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Defined Contribution (DC) Pension Plan Design

An overview of the best white papers on the design of DC pension plans

Savvy Investor Defined Contribution Pensions logoThe accelerating demise of DB plans around the world means that for most young private sector employees, DC pensions are the only type of employer-sponsored retirement plan available.

In many countries however, DC pension schemes suffer from systemic problems, the primary issues being simply that most pension participants don’t save enough, don’t have a clear plan for retirement, and don’t have any independent advice outside of their employer.

If they are to serve their employees well, DC plans must be well designed and well communicated, successfully persuading all employees to take their future financial security seriously, and to make their DC pension plan a priority.

On the Savvy Investor site we have a range of papers that tackle the question of DC plan design and education. See here for our full PDF library of white papers on DC pensions.

Recommended papers on DC pension plan design (PDF)

PIMCO (2015) Aligning the Design: Evaluating and Considering Target Date GlidePaths  

From the perspective of a DC plan sponsor, the selection of a default glide path is paramount; enabling an employee to retire on time and with adequate income. Essentially, the aim is to have the highest possible investment return with low volatility compared to the pension liability.

Schroders (2014) DC pension design: lessons from around the world

This 40-page report from Schroders examines the quickening momentum towards DC plan provision in markets around the world and highlights the crucial aspects of plan design. It analyses the efficacy of local practices, and seeks to set out priorities for the multitude of decisions facing plan sponsors.

Northern Trust (2015) Designing Defined Contribution Pensions - Employees Want More

In this paper by Northern Trust, the authors identify a five-point plan to help employees. They argue that if followed, these steps will help plan sponsors improve their DC retirement plans and create a more secure future for American workers. The report is informed by in-depth interviews with US pensions professionals.

DCIIA (2015) DC Plan Success Factors

This papers sets out best practices for plan sponsors and fiduciaries to follow as they design DC plans with a prime goal of providing adequate retirement incomes for employees.

American Century (2014) Essentials of U.S Target-Date Design and Analysis

This report discusses TDF-related risks, while giving a concise summary of the key considerations for target-date fund design, including issues such as whether manager style should be active or passive.

JP Morgan (2015) Aligning goals, improving outcomes: DC Plan Sponsor Survey

This DC survey from JP Morgan is based on a survey of over 700 plan sponsors, of all sizes, who offer 401(k) or 403(b) plans to US employees.

For country-specific pensions papers (PDF):

Visit our list of white papers on US Pensions

Visit our list of white papers on UK pensions

Visit our list of white papers on Canadian pensions

Visit our list of white papers on Australian superannuation

Visit our list of white papers on European pensions

Visit our list of white papers on Asian pensions

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