New MetLife Study: Majority of Plan Sponsors Concerned about the Impact of Market Volatility on Near-Retirees and Retirees
“Stable Value has a nearly 50-year history as a capital preservation option in DC plans and provides protection against market volatility in uncertain environments,” says Tom Schuster, senior vice president and head of Stable Value and Investment Products with MetLife. “This is essential for those participants near or at retirement looking for earnings stability and liquidity, along with a guarantee of principal and interest.”
Stable Value: A DC Plan Mainstay
Stable Value remains a popular capital preservation option among plans sponsors, with
Eighty-four percent of plan sponsors say stable value was recommended by their DC plan’s investment or financial advisor. Eight in 10 advisors (
“Plan sponsors and advisors recognize and appreciate stable value’s long-term historical performance across all market cycles,” says Schuster. “Because of this compelling track record, stable value remains a popular choice and its outlook is strong.”
According to the Study, a majority of plan sponsors and advisors (
Stable Value and Target Date Funds
As target date funds (TDFs) remain popular within DC plans, a critical consideration is whether participant savings in these funds are adequately protected from market volatility. The Study found that more than a third of plan sponsors,
“The good news is that there are new solutions available in the market that apply the volatility smoothing principles of stable value to TDFs,” says Warren Howe, national director, Stable Value Markets. “These solutions allow plan sponsors to optimize the risk/return profile of their TDFs by either lowering volatility while maintaining returns or enhancing returns while maintaining volatility.”
When presented with an example of the first approach—the TDF provider delivers comparable returns, net of fees, while reducing volatility by approximately
“Plan sponsors can apply these strategies to custom TDFs to reduce the fund’s volatility, particularly for participants who are near or in retirement,” says Howe. “By doing so, they can create better retirement outcomes.”
About the Study
MetLife commissioned Greenwald Research to conduct surveys of plan sponsors and advisors between February 26 and March 21, 2024. A total of 238 interviews were completed among plan sponsors who offer a 401(k), 457 or 403(b) plan. Assets under management for plans included in the study ranged from under
About MetLife
MetLife, Inc. (NYSE: MET), through its subsidiaries and affiliates (“MetLife”), is one of the world’s leading financial services companies, providing insurance, annuities, employee benefits and asset management to help individual and institutional customers build a more confident future. Founded in 1868, MetLife has operations in more than 40 markets globally and holds leading positions in
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MetLife Contact:
Judi Mahaney
jmahaney@metlife.com
646-238-4655
Source: MetLife, Inc.