- Retirement Research Center
|Plan Design Matters|
Welcome to DCIIA's online resource library for DCIIA and member thought leadership. If you have resources to contribute in this topic area contact us at firstname.lastname@example.org.
DCIIA posts links to member content as a service to our members, plan sponsors, and the broader retirement industry. Some sites may require registration. Posting these links does not imply endorsement and we are not responsible for non-DCIIA content. Please advise us of any broken links or other updates.
Design Matters: Plan Distribution Options
DCIIA believes that one of the primary roles of a DC plan should be to create adequate retirement income for the plan’s participants. This paper covers topics including:
DCIIA has been working on research geared to understanding 401(k) plan contributions to the retirement readiness of American workers since 2010. This paper draws on EBRI’s Retirement Security Projection Model® and explores the current state of the impact of 401(k) plans and other retirement savings plans on overall retirement preparedness in a post-Pension Protection Act (PPA) DC environment.
DCIIA’s Retirement Research Board embarked on a series of initiatives to identify ways to create consensus definitions for varying auto features used within DC plans. The outcome of these projects is this series of auto feature definitions.
Automatic Plan Features in Defined Contribution Plans:
This paper seeks to offer a new perspective to plan sponsors who desire to implement or enhance automatic plan features in a defined contribution plan. Specifically, this paper highlights several potential benefits to the employer and profiles plan sponsors who have experienced these benefits. Additionally, DCIIA provides a roadmap for implementation that suggests strategies a plan sponsor may employ to implement automatic plan features over a multi-year period.
Retirement Income Solutions: A Guide for Plan Sponsors
With this paper, DCIIA describes many of the tools and withdrawal strategies (both guaranteed and non-guaranteed) that support plan participants’ income needs as they move toward and live in retirement.
DCIIA has developed this best practices framework to outline actions that plan sponsors and fiduciaries can take to build plans that have the greatest potential to help participants achieve retirement readiness.
Implementing Automatic Features in DC Plans
This resource is the third in a series on best practices in implementing automatic features in DC plans and seeks questions that plan sponsors and their advisors may have when putting auto features into practice.
This second-in-a-series paper describes how to implement auto features in DC plans in more robust ways to help achieve better outcomes for plan participants.
In this paper, DCIIA examines what is meant by institutionalization, how plan sponsors might go about adopting institutional strategies in their DC plans, and possible benefits of doing so as well as potential barriers to overcome.
DCIIA examines the impact of leakage factors on workers’ retirement income adequacy. We examine how loans, hardship withdrawals, distributions and cash outs impact potential outcomes.
This Research Report expands upon earlier work by EBRI to provide the first results of a new simulation model that estimates the impact of changing 401(k) plan design variables and assumptions on retirement income adequacy.
DCIIA shows strong evidence that by adjusting the implementation of automatic features and influencing certain employee actions, plan sponsors can materially improve retirement outcomes for all employees. The paper uses simulation results from the EBRI Retirement Security Projection Model®.
Defined Contribution Consulting Study
In its 13th year, the PIMCO Defined Contribution Consulting Study seeks to help consultants, advisors and plan sponsors understand the breadth of views and consulting services available within the defined contribution (DC) marketplace.
This handbook by Russell Investments is designed to help you better understand today’s DC market and prevailing best practices as you build a plan to help meet participants’ retirement income needs within the context of meeting your fiduciary obligations.
In this report, Willis Towers Watson and Angela M. Antonelli, Research Professor and Executive Director, Georgetown University Center for Retirement Initiatives, provide an analysis of how different solutions address participant needs.
Open MEPs — What’s All the Fuss About?
In this blog post, Mercer notes: “Open MEPS could lower costs, lead to better participant outcomes, streamline administrative duties, limit fiduciary responsibilities — and so much more.
Open MEPs: A Promising Way to Narrow the Coverage Gap
Great-West Financial notes: "As discussions continue about expanding access to workplace retirement plans, it’s important to understand the dynamics driving both the coverage gap and small businesses’ decision-making when it comes to retirement plans. Our research shows that small business owners would be interested in joining an open MEP. This paper explores why."
Vanguard invites you to help your participants down Drawdown Mountain by making sure your plan is retiree-friendly.
