In a February 12th, 2025 report, PGIM DC Solutions shared fresh insights. These insights were obtained through their joint research effort with Greenwald Associates.
PGIM DC Solutions specializes in providing innovative retirement solutions. The report is titled the Defined Contribution (DC) Landscape Survey.
This study emphasizes a growing trend toward personalized approaches in retirement planning, as decision-makers within these plans increasingly prioritize tailored strategies to enhance the financial well-being and security of retirees.
Managing director and head of PGIM DC Solutions, Michael Miller highlighted the industry’s commitment to improving employee retirement outcomes. He noted the rising trend among employers and plan sponsors toward offering enhanced retirement options to better serve their workforce.
Key Takeaways
A survey shows that 88% of plan sponsors favor personalized advice to boost retirement outcomes.
- 88% of plan sponsors believe that personalized guidance greatly enhances participants’ financial security.
- Interest in managed accounts is growing, especially when they come as the default option and are competitively priced.
- Educational resources are key to improving retirement outcomes, though many plans lack support for maximizing Social Security benefits.
Personalized advice gains traction
Survey results indicate that 88% of plan sponsors believe personalized guidance can significantly improve participants’ financial security.
As the industry evolves, enhanced income solutions, plan design, advice, education and communication will all play pivotal roles in improving the retirement experience for American workers
Michael Miller
Additionally, there is growing interest in managed accounts, particularly when these services are offered by default and competitively priced. Approximately 63% of the surveyed plans favor managed accounts when fees remain at or below 10 basis points.
These findings reflect a shift toward solutions that not only cater to individual needs but also offer cost efficiencies for plan participants.
Evaluating asset allocation strategies
Participants in the survey expressed high levels of satisfaction with their Defined Contribution plan investments. Approval ratings included 93% for asset class diversification, 91% for overall investment performance, and 85% for cost management within these plans.
Plan decision-makers were particularly pleased with the performance of target-date funds (TDFs). They expressed confidence in specific investment categories, including active fixed income securities, high-yield bonds, real estate assets, and commodities.
However, concerns persist regarding the future of target-date funds, their vulnerability to market fluctuations, and potential legal risks.
Questions continue about how these funds will perform under different economic conditions and whether they will consistently meet the expectations of both plan sponsors and participants. Some emphasize the importance of ongoing evaluation and diversification to ensure investment strategies align with long-term objectives.
Education is a critical component
Survey respondents emphasized that educational resources and tools are essential for improving retirement outcomes, helping participants make informed decisions about their savings and withdrawal strategies.
However, fewer than half of the surveyed plans currently offer support in helping retirees establish appropriate spending rates, leaving many without structured guidance on managing withdrawals sustainably.
Additionally, only 20% provide resources for optimizing Social Security benefits, highlighting a gap in available assistance for one of the most critical components of retirement income.
Beyond education, effective risk management is a crucial component of long-term financial security in retirement. Without proper planning, retirees face potential financial shortfalls due to longevity risk, inflation, and market volatility.
These factors can erode purchasing power over time, making it essential for individuals to adopt strategies that account for both short-term stability and long-term growth.
Plan sponsors and advisors must work together to implement solutions that safeguard retirees from financial uncertainty and provide them with the knowledge necessary to make informed decisions.
This includes expanding access to retirement planning tools, increasing financial literacy efforts, and ensuring participants have the support needed to navigate complex financial choices.
Using AI and predictive analytics could further refine risk assessment and ensure that retirement portfolios remain aligned with long-term objectives despite market changes.
By analyzing trends and identifying potential risks, these technologies have the potential to enhance decision-making, improve personalization in retirement planning, and offer more dynamic strategies for adapting to evolving economic conditions.
Investment strategies for retirement
While defined contribution plans significantly benefit talent retention, many plan sponsors believe further innovation is necessary to maximize their potential.
Respondents stressed the importance of personalized communication, noting its potential to enhance retirement outcomes.
Nearly all participants agreed that artificial intelligence (AI) remains underutilized in retirement plan communications, representing a missed opportunity for improving engagement and comprehension.
Survey findings highlight the need for greater creativity and new methodologies in defined contribution plans to ensure retirees receive the full benefits available to them.
Integrating digital engagement tools, interactive financial modeling, and more intuitive plan interfaces could help participants better understand their options and make informed choices that align with their retirement goals.
Conclusion
By promoting collaboration among sponsors, advisors, and participants, the retirement planning landscape can evolve to better support long-term financial stability. Expanding educational resources, refining risk management, and leveraging technology will be key to this progress.
As the industry adapts, personalized strategies and advanced tools will play a vital role in improving retirement outcomes. Greater investment in data-driven insights and financial education highlights a shift toward solutions that empower individuals to manage their financial futures confidently.
Plan sponsors and advisors can ensure retirement solutions remain effective and adaptable by optimizing investment strategies, expanding Social Security guidance, and addressing concerns about target-date funds. Through continued innovation, the industry can create a more resilient framework for retirees.
