NEPC’s 19th Annual Defined Contribution (DC) Plan Trends and Fee Survey: Insights into Emerging Investment Trends
BOSTON, MA – In its 19th annual study, NEPC, a leading investment consulting firm, delved into the latest trends and fee structures in Defined Contribution (DC) plans. NEPC’s comprehensive analysis offers valuable insights for plan sponsors, employers, and participants seeking to make informed decisions about their retirement savings.
Key Findings
The survey revealed several noteworthy trends in the DC plan landscape:
- Fee Transparency: Plan sponsors are increasingly focusing on fee transparency, pushing for lower fees and greater value from their service providers. NEPC found that the average management fee for large DC plans decreased from 41 basis points (bps) in 2018 to 37 bps in 2021.
- Target Date Funds (TDFs): TDFs continue to dominate DC plans, with 73% of assets invested in these funds. NEPC emphasized the importance of customization, with over a third of surveyed plan sponsors offering more than 20 TDFs.
- Alternative Investments: Alternative investments, such as real estate, private equity, and hedge funds, are gaining traction in DC plans. NEPC reported that 25% of large DC plans now offer alternatives, up from 16% in 2018.
- ESG Investing: Environmental, Social, and Governance (ESG) investing is becoming more mainstream in DC plans, with 64% of large plans offering ESG options.
Impact on Individuals
For individuals participating in DC plans, these trends could lead to:
- Lower fees, resulting in more savings for retirees
- Greater access to alternative investments and ESG options, offering more diverse portfolios
- Customized investment options tailored to individual risk profiles and retirement goals
Impact on the World
On a global scale, these trends could:
- Encourage greater competition among service providers, leading to lower fees and improved value
- Expand access to alternative investments for a broader range of investors
- Foster a more sustainable investment landscape, as ESG considerations become more prevalent
Conclusion
NEPC’s 19th annual DC Plan Trends and Fee Survey provides a comprehensive overview of the evolving DC plan landscape. With a focus on fee transparency, customization, and emerging investment trends, the study offers valuable insights for plan sponsors, employers, and participants alike. As these trends continue to shape the retirement savings landscape, individuals and the world stand to benefit from increased competition, improved value, and a more diverse range of investment options.
These findings underscore the importance of staying informed about the latest developments in the DC plan market. By understanding these trends and their potential impact, investors can make more informed decisions about their retirement savings and contribute to a more sustainable investment landscape.
