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week ending March 6th, 2020
The proper allocation of retirement savings assets could boost returns over a person's career by as much as 34%, Sibson Consulting maintains. Educating participants about how to allocate their assets, while a good idea, can only go so far. Target-date funds (TDFs) are popular in retirement plans because they are believed to solve the problem of participants not being properly diversified in their investments and not allocating assets to the right investments for their age. However, differences in the underlying funds used in TDFs and differences in the movement of the glidepath can vary outcomes. These are factors defined contribution (DC) plan sponsors should evaluate when selecting TDFs. Still there are participants who do not invest in TDFs and select investments on their own. At least one report suggests target-risk funds could help those participants with proper allocations for their retirement savings. In this edition of PLANSPONSOR Weekend, you’ll find articles to help you make sure DC plan participants are investing properly.
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
Dynamically Managed TDFs Paired With Higher Deferrals Equals Superior Results
GMO looked at the performance of various TDF factors over a 40-year period to help guide TDF selection.
Investing
Serving Up Target-Risk Strategies for ‘Forgotten Participants’
The main reason target-risk gave way to target-date is not that target-risk strategies are inherently inferior; instead, target-date funds have benefited from the added perceived simplicity.
Investing
How to Include Private Equity in DC Plans
Serge Boccassini, with Northern Trust Asset Servicing, explains how his firm has been doing so for 10 years.
Opinions
Now Is the Time: The Retirement Tier
Peg Knox, Defined Contribution Institutional Investment Association (DCIIA) discusses the “retirement tier,” which allows a DC plan sponsor to broaden the plan’s goal from accumulation to decumulation.
Popular Reads
Compliance
Lawsuit Says Plan Fiduciaries Should Have Chosen Less Expensive CITs
Though the majority of investment options for Estee Lauder’s 401(k) are CITs, the lawsuit argues the TDFs are more expensive private label CITs.
Compliance
DOL ESG Proposal Throws a Cloud Over Prior Guidance
The proposed regulation seems to create stricter limits for ESG investing in retirement plans, but experts say it is not all doom and gloom for plan sponsors and participants who want these investments.
Administration
Another Risk for Retirement Savings: Divorce
Divorced women are especially vulnerable, but targeted messages not just focused on retirement can help.
Opinions
COVID-19 Compliance Corner: IRS Expands CRD Eligibility and Clarifies Loan Rules
Each week, Carol Buckmann, with Cohen & Buckmann P.C., will explain legislative provisions or official guidance related to the COVID-19 pandemic that affect retirement and health plan sponsors.
Compliance
Heroes Act Now In the Hands of a Skeptical Senate
The Heroes Act, passed by a narrow majority in the House, includes union pension partition relief and a waiver for the reinvestment of 2019 and 2020 RMDs.
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