Consultants to 401(k)s and other defined contribution plans are carefully analyzing, and in some cases replacing, the plans’ money market, stable value, inflation protection and target-date offerings, PIMCO found in a survey.

Sixty-one percent of those surveyed said they expect plans they advise to add a Treasury or government-only money market fund and a stable value fund.

Thirty-five percent said sponsors are looking at the asset allocation mix in their target-date funds, leaning toward more conservative and better diversified funds. The majority agreed that target-date funds will become the preferred investment default for DC plans, and two-thirds are promoting customized target-date portfolios.


Perhaps most interestingly, 78% believe that DC sponsors will consider adding guaranteed income options over the next two years.

“Given the extreme market volatility and significant decline in DC account balances over the past year, it’s not surprising that DC plan sponsors are focused on reducing the risk that participants face,” said Stacy Schaus, senior vice president and defined contribution practice leader at PIMCO. “Consultants are helping clients evaluate their DC plan investment structures, often to dial down risk and improve the likelihood that the plans will meet participants’ retirement income goals.”

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