Successful defined contribution investment design : how to align target-date, core, and income strategies to the PRICE of retirement / Stacy L. Schaus with Ying Gao.

Format:

Book

Author/Creator:

Schaus, Stacy L., author.

Gao, Ying, author.

Series:

Wiley finance series.

THEi Wiley ebooks.

Wiley Finance Series

THEi Wiley ebooks

Language:

English

Subjects (All):

Defined contribution pension plans.

Retirement income--Planning.

Retirement income.

Physical Description:

1 online resource (383 pages).

Edition:

1st edition

Place of Publication:

Hoboken, New Jersey : Wiley, 2017.

System Details:

Access using campus network via VPN at home (THEi Users Only).

text file

Summary:

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.

Contents:

Intro

Successful Defined Contribution Investment Design

Disclosure

Contents

Acknowledgments

Introduction

How This Book Is Organized-and How to Use It

A Continuing Commitment to Meet the Need for Information

Why Should You Read This Book?

Part One DC Plans: A Cornerstone of Retirement

Chapter 1 DC Plans Today: An Overview of the Issues

Preface: A Career and a New Form of Pension Plan Are Born

DC Plans: Becoming the New Reality . . . No Turning Back

Setting Goals for Success: Income Replacement Targets

Reducing DC Litigation Risk: Process and Oversight

Who's a Fiduciary?

How to Approach Outsourcing DC Plan Resources

Hiring an Investment Consultant

Getting Started: Setting an Investment Philosophy and Governance Structure

Establish Global Philosophy and Guiding Principles

Set Retirement Plan Objectives and Design

Create Governance Oversight Structure

Formulate Objective Measures of Success

Outline Implementation Considerations

PIMCO Principles for DC Plan Success: Building and Preserving Purchasing Power

Maximizing DC Savings: Just Do It!

In Closing

Questions for Plan Fiduciaries

Chapter 2 Aligning DC Investment Design to Meet the PRICE of Retirement

Begin with the End in Mind

What Is a Reasonable Pay Replacement Target?

Calculating the Income Replacement Rates

Historic Cost of Retirement: PRICE Is a Moving Target

A Focus on Income, Not Cost

PRICE-Aware: Applying PRICE to Consider DC Assets and Target-Date Strategies

Evaluating Glide Paths

Tracking DC Account Balance Growth Relative to PRICE

Summary: The Importance of Knowing Your PRICE

Note

Chapter 3 Plan Investment Structure

Tiers and Blends: Investment Choices for DC Participants.

Tier I: "Do-It-for-Me" Asset Allocation Investment Strategies

Target-Date Strategies

Balanced or Target-Risk Strategies

Managed Accounts

Tier II: "Help-Me-Do-It" Stand-Alone or "Core" Investment Options

DC Plan Investment Choices: Farewell to Company Stock?

Reduce Company Stock Exposure with "Sell More Tomorrow"

Evolution of Investment Menu Design

Active versus Passive Approaches: DC Consultants' Views

Active versus Passive: Reduced or Heightened Litigation Risk?

Investment Structure: Mutual Fund, Collective Investment Trust, or Separately Managed Account

Understand Revenue Sharing: Consider Paying Administration and Other Plan Fees

Blended Multimanager or White-Label Investment Options

Tier III: "Do-It-Myself" Mutual-Fund-Only or Full Brokerage Window

Considering an Outsourced Chief Investment Officer

Notes

Chapter 4 Target-Date Designand Approaches

Target-Date Structures vary By plan Size

Custom Target-Date Strategies

Semicustom Target-Date

Packaged Target-Date

Target-Date Selection and Evaluation Criteria

No Such Thing as Passive

Low Cost and Low Tracking Error Does Not Equal Low Risk

Framework for Selecting and Evaluating Target-Date Strategies: Three Active Decisions Plan Sponsors Must Make

Active Decision #1: How Much Risk Can Plan Participants Take?

Human Capital May Not Be Sufficient: Understanding Risk Capacity versus Risk Tolerance

Active Decision #2: How Is the Risk Best Allocated across Investment Choices?

Active Decision #3: Should Risk Be Actively Hedged?