WillisTowersWatson notes that many sponsors evaluate their employees’ progress by relying on snapshots of plan-wide aggregate data. This offers little insight to help understand and improve their workers’ retirement readiness, or to measure sponsors’ return on the considerable capital they devote to their plans. Sponsors can strengthen their plan governance and improve their plans’ return on investment by using detailed analytics that evaluate specific segments of their employee population based on age, job category, tenure and benefit structure. The right analytics highlight those employees and groups most at risk, and allow sponsors to determine which participant tools and strategies best prepare employees for retirement.
T. Rowe Price studied the impact of demographics (the interaction between salary and expected mortality) and risk preference on potential optimized withdrawal strategies in retirement in order to demonstrate why investors’ behavioral risk preferences should play a significant role in retirement income strategy design.
In this paper, Callan's Tom Shingler and James Veneruso discuss our research on the “distribution phase” of DC plans; that is, the period in which participants are drawing down assets. Plan sponsors should evaluate the breadth of choices they wish to offer retirees to meet their needs, as well as the level of fees and complexity. Once operational considerations have been addressed, plans must focus on the fund lineup and the overall communication efforts, which differ from those needed for the “accumulation phase” when participants are building up their wealth for retirement.
This Vanguard research paper discusses the implications of recent retirement distribution decisions for target-date funds and retirement income.
A new model from Vanguard along with Mercer Health and Benefits offers key guidance on planning for retiree health care costs.
Plan Design Has Made Us Better Investors
Vanguard blogs that sophisticated plan design has helped improve retirement readiness
A Vanguard research paper examines how default decisions in defined contribution plans affect retirement savings.
Should You Reenroll Your Plan Into a QDIA?
Vanguard’s Shelly Preston outlines implementation considerations for reenrollment and illustrates the effect reenrollment may have on retirement readiness.
Two Cheers for Plan Design
Vanguard on plan sponsors, courageous plan design and helping participants increase retirement savings rates.
PGIM notes in this white paper, “Growing reliance as a primary retirement savings vehicle, default-driven behavior, and increasing fiduciary scrutiny continue to characterize the defined contribution (DC) environment. Given these trends, we have identified five key areas plan sponsors and their advisors should focus on to achieve the objectives of a DC plan in helping participants meet their retirement liabilities and manage key risks. Here, we address both what we believe has been answered and the questions that remain to be solved among plan design, public policy, investments, default options, and post-retirement.”
In this white paper, Ascensus notes, “Millions of new workers will have access to workplace savings as a result of emerging policies and business practices. Advisors will play a critical role in helping small business to navigate this evolving ecosystem of products, technologies, and relationships, helping to determine which retirement plan options best serve their clients.”
Capital Group notes that plan sponsors can set up better decision-making from participants by simplifying their investment options. Fewer and easier-to-understand menu choices can encourage more appropriate selections, leading to better potential outcomes.
The 401(k) Plan Turns 40: Six Lessons from 1978
In 1978, a section of the Internal Revenue Code was enacted into law that made 401(k) plans possible. Callan notes that over the past four decades, 401(k) plans have become commonplace: more than 640,000 DC plans exist, accounting for $5.1 trillion in assets. For the most part, plan sponsors have taken advantage of DC plan improvements that have transpired since 1978. Yet some aspects of DC plan management may still be stuck in the era of bell bottom pants and earth shoes. In this article we take a walk down memory lane while observing lessons sponsors can apply to their DC plans in 2018. Author: Lori Lucas, CFA
This white paper notes, “At Franklin Templeton, we believe that one of the next areas of focus and innovation in the DC industry should be in the development of a ‘Retirement Tier’ in DC plans. While there is no ‘silver bullet’ retirement income solution that will meet the needs of every participant, a great deal of options exist that can help households fit the DC plan into the context of their complex and unique retirement plan.”
This piece from Marquette Associates details best practices for fiduciaries to implement with respect to plan design in order to encourage better retirement outcomes. Plan features including QDIA, auto-enrollment, auto-escalation, and a streamlined investment lineup paired with good participant education and a strong governing Investment Policy Statement are discussed.
This blog offers thoughts from Vanguard’s head of Strategic Retirement Consulting on establishing a cadence for planwide events.
This publication from Invesco is focused on the latest DC thinking across four essential plan components — plan design, investment strategy, plan governance and participant engagement — with concrete ways to turn ideas into action.