Defined Contribution Plans: Automation and Asset Allocation in Today’s Market Environment


Have enough money to retire well

NEW YORK, NY, USA, June 8, 2022 / — One of the biggest drivers of innovation in defined contribution plans today is automation and the drop or drop mentality. to do it for me predominates among participants in employer-sponsored plans, said James Lukezic, managing director of qualified plans at Old Slip Capital Partners. “We’ve already seen the very positive effects of the plan’s automatic features such as auto-enrollment, auto-escalation, auto-rebalancing, and even automation of target date features. The industry seems to be gearing up for automation “, did he declare.

Innovation tends to happen quite slowly in the DC space and is often driven by a combination of legislation, regulation and litigation. For several years litigation has been the main driver as plans have sought to weed out underperforming managers or ensure they are invested in the lowest class of stock or cheapest vehicle available. or when they have switched to collective investment funds, for example.

On another note, retirement income has become paramount, with many variables and a wide range of philosophies among plan sponsors on how to meet this challenge without being in conflict, said James Lukezic of Old Slip Capital. Some employers want to try to solve this problem for their entire workforce while others want to give participants options they can choose themselves with or without the help of ERISA Fiduciary Advisor plans.

The economy and savings plans

The odds of a rate hike have improved as the Biden administration’s $1.9 billion stimulus package adds momentum to the nascent economic recovery, raising the specter of inflation. In this context, sponsors are reviewing their asset allocation.

According to Old Slip Capital’s James Lukezic, plan sponsors face the potential risks of a rising rate environment or simply a fixed income market that’s different from what we’ve seen in the past. The problem today is the passive fixed income that seems to be showing up in most plans nationwide, says Lukezic. It is possible to add active fixed income securities, either as a base option or to augment or replace the passive option, which is particularly important as participants approach and enter the retirement phase.

Maximilian Longo
Falconer, LLC
write to us here


About Author

Comments are closed.