
Designing Successful Target-Date Strategies for Defined Contribution Plans Putting Participants on the Optimal Glide Path
by Schaus, Stacy L.; Gross, Bill-
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Summary
Author Biography
Table of Contents
Foreword | p. xiii |
Introduction | p. xv |
Acknowledgments | p. xxi |
DC Plan Evolution and Design Trends | p. 1 |
DC Plans in the American Retirement System | p. 3 |
Evolution of DB and DC Plans | p. 4 |
Making the Move from a DB Plan to a DC Plan | p. 6 |
How Do We Measure DC, Plan Success? | p. 8 |
What Is a Qualified Default Investment Alternative? | p. 10 |
Is Automatic Enrollment Enough? | p. 15 |
Auto-Escalation: How Much Is Enough? | p. 17 |
How Much Should We Save to Beat Inflation? | p. 17 |
Preparing for Retirement in an Economic Downturn | p. 19 |
What the Future May Hold for DC Plans | p. 21 |
In Closing | p. 22 |
Evolving DC Plan Design | p. 23 |
Investment Structure of Defined Contribution Plans | p. 27 |
Future of DC Plan Investment Design | p. 28 |
Qualified Default Investment Alternatives-Asset-Allocation Strategies | p. 28 |
Core Investment Offerings in DC Plans | p. 30 |
Brokerage or Mutual Fund Window | p. 36 |
Passive Investment Strategies? | p. 39 |
Evolving Structures and Alternative Investment Strategies | p. 40 |
Bringing It All Together: DC Investment Structure and Guarantees | p. 44 |
In Closing | p. 46 |
Target-Date Strategies: Packaged versus Custom | p. 47 |
Why Plan Sponsors Create Custom Target Retirement-Date Strategies | p. 49 |
Intel: Building Is Better than Buying | p. 56 |
Verizon: Well Worth the Effort | p. 61 |
In Closing | p. 64 |
Development of Custom Target-Date Retirement Strategies | p. 65 |
Legal and Fiduciary Considerations | p. 67 |
Common Legal Questions Regarding DC Plans | p. 68 |
Investment Policy Statements and Governance | p. 72 |
Target-Date Strategies on the Hot Seat | p. 74 |
What May Lie Ahead in Legislation of Target Strategies | p. 79 |
In Closing | p. 83 |
Record Keeping and Trust | p. 84 |
Two Basic Approaches to Setting Up Record Keeping | p. 85 |
Custom Target Strategies Lead to New Record-Keeping Approaches | p. 85 |
Pros and Cons of Alternative Operational Approaches | p. 87 |
Questions to Pose to Your Record Keeper | p. 87 |
Key Considerations to Determine Which Approach to Choose | p. 91 |
Establishing and Maintaining Operations | p. 92 |
Conversion of Target Risk to Target Date | p. 92 |
Fee Allocations and Disclosures | p. 92 |
Rebalancing the Target-Date Strategies | p. 96 |
Deluxe Corporation: Seamless Operational Setup and Rollout Communication | p. 96 |
How Record Keepers and Trustees Support Operations | p. 97 |
In Closing | p. 98 |
Communication Challenges and How to Meet Them | p. 100 |
Common Myths Surrounding Custom Target-Strategy Communication | p. 101 |
Communicating the Benefits of Target-Date Strategies | p. 102 |
Communication: Strategies to Keep It Simple | p. 103 |
Communication Tools | p. 105 |
Helping Plan Participants to Visualize Their Postretirement Future | p. 110 |
Communications and the Switch to DC Custom Strategies | p. 115 |
Communication Challenges during an Economic Downturn | p. 118 |
In Closing | p. 120 |
Evaluating Costs m Custom Strategies | p. 121 |
Why Costs Matter | p. 122 |
Have You Calculated and Reduced Total Plan Cost? | p. 122 |
Keeping Fees Reasonable | p. 124 |
Unbundling Can Keep Down Costs | p. 126 |
Custom Strategies and the Value of Unitizing | p. 127 |
Experts Discuss Fee Transparency | p. 128 |
ERISA Section 404(c) and Fee Disclosure | p. 130 |
Costs of Implementing and Running Custom Target Strategies | p. 132 |
In Closing | p. 134 |
Designing and Benchmarking custom Target-Date Strategies | p. 135 |
Glide-Path Design | p. 137 |
An Academic Look at Creating Optimal Asset-Allocation Strategies | p. 139 |
A Practitioner's look at Creating Optimal Asset-Allocation Strategies | p. 141 |
DC Plan Success Requires a New Approach | p. 143 |
Evaluating the Probability of Meeting DC Retirement-Income Goals | p. 144 |
Evaluating Risk-Factor Exposures in Target-Date Glide Paths | p. 156 |
Plan Sponsor Approaches to Custom Target-Date Strategies | p. 158 |
In Closing | p. 165 |
Asset Classes and Alternatives | p. 167 |
Clearing the Decks: Offering a Brokerage Window to Participants | p. 169 |
Typical DC Core Investment Offerings | p. 170 |
Simplify, Simplify, Simplify | p. 173 |
Simplify yet Diversify | p. 174 |
Suggested Core Investment Lineup | p. 176 |
Adding Alternatives to Target-Date Strategies | p. 191 |
In Closing | p. 194 |
Helping Protect DC Assets from Risk | p. 135 |
How Do We Experience Risk? | p. 196 |
2008 Market Impact on DC Participant Accounts | p. 198 |
No Place to Hide | p. 201 |
What Are the Main Types of Risk? | p. 203 |
Helping Protect DC Participant Assets from Risks | p. 220 |
Importance of Tail-Risk Hedging | p. 220 |
In Closing | p. 221 |
Approaches to Benchmarking | p. 223 |
Introduction to Target Date Benchmarking and the Measure of Success | p. 224 |
Common Approaches to Benchmarking Target-Date Strategies | p. 226 |
Benchmarking Managed Accounts | p. 234 |
In Closing | p. 235 |
Looking to the Future | p. 237 |
Financial Education, Advice, and Retirement Planning | p. 239 |
Why Plan Sponsors Provide Education and Advice | p. 241 |
Is Advice Needed When a Plan Has Auto-Enrollment and Target-Date Strategies? | p. 241 |
Education and Advice Offered by Plan Sponsors | p. 242 |
Evolution from Education to Managed Accounts | p. 243 |
Comparison of Managed Accounts and Custom Target-Date Strategies | p. 246 |
Advice beyond Asset Allocation | p. 247 |
Advice beyond Advice Models | p. 248 |
What Is Financial Planning? | p. 249 |
Financial Planning Process | p. 250 |
Financial Planning Fees | p. 251 |
In Closing | p. 254 |
Retirement Income and Guarantees | p. 256 |
Encourage Participants to Stay in the Plan or Go? | p. 260 |
In-Plan Guaranteed Income Solutions | p. 276 |
Plan Sponsors Exploring Guarantees | p. 278 |
Allowing Consolidation of Outside Assets into the Plan | p. 280 |
In Closing | p. 281 |
Conclusion | p. 283 |
Notes | p. 287 |
Index | p. 297 |
Table of Contents provided by Ingram. All Rights Reserved. |
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