Most plan sponsors taking steps to solve retirement income challenge: PGIM survey
Access to alternatives may be on the rise; plan sponsors mixed on ESG
Mikaylee O’Connor, Principal, Senior Defined Contribution Strategist, PGIM DC Solutions (Photo: Business Wire)
“As DC plans continue to evolve from savings vehicles to true retirement plans, retirement income will become a more pertinent focus area for plan sponsors, requiring more research and action,” said Mikaylee O’Connor, senior defined contribution strategist, PGIM DC Solutions. “Plan sponsors don’t need to face this journey alone — they should continue to leverage experts and lean on strategic partners for guidance.”
Additional findings include:
-
Plan sponsors are in various stages of their retirement income journey: A plurality (
34% ) is studying retirement income approaches, and15% are in the process of evaluating or implementing a solution. However,27% of plan sponsors admit retirement income is not currently a topic of interest or need. -
Stable value funds are the most common solution: When it comes to products and solutions designed to support retirement income, plan sponsors cite stable value (
70% ) and the income fund in a target-date series (46% ) as the most offered vehicles. - Annuity consideration is on the rise: Products most likely to be considered for future inclusion in 401(k) plans include annuities, long-duration fixed income funds, and managed accounts that support decumulation.
PGIM’s research, conducted in partnership with Coalition Greenwich, is based on a survey of 155 DC plan sponsors and sought to better understand the evolving DC landscape, including 401(k) menu design, retirement income solutions, and the use of environmental, social and governance (ESG) investments.
Are alternative investments on the rise in 401(k)s?
More DC plan sponsors report offering alternative investment options on their 401(k) menu, with
Despite their popularity in institutional portfolios, alternatives to traditional stocks and bonds are still not commonplace in 401(k) plans or within target-date funds. Plan sponsors’ top reasons for not adding alternatives to the investment menu or target-date fund series include the need for participant education, operational challenges, cost, and litigation risk.
Retirement plans less interested in ESG
On the hot-button issue of ESG investing, plan sponsor views are mixed, with only 1 in 4 (
O’Connor added, “ESG continues to be an evolving area with differing views, changing definitions, a variety of approaches, and regulatory impacts. Our research indicates most plan sponsors are in one of three camps: those who have taken action, those who are still evaluating, and those who are not considering ESG for their 401(k) plan at all.”
More detailed findings on the survey can be found here: The Evolving DC Landscape
ABOUT THE SURVEY
The research was conducted by Coalition Greenwich from May 23 to Aug. 26, 2022, using an online, quantitative approach with 155 DC plan sponsors who have at least one 401(k) plan and at least
*PGIM conducted a similar study with Coalition Greenwich, fielded Mar. 5 through Jul. 17, 2020, using an online, quantitative approach with 138 DC plan sponsors who have at least one 401(k) plan and at least
ABOUT PGIM DC SOLUTIONS
PGIM DC Solutions is the retirement solutions provider of PGIM, committed to helping American workers achieve their individual retirement goals through innovative, personalized investment solutions backed by differentiated research and investment capabilities. As of Dec. 31, 2022, PGIM had
ABOUT PGIM
PGIM is the global asset management business of Prudential Financial, Inc. (NYSE: PRU), a leading global investment manager with more than
Prudential Financial, Inc. (PFI) of
PGIM DC Solutions is an SEC-registered investment adviser, a
These materials are for informational, illustrative and educational purposes only. This document may contain confidential information and the recipient hereof agrees to maintain the confidentiality of such information. Distribution of this information to any person other than the person to whom it was originally delivered is unauthorized, and any reproduction of these materials, in whole or in part, or the divulgence of any of its contents, is prohibited. The information presented herein was obtained from sources that PGIM DC Solutions believes to be reliable as of the date presented; however, PGIM DC Solutions cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. The information contained herein is current as of the date of issuance (or such earlier date as referenced herein) and is subject to change without notice.
These materials do not provide any legal, tax or accounting advice. These materials are not intended for distribution in any jurisdiction where such distribution would be unlawful. Certain information contained herein may constitute "forward-looking statements," (including observations about markets and industry and regulatory trends as of the original date of this document). Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in such forward-looking statements. As a result, you should not rely on such forward-looking statements in making any decisions. No representation or warranty is made as to future performance or such forward-looking statements.
©2023 PGIM, the PGIM logo and Rock design are service marks of PFI and its related entities, registered in many jurisdictions worldwide.
PGIM DCS- 20230420-038
View source version on businesswire.com: https://www.businesswire.com/news/home/20230501005080/en/
CONNECT WITH US:
Visit pgim.com
Join the conversation on Twitter@PGIM
MEDIA CONTACT
Kylie Scott
+1 973-902-2503
kylie.scott@pgim.com
Source: PGIM
