New Paper from NAGDCA Provides DC DataThe Evolving Role of Defined Contribution Plans in the Public Sector, a research paper from the National Association of Government Defined Contribution Administrators and the Arthur N. Caple Foundation, provides information to assist retirement plan administrators and public policy makers in their review and implementation of defined contribution plans.
Findings include the following:
- Between 2009 and 2011, 43 states enacted pension reform.
- Several experts predict a continuing trend toward increased reliance on a DC plan component in the public sector to provide retirement income.
- The definition of what constitutes and adequate retirement income for employees varies.
- Behavioral research suggests that most people lack the skills to effectively manage their own retirement investments.
- Automatic enrollment is an effective tool for increasing participation in DC plans because it overcome individual inertia.
- Not all DC plans need tools like automatic enrollment, particularly supplemental plans.
- Core DC plans require the same fiduciary and management focus as defined benefit plans.
- Best practice recommends that in a DC environment, employees have access to lifetime income options to protect against longevity risk.
Click here for the report.