Defined Contribution Plan

A defined contribution plan (DC) is a pension plan such as a 401(k) where the plan participant such as an employee assumes responsibility for directing plan assets among various investment options. In contrast to a defined benefit plan, the participant assumes market risk under a defined contribution plan. In addition, the participant assumes responsibility for converting accumulated assets into a stream of income when they retire. In other words, assets need to accumulate during working years and then the participant is responsible for figuring out what to do with that sum of money when they retire. The number of defined contribution plans has increased significantly over the past 20 years.

Retirement Income Product Comparisons Proving Difficult

Investment News columnist Darla Mercado wrote an interesting piece of the difficulty of making meaningful comparisons among annuities and related retirement income products. Mercado focuses on the challenges created by the lack of benchmarks in the retirement income industry. Unlike the investment industry where benchmarking and transparency of product features are standard, lifetime income products are opaque and complex. Mercado examines the defined contribution plan sponsor market where...

Calculating the Value of a Pension Buyout Offer

One way to evaluate a...

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Some Sobering 401k Statistics

The UC Berkeley Center for Labor Research and Education just released an interesting research report titled “Meeting California’s Retirement Security Challenge.” The report has an introduction written by Jacob Hacker—a Political Science professor at Yale University. Hacker’s introduction focuses on what he refers to as the “Great Risk Shift” and is appropriately titled “The Coming Age of Retirement Insecurity.” The viability of defined...

Meir Statman on the Behavioral Obstacles Affecting Investing and Retirement Planning

Meir Statman is the Glenn Klimek Professor of Finance at the Leavey School of Business, Santa Clara University, and Visiting Professor at Tilburg University in the Netherlands.

His research on behavioral finance has been supported by the National Science Foundation, CFA Institute, and Investment Management Consultants Association (IMCA) and...

MetLife is Nudging the World of Defined Contribution toward Income Annuities

Jody Strakosch is the National Director for MetLife’s Retirement Products Group.  In this role, Jody has a broad perspective on developments in the institutional space.  In other words, Jody is intimately familiar with how in-plan accumulation and point of retirement annuities are evolving in the defined contribution arena.