Press Release Large 401(k) Plans Seek to Retain Retiree Assets, according to PIMCO Consultant Survey Nearly three-quarters of sponsors advised by consultants want savers to keep assets in their 401(k) plans after they retire
Newport Beach, California (April 19, 2021) – Initially a vehicle to help Americans save for retirement, 401 (k) plans could become an important source of income for retirees when they stop working, according to the 15th Annual Defined Contribution Consulting Study conducted by PIMCO, one of the world’s premier fixed income investment managers. Consultants who participated in the survey said approximately three-fourths of 401(K) sponsors prefer to keep participant assets in plan after they enter retirement, up from less than half in 2015. Allowing flexibility in income distribution, adding retirement education/tools and communicating the value of staying in plan, were among the most popular consultant recommendations for plans seeking to hold onto retiree assets. “Demand for income will only increase as more Americans enter retirement and it is clear from the survey that plan sponsors are changing how they view 401(k)s from what historically had been a vehicle for savings to one that will generate income for participants,” says Rene Martel, PIMCO’s Head of Retirement. PIMCO surveyed 47 consultants and advisory firms who serve over 33,000 clients with $6.7 trillion in total assets in defined contribution plans as part of the firm’s effort to capture the breadth of views in the industry as well as services available amid rapidly changing demographics of plan participants. Published results were based on responses from firms with more than $10 billion in DC assets under management. “The survey’s findings reflect the ongoing changes in defined contribution – a pivot to solutions for retirement income, best practices for default fund/target date funds, evaluation of ESG products, etc. – and provide invaluable insights for sponsors and consultants who want to best serve end investors,” says Julie Meggers, PIMCO’s Global Head of Consultant Relations. Other survey findings: Target-date funds remain the most recommended Qualified Default Investment Alternative (QDIA), with all consultants and advisors surveyed ranking it their number one choice. More than two-thirds of institutional consultants said reviewing TDFs was a top priority, indicating they are keeping a close eye on fees and performance. The majority of consultants recommend a blend of actively-managed and passive funds for core investments, with more than 90% preferring an active/passive blend for equities and 87% favoring all-active for capital preservation. Of the survey respondents, 67% preferred an active/passive blend in fixed income, with the others favoring all-active. Interest in ESG investment options continues to grow, with over a half of consultants already or planning to recommend sustainable options; however, 54% of those surveyed said they needed to have greater regulatory/legal comfort before implementing an ESG solution. A summary of the survey’s key findings can be found here: www.pimco.com/dc-survey. About the Survey In its 15th year, the PIMCO US Defined Contribution Consulting Study seeks to help consultants, advisors and plan sponsors understand the breadth of views and consulting services available within the defined contribution (DC) marketplace. Our 2021 study captures data, trends and opinions from 47 consulting and advisory firms who serve over 33,000 clients with aggregate DC assets in excess of $6.7 trillion. All responses were collected from January 4, 2021 through February 26, 2021. Published results were based on responses from firms with more than $10 billion in DC assets under management.
Michael Reid Global Head of Corporate Communications – New York +1.212.597.1301 michael.reid@pimco.com Agnes Crane U.S. Corporate Communications – New York +1.212.597.1054 agnes.crane@pimco.com Joy Sheetz U.S. Corporate Communications – New York +1.646.870.2025 joy.sheetz@pimco.com Laura Batty U.S. Corporate Communications – Newport Beach +1.949.720.6209 laura.batty@pimco.com Lisa Papas U.S. Corporate Communications – Newport Beach +1.949.720.6751 lisa.papas@pimco.com Laura Thomas UK & EMEA Corporate Communications – London +44 203 640 1520 laura.thomas@uk.pimco.com Wendy Svirakova UK & EMEA Corporate Communications – London +44 203 640 1237 wendy.svirakova@pimco.com Li Anne Wong APAC Corporate Communications – Singapore +65 6491 8068 lianne.wong@pimco.com