this package consists of four separate but coordinated bills that address various aspects of improving benefits, one bill stands out: The Independent Retirement Fairness Act. This bill is sponsored by Senator Bill Cassidy (R-LA), who also chairs the Senate Committee on Health, Education, Labor, and Pensions (HELP Committee). So considering his position and the broad bipartisan support that pension reform normally receives in Congress, prospects for this bill seem reasonably good.
Key Provisions of the Independent Retirement Fairness Act
As with any new law, some specifics may need to be ironed out. But the Independent Retirement Fairness Act contains a number of favorable provisions for certain types of workers.
- Independent workers may be enrolled in a pooled employer plan (PEP) “as if the independent worker were an employee of an employer in the plan” and are considered participants for plan purposes.
- Similarly, a trade association may participate in a PEP “as if the trade organization were an employer and may enroll an independent worker” as a PEP participant.
- Employers may elect to treat independent workers as employees for purposes of making a contribution through a Simplified Employee Pension (SEP) plan.
- The audit requirement for plans with over 100 participants will be relaxed for PEPs—to apply only if such an audit would be required if the participating employer were not in the PEP.
- The IRS and Department of Labor (DOL) are directed “to establish pilot programs to encourage independent workers to save for retirement.”
On a related note, the HELP Committee held a public hearing on July 17, 2025, entitled “Freedom to Work: Unlocking Benefits for Independent Workers.” This hearing was scheduled to address the rise of independent contractors, gig workers, and freelancers and to discuss ways to strengthen their access to workplace benefits such as healthcare and retirement savings.
Independent workers in the U.S. Economy
According to a 2023 study by Upwork, there are 64 million independent workers in America, representing 38% of the U.S. workforce. By any measure, this number is significant. And while many such workers are clearly independent contractors or freelancers, there are also substantial portions of the workforce whose status is less clear. Especially over the past several years, federal rules that determine a worker’s status—as either an employee or as a contractor—have see-sawed depending on which party controls the executive branch. Sometimes it is unclear under existing laws whether a worker should be classified as an “employee” or not. So allowing workers who are not considered employees to receive certain benefits as if they were employees could be a game changer.
Another PEP Development
The DOL has just submitted a request for information (RFI) to the federal Office of Management and Budget. This is a first step toward fulfilling a requirement that the DOL study PEPs and make recommendations to Congress. This RFI will be sent to “a diverse set of stakeholders, including employers and employees . . . and retirement plan service and investment providers, to explore areas where regulatory or other guidance would facilitate establishment and operation of pooled employer plans.” Once the RFI is approved, the information-gathering process can begin. And while there is no specific timeline for the PEP report, the SECURE 2.0 Act requires the DOL to make PEP recommendations to Congress within five years of the Act’s December 2022 enactment date.
PEPs and Pentegra
Pooled employer plans have been singled out by Congress for their unique combination of flexibility, cost savings, and efficiency. By pooling numerous employers into one plan and overseeing administration, qualified providers, such as Pentegra, can increase plan compliance and monitor plan expenses. Most plan sponsors do not want to become retirement plan experts; they want to run their businesses without the burden of plan administration. Fortunately, PEPs may be the solution for many employers who see the importance of providing retirement benefits to their workers, but who don’t necessarily want to toil in the trenches trying to get it right.
Pentegra is optimistic that some meaningful guidance will make PEPs even more attractive to employers and workers. But even if no changes come out of D.C., existing PEP rules may still make a compelling case for plan sponsors who want an experienced administrator to do the heavy lifting. Get in touch with Pentegra’s plan consultants, who can bring you up to speed on PEPs and legislation impacting retirement plans in general.