Managing Defined Contribution Plans in the Current Environment

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Millions of Americans now rely on employer-sponsored defined contribution (DC) plans as their primary retirement savings vehicle. While many improvements have been made to DC plans in recent years, the financial crisis and ensuing economic downturn have exposed new risks and challenges.

The significant decline in employees’ retirement savings and confidence, coupled with the relatively short history of 401(k)s, has raised questions about the future of DC plans. Many plan sponsors are revisiting their current plan designs, investments, and communication and governance practices. Some employers have made short-term changes in these areas, such as suspending their matching contribution and increasing communication around their plan. As companies begin the long climb to recovery and focus on managing costs and providing more effective benefits, we could see longer-term changes on the horizon.