Start-to-finish guidance toward building and implementing a robust DC plan
Successful Defined Contribution Investment Design offers a comprehensive guidebook for fiduciaries tasked with structuring and implementing a 401(k) or other defined contribution (DC) pension plan. More than a collection of the usual piecemeal information, this book seeks to offer a complete, contemporary framework for plan design, together with tested methodologies and analytic techniques to help streamline plan monitoring, management and improve participant outcomes. Examples from plan sponsors provide on-the-ground insight while suggestions from DC consultants add expert perspective. Views from ERISA expert counsel provide additional understanding--along with input from academic thought leaders. Finally, investment evaluation and analysis is joined with participant savings and asset allocation data to look prospectively at potential outcomes, and case studies illustrate real-world implementation of objective-aligned asset allocation such as custom target-date strategies. Though the focus is primarily on U.S. plan design, author perspectives from countries including Australia, the United Kingdom and Canada provide relevant and helpful viewpoints for both new and experienced plan fiduciaries.
For the vast majority of workers, DC plans have replaced traditional defined benefit pension plans as the primary source of employer-provided retirement income. This book provides comprehensive guidance to help you construct a plan to help workers to retire with confidence.
* Adopt a framework for DC evaluation and structure
* Learn new methodologies for investment choice evaluation
* Use the innovative PIMCO Retirement Income Cost Estimate--or PRICE--to help quantify the amount of money a worker needs to create and stay on track to building a real income stream in retirement
* Examine methodologies used at major companies in the U.S. and globally
DC plans are the most rapidly growing retirement market in the world, yet sources of consolidated structural and analytical guidance are lacking. Successful Defined Contribution Investment Design fills the gap with a comprehensive handbook that covers the bases to help you develop an objective-aligned defined contribution plan.
Autorentext
STACY L. SCHAUS is an executive vice president and leads PIMCO's Defined Contribution Practice working primarily with plan sponsors and consultants. Prior to joining PIMCO in 2006, she was a founder and president of Hewitt Financial Services, which offers DC investment consulting and research as well as brokerage and personal finance services. While at Hewitt, she co-created and launched the Aon Hewitt 401(k) Index™ to help evaluate how DC participants respond to market changes. She is the founding chair for the Defined Contribution Institutional Investment Association, serves on the executive committee of the Employee Benefit Research Institute, and served as a Financial Planning Association board member. She has 35 years of investment experience and holds an MBA from the Stern School of Business at New York University and an undergraduate degree from the University of California, Santa Barbara.
YING GAO, who carried out the analytic reporting and modeling contained in this volume, is a vice president in the client analytics group in the Newport Beach office of PIMCO. Her primary areas of focus are financial modeling, asset allocation, and risk management. Prior to joining PIMCO in 2009, Dr. Gao worked with the fixed income portfolio management department at Principal Global Investors and the capital markets group at Federal Home Loan Bank of Des Moines. She has 10 years of investment experience and holds a PhD in economics from Iowa State University. She earned her master's and undergraduate degrees in finance from Zhejiang University in China.
Zusammenfassung
Start-to-finish guidance toward building and implementing a robust DC plan
Successful Defined Contribution Investment Design offers a comprehensive guidebook for fiduciaries tasked with structuring and implementing a 401(k) or other defined contribution (DC) pension plan. More than a collection of the usual piecemeal information, this book seeks to offer a complete, contemporary framework for plan design, together with tested methodologies and analytic techniques to help streamline plan monitoring, management and improve participant outcomes. Examples from plan sponsors provide on-the-ground insight while suggestions from DC consultants add expert perspective. Views from ERISA expert counsel provide additional understandingalong with input from academic thought leaders. Finally, investment evaluation and analysis is joined with participant savings and asset allocation data to look prospectively at potential outcomes, and case studies illustrate real-world implementation of objective-aligned asset allocation such as custom target-date strategies. Though the focus is primarily on U.S. plan design, author perspectives from countries including Australia, the United Kingdom and Canada provide relevant and helpful viewpoints for both new and experienced plan fiduciaries.
For the vast majority of workers, DC plans have replaced traditional defined benefit pension plans as the primary source of employer-provided retirement income. This book provides comprehensive guidance to help you construct a plan to help workers to retire with confidence.
- Adopt a framework for DC evaluation and structure
- Learn new methodologies for investment choice evaluation
- Use the innovative PIMCO Retirement Income Cost Estimateor PRICEto help quantify the amount of money a worker needs to create and stay on track to building a real income stream in retirement
- Examine methodologies used at major companies in the U.S. and globally
DC plans are the most rapidly growing retirement market in the world, yet sources of consolidated structural and analytical guidance are lacking. Successful Defined Contribution Investment Design fills the gap with a comprehensive handbook that covers the bases to help you develop an objective-aligned defined contribution plan.
Inhalt
Acknowledgments xv
Introduction 1
How This Book Is Organizedand How to Use It 3
A Continuing Commitment to Meet the Need for Information 6
Why Should You Read This Book? 7
PART ONE DC Plans: A Cornerstone of Retirement 9
CHAPTER 1 DC Plans Today 11
Preface: A Career and a New Form of Pension Plan Are Born 11
DC Plans: Becoming the New Reality . . . No Turning Back 13
Setting Goals for Success: Income Replacement Targets 14
Reducing DC Litigation Risk: Process and Oversight 16
Who's a Fiduciary? 17
How to Approach Outsourcing DC Plan Resources 19
Hiring an Investment Consultant 20
Getting Started: Setting an Investment Philosophy and Governance Structure 20
PIMCO Principles for DC Plan Success: Building and Preserving Purchasing Power 25
Maximizing DC Savings: Just Do It! 27
In Closing 32
Questions for Plan Fiduciaries 33
CHAPTER 2 Aligning DC Investment Design to Meet the PRICE of Retirement 35
Begin with the End in Mind 37
What Is a Reasonable Pay Replacement Target? 39
Calculating the Income Replacement Rates 42
Historic Cost of Retirement: PRICE Is a Moving Target 44
A Focus on Income, Not Cost 47
PRICE-Aware: Applying PRICE to Consider DC Assets and Target-Date Strategies 48
Evaluating Glide Paths 50
Tracking DC Account Balance Growth Relative to PRICE 54
Summary: The Importance of Knowing Your PRICE 55
In Closing 55
Questions for Plan Fiduciaries 56
Note 56
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