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week ending January 3rd, 2020
For defined contribution (DC) plans, the proper asset allocation is important for retirement savings outcomes. Since a large number of DC plan participants are invested in target-date funds (TDFs), that’s one reason TDF providers are considering different types of investments in the underlying portfolios. For DC plan participants who choose investments on their own, the presentation of the investment lineup can have an effect on whether they implement the right portfolio. The challenge of lower assumed returns and the low interest rate environment is also leading defined benefit (DB) plan sponsors to consider diversifying from the traditional liability-driven investing (LDI) portfolio. In this edition of PLANSPONSOR Weekend, we offer insights on optimal asset allocations.
Editor's Choice
Administration
Proper Asset Allocation Often Overlooked, Sibson Says
The right allocation could boost returns over a person's career by as much as 34%, the consulting firm says.
Investing
Updating TDFs to Provide Better Retirement Income
Three ideas for a qualified default investment alternative (QDIA) design that will better serve participants ready to retire.
Investing
Private Equity Could Boost DC Plan Participant Returns
Research finds including private equity in balanced and target-date funds offers return and diversification benefits.
Data and Research
Researchers Find Bias When Retirement Funds Listed Alphabetically
Retirement plan participants tend to select funds placed in the first positions on a list, so rather than ordering the investment menu alphabetically, researchers suggest placing lower-cost or lower volatility funds near the top to help participants.
Investing
What DB Plans Can Learn From Insurance Companies
Insurance companies take on pension risk, so why wouldn’t DB plan sponsors take lessons from insurer’s investment strategies?
Popular Reads
Research
2021 Recordkeeping Survey
Benefits
Defined Benefit vs. Defined Contribution: Understanding the Costs of Each
There are instances where a DB plan is the more cost-effective option, but experts say the trend of lower DC plan fees could be a game-changer.
Investing
Considering the Arguments for and Against Actively Managed Funds in DC Plans
The debate continues following a recent publication from the CFA Institute Research Foundation which asks, ‘Is active management worth it?’
Data and Research
Not Having a Retirement Drawdown Strategy Can Affect Retirement Security
A survey finds a majority of retirees are using RMDs for ‘guidance’ about how to spend down their assets, but experts say this doesn’t support spending trends in retirement and doesn’t make the best use of their savings.
Opinions
Behavioral Science-Backed Strategies for Financial Wellness Engagement
Beth Brockland, with Financial Health Network, shares three ways to help employees best use their financial wellness benefits.
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