The DC Imperative: Advance Investment Solutions to Strengthen the Retirement Lifeline

Jennifer DeLong, Head of Defined Contribution, AllianceBernstein

The retirement landscape has evolved a lot over the years. Today, there are fewer younger workers to support an aging population, and longer lifespans mean longer retirements. The shift from DB to DC plans is reshaping how people prepare for their golden years. Increasingly, the burden is on individuals to save for retirement. Get it wrong, and the life they envision could be out of reach.

For many workers, the DC plan is a cornerstone for retirement readiness—and they’re looking to their employers for help. The good news? Our decades of research and innovation—inspired and informed by conversations with our clients—have yielded a stronger, more flexible solution set that seeks to address the needs of diverse plans and participants.

Considering the scope of the challenge, we think it’s imperative that plan sponsors act now. In our view, enhancing default options will help the most participants, given the high usage. Improvements can come from better target-date design or guaranteed income solutions—or both. We see custom target-date funds as the default option of choice: The structure is tailored to a plan’s demographics and allows for continued enhancements without uprooting the target-date solution. For example, design improvements such as adding private-market exposures and lifetime income can be done seamlessly. Because custom target-date funds offer that flexibility, we think more plan sponsors will choose them.

For plan sponsors, the question is: What can you do to provide participants with access to the tools they need to realize the comfortable retirement they’ve worked hard to achieve?

Solving for Both: Saving Enough … and Knowing How to Spend It Wisely

Next year marks the 20th anniversary of the Pension Protection Act of 2006 (PPA). That’s the same year AllianceBernstein started working with DC plan sponsors to customize their target-date funds, better meeting the needs of each participant. The PPA was instrumental in the surging popularity of target-date funds, relieving individuals from the burden of complex investment decisions.

Over the years, we’ve continued refining the asset mix in target-date glide paths. Private assets, which we’ve been integrating for clients for more than a decade, are one example. Public markets don’t offer as many options for diversification today, so many investors are turning to private markets. By incorporating investments in loans, equity and other assets that are privately financed, long-term investors seek to enhance their portfolios’ diversification and risk-adjusted returns.

For decades, private assets have been used in DB plans to help them achieve sufficient returns to make employee-pension payments. Today, a growing number of DC plan sponsors, target-date providers and consultants are incorporating private assets in professionally managed target-date funds and other multi-asset solutions, broadening the investment opportunity set.

Many participants also struggle with the income side of retirement planning, unsure how much they can safely withdraw in retirement without overspending—or underspending, which risks sacrificing their quality of life. Only 37% of participants in our 2025 Inside the Minds of Plan Participants survey were very confident or confident that they’ll live a financially comfortable retirement. And 73% said they would likely use an option that turns savings into guaranteed monthly income if their employer offered one. With the innovative advances in solutions available now, plan sponsors have an opportunity to give participants what they want—and maybe what they need most—to achieve a secure retirement.

When we started offering the Lifetime Income Strategy (LIS) to DC plans in 2012, our key objective was to give participants a holistic solution that delivers a secure income stream they can’t outlive. The flexible guaranteed income option in LIS is built into a personalized target-date portfolio that seeks to address both retirement saving and spending needs. Today, the market has many lifetime income solutions, but, though their adoption is growing, they aren’t yet nearly as common in DC plans as target-date funds. We think that will—and must—change.

Regulatory Clarity Validates Lifetime Income Design

Clear regulatory guidance helps foster innovation in DC plans, including with lifetime income solutions. Plan sponsors have gained a much sharper fiduciary picture over the past few years. Notably, the SECURE Act of 2019 included a safe-harbor provision for guaranteed income solutions in DC plans, but some plan sponsors are still looking for more concrete guidance from Washington to feel comfortable implementing these solutions.

From the outset, we designed LIS to comply with qualified default investment alternative (QDIA) regulations, enabling it to be a true default option for DC plans. In September 2025, the U.S. Department of Labor’s advisory opinion 2025-04A confirmed LIS’s status as a QDIA under ERISA because it meets a key requirement—liquidity. Participants have the freedom to access and control their savings without any restrictions.

Collectively, this regulatory clarity should go a long way toward allaying plan sponsors’ concerns. It’s also good news for the retirement industry because it fosters continued innovation and—ultimately—more choice for DC plan sponsors. With a firmer fiduciary footing, plan sponsors are empowered to focus on solving for better retirement outcomes for participants.

Striving for Flexibility—Not ‘One Size Fits All’

Retirement income is personal, and there’s no such thing as an average plan or participant, so lifetime income solutions must account for diverse needs with a personalized approach. Some plan sponsors may be reluctant to select a lifetime income solution, feeling that one solution may not fit all participants. LIS tackles that by allowing customization at the plan level and the participant level, including levers to turn off the income feature entirely for a participant who may not need it. Other levers offer additional optionality to adjust for unique participant needs.

Implementation flexibility is critical, too. For some plan sponsors, choosing a target-date solution with a guaranteed income component from a single provider may offer a streamlined experience. But other plans may not want to replace their existing target-date solution in order to deliver the income benefits to participants. That may be a bridge too far.

As we’ve continued enhancing our lifetime income platform over the past decade-plus, we’ve been keenly aware of wide-ranging preferences, and stand-alone guaranteed income solutions now allow plans to add the income benefit while keeping their existing target-date fund. Our Secure Income Portfolio (SIP), available in a collective investment trust, comes in both variable-annuity and fixed-annuity versions, and provides more implementation choice for plans.

For more than two decades, we’ve been developing more advanced and more flexible retirement solutions. Plan sponsors, with their broad responsibility, are empowered to take advantage of the flexibility of custom target-date funds to leverage the benefits of lifetime income and exposure to private markets, upgrading their DC plans for the future. Working together, we can better equip participants to enjoy the retirement they’ve always imagined.

Let’s not allow inertia to stand in the way of that goal.

The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AllianceBernstein portfolio management teams. Investing in the Lifetime Income Strategy only guarantees the longevity of income in retirement, not that the income will be sufficient. Guarantees are based on the financial strength and claims-paying ability of each insurance company.

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