Defined Contribution Plans: A Look at the Past, Present & Future

December 19, 2014 | Kweku Obed, CFA, CAIA, Managing Director

The percentage of U.S. workers that are covered by a traditional defined benefit (DB) pension has declined in recent decades while over the same period, defined contribution (DC) plans have become the most commonly used employer-sponsored retirement savings vehicle in the U.S.

As a growing percentage of the U.S. labor force will rely on DC plans as a key source of retirement income, we expect to see the continued evolution of best practices around the design, monitoring, and accessibility of defined contribution plans, including increased direction from regulatory organizations such as the Department of Labor (DOL).

In this paper we will highlight some key themes, namely that along with the growth of DC plans, the Pension Protection Act of 2006 (“PPA”) has been a catalyst for changes to plan design and investment structure. Additionally, the mainstream acceptance of behavioral finance has placed greater emphasis on simplifying the investment lineup and helping DC participants make more effective choices.

While these three factors have driven much needed change in the DC world, plan sponsors and consultants must continue to build on the solid foundation and tailwinds that the growing popularity of DC plans, PPA, and behavioral finance have helped create. In building on this strong foundation, DC plan sponsors should adopt a robust governance and monitoring framework in which the depth and quality of the investment lineup is equally important as the maximization of participant engagement, plan design, and oversight of all vendors responsible for providing third-party services to DC plans.

Download PDF >

Kweku Obed, CFA, CAIA
Managing Director

Get to Know Kweku

Related Content

07.09.2019

2019 Halftime Market Briefing

Live Webinar – Thursday, July 18, 2019 – 1:00-2:00 PM CT

06.14.2019

Bank Loans Position Paper

Bank loans represent a key strategic asset class for most institutional investors’ fixed income portfolios. Some of the critical benefits…

06.06.2019

Sell in May and Go Away?

Global equity markets declined in May on a flurry of geopolitical news. As tensions persist, stocks are grasping to sustain…

06.03.2019

Securing Retirement Through the SECURE Act

On May 23rd, with overwhelming bipartisan support, the Setting Every Community Up for Retirement Enhancement Act (SECURE…

05.08.2019

Municipal or Taxable Bonds for High Net Worth Investors?

Municipal bonds remain attractive and still make sense for high net worth investors on a go-forward basis…

05.08.2019

Basics of Target Retirement Date Funds

Live Webinar – Wednesday, May 22, 2019 – 1:00-1:30 PM CT

More articles

Subscribe to Research Email Alerts

Research Email Alert Subscription

Research alerts keep you updated on our latest research publications. Simply enter your contact information, choose the research alerts you would like to receive and click Subscribe. Alerts will be sent as research is published.

We respect your privacy. We will never share or sell your information.

Thank You

We appreciate your interest in Marquette Associates.

If you have questions or need further information, please contact us directly and we will respond to your inquiry within 24 hours.

Contact Us >