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week ending February 7th, 2020 Whether you’re a defined benefit (DB) or defined contribution (DC) plan sponsor, a well-created investment policy statement (IPS) can be your road map for investment selection and monitoring. A starting point in developing an effective IPS is to determine what investment categories you want to include in your investment lineup or investment portfolio. Fred Reish, partner in the employee benefits and executive compensation practice group of Faegre Drinker Biddle, says for DC plans, it is almost inevitable that plan sponsors will want to include target-date funds (TDFs). But there are many variables to consider when selecting which TDF series will be right for your participants. Looking at participant demographics will inform many decisions when it comes to investment selection and asset allocation. DC plan sponsors should also consider what investments or investment help will be right for pre-retirees and retirees. This edition of PLANSPONSOR Weekend offers information to help you with your investment decisions. Editor's Choice Investing Steps for Creating an Effective IPS While not required, a road map for investment selection and monitoring is a best practice, and sources now say the more detailed, the better. Investing Research Shows Positive Effects of TDFs Various beneficial changes to retirement savings portfolios made by investing in TDFs could enhance retirement wealth by as much as 50%, research suggests. Investing The Case for TDFs That Mix Active and Passive Management PIMCO says a mix of the two makes sense, especially assigning the fixed income portion of the portfolio to active management due to outperformance. Investing Consider the More Conservative Investments Pre-Retirees Should Hold With potentially lower future returns and low interest rates, plan sponsors should reexamine plan investments to help participants with retirement income. Investing Don’t Leave Retiring Plan Participants Hanging Many people are confused about how to invest in retirement, so they will need help before and after they do so. Popular Reads 2020 Defined Benefit Administration Survey Ask the Experts Clarification of Loan Repayment Delay Provisions of CARES Act Experts from Groom Law Group and Cammack Retirement Group answer questions concerning retirement plan administration and regulations. Compliance Use of Fidelity Active Management Funds Questioned in Court Multiple lawsuits have been filed recently that question the offering of active management funds to retirement plan participants. Administration Get Beneficiary Designation and Missing Participant Practices in Order The pandemic has highlighted the need for plan sponsors to actively encourage revised beneficiary designations and have missing participant procedures in place. Investing Improving Participant Outcomes With Custom TDFs Off-the-shelf TDFs may not meet the needs of participant demographics, so plan sponsors can build custom TDFs to provide greater diversification and less risk near retirement. Did someone forward you this newsletter? Sign up here to get PLANSPONSOR Weekend directly in your mailbox!

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