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A Plan for "Disengaged" Sponsors

Journal of Pension Benefits - Summer 2014

Mark Davis
Senior Vice President | CAPTRUST Financial Advisor

It has become a settled truth that most working Americans will rely on participant-directed defined contribution plans, such as 401(k), 403(b), and 457 plans, as their primary retirement savings vehicle to supplement Social Security. In order to be successful, these plans should provide meaningful income replacement for most participants. To accomplish this mission, both plan sponsors and participants must pay attention to the design, implementation and ongoing execution of the plans themselves. Participants must be attentive to their savings behavior and investment choices within these plans. Yet many, if not most, participants are not engaged, and perhaps should not be engaged, in overseeing their own retirement savings plan accounts. Of course, the same can be said of plan sponsors; may are not engaged, and perhaps many should not be engaged in creating and overseeing such important employee benefits. New models and solutions for less fully engaged plan sponsors and participants that leverage the investment manager role outlined in ERISA Section 3(38) represent a significant step forward in the evolution of defined contribution plans and their chances of providing meaningful retirement outcomes for participants an beneficiaries.

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