NEPC Survey: Active vs. Passive, Managed Account Debates Continue to Transform DC Plans

BOSTON--()--NEPC, LLC one of the industry’s largest independent, research-driven investment consulting firms, today announced the results of the 15th annual DC Plan and Fee Survey. This survey examines defined contribution plan features, investment menus, participation rates, and fees during 2020.

The results show:

  • Auto-features like auto-enrollment and auto-escalation have proven to be popular and effective: 49% of respondents offer auto-escalation and 64% of respondents offer auto-enrollment - a significant increase from 2005 when only 21% of plans offered auto-enrollment. The widespread adoption of auto-enrollment has helped lead to a relatively high average participation rate of 82% for respondents in 2020.
  • Investment menus have largely stayed the same, with target date funds (TDFs) seeing a significant increase in utilization: TDFs continue to dominate investment menus, with TDF utilization increasing from 76% of plans in 2005 to 96% in 2020.
  • Managed accounts continue to struggle with adoption: Managed accounts are not offered by a majority of plans, having increased from 13% adoption in 2005 to just 36% in 2020. This increase was minor despite immense marketing efforts of managed account service providers.
  • Plans continue to utilize blended strategies, with 58% of this year’s respondents offering a passive tier (defined as three or more passively managed funds, including at least one fixed income option).

“As plans continue to innovate, we expect to see more focus on plan design elements that aid the post-retirement life of participants,” said Ross Bremen, Partner in NEPC’s Defined Contribution Practice Group. “Additionally, with a new administration in office, we’re keeping close watch on how potential legislative measures could impact plan design and implementation moving forward.”

This survey was conducted online by NEPC’s Defined Contribution Practice Group. The 142 respondents represent $191 billion in aggregate assets and a total of 1.8 million plan participants. For the full results, click here.

NEPC, LLC:

NEPC is an independent investment consultant and private wealth advisor, serving 391 retainer clients and $1.1 trillion in total assets. Combining a proprietary research team dedicated to the long-term challenges facing institutional and high-net investors, with our unique client-centric model, NEPC builds the investment portfolios defining the future of finance.

As of October 1, 2020, NEPC serves 209 DC plans, representing more than $196 billion in assets. To learn more, visit nepc.com.

Contacts

Media Contact:
Corey Law
nepc@fullyvested.com

Release Summary

Investment consultant NEPC announces the results of its Defined Contribution Plan and Fee Survey, examining DC plan features and investment menus.

Contacts

Media Contact:
Corey Law
nepc@fullyvested.com