Tail-Risk Hedging Strategies

Insurance

Target-Date Analytics: Glide Path Analyzer (GPA) and Other Tools

Global DC Plans: Similar Destinations, Distinctly Different Paths

In Closing.

Questions for Plan Fiduciaries

Part Two Building Robust Plans: Core Investment Offerings

Chapter 5 Capital Preservation Strategies

Capital Preservation: Importance

Capital Preservation: What Is Prevalent and What Is Preferred?

The 1 NAV : Shared by Stable Value and MMFs

Stable Value Offers More Opportunity in a Low-Interest-Rate Environment

Looking Forward: The Changing Role of Stable Value

Making Low-Risk Decisions: Views from the Field

White Labeling: A Capital Preservation Solution

An Analytic Evaluation of Capital Preservation Solutions

Short-Term, Low-Duration, and Low-Risk Bond Strategies

Inclusion of Stable Value in Custom Target-Date or Other Blended Strategies

Chapter 6 Fixed-Income Strategies

What Are Bonds, and Why Are They Important for Retirement Investors?

What Are the Different Types of Bonds in the Market?

What Types of Bonds Should Be Offered to DC Participants?

Capital Preservation

Core and Core-Plus Bonds

Investment-Grade and High-Yield Credit

Multisector

Foreign/Global

Bond Investment Strategies: Passive versus Active Approaches

Bonds Unleashed

Analytic Evaluation: Comparing Bond Strategies

Fixed Income within Target-Date Glide Paths

Observations for Fixed Income Allocation within Target-Date Strategies

Chapter 7 Designing Balanced DC Menus: Considering Equity Options

What Are Equities and How Are They Presented in DC Investment Menus?

Getting the Most out of Equities

Consider Dividend-Paying Stocks

Evaluating Equity Strategies

Less Is More: Streamlining Equity Choices

Shift to Asset-Class Menu May Improve Retirement Outcomes

Active versus Passive-The Ongoing Debate.

Strategic Beta: Consider Adding Fundamentally Weighted Equity Exposure

Currency Hedging: An active Decision

Observations for Equity Allocations within Target-Date Strategies

Questions for Fiduciaries

Chapter 8 Inflation Protection

What Is Inflation and How Is It Measured?

Why Inflation Protection in DC?

History of Inflation: Inflation Spikes Underscore Need for Inflation-Hedging Assets

Inflation Protection When Accumulating and Decumulating, and in Different Economic Environments

Economic Environments Change Unexpectedly-and Reward or Punish Various Asset Classes

Consultants Favor TIPS, Multi-Real-Asset Strategies, REITs, and Commodities

How Should Plan Sponsors Address Inflationrisk In DC Portfolios?

Implementation Challenges

Evaluating Real Asset Strategies

Summary Comparison of Individual and Multi-Real-Asset Blends

Inflation-Hedging Assets in Target-Date Glide Paths

Observations for Inflation-Hedging Assets in Target-Date Glide Paths

Chapter 9 Additional Strategies and Alternatives: Seeking Diversification and Return

What Are Alternative Assets?

A Wider Lens on Alternatives

Consultant Support for Additional Strategies and Alternatives

Back to Basics: Why Consider alternatives?

Liquid Alternatives: Types and Selection Considerations

Important Characteristics in Selecting Alternatives: Consultant Views

Illiquid Alternatives: Types and Considerations

Contrasting Liquid Alternative Strategies with Hedge Fund and Private Equity Investments

Part Three Bringing It All Together: Creating Retirement Income

Chapter 10 Retirement Income: Considering Options for Plan Sponsors and Retirees

Advisor and Consultant Retirement Income Suggestions.

Why Don't Retirees Leave Their Assets in DC Plans at Retirement?

Retaining a Relationship with Your Employer Inretirement: An Innovative and Caring Plan Sponsor

Mutual Benefits: Retaining Retiree Assets May Help Both Retirees and Plan Sponsors

Turning DC Assets into a Lifetime Paycheck: Evaluating the DC Investment Lineup for Retiree Readiness

Evaluating Portfolio Longevity

Turning Defined Contribution Assets into a Lifetime Income Stream: How to Evaluate Investment Choices for Retirees

Guarding Retiree Assets against a Sudden Market Downturn: Sequencing Risk

Ways to Manage Market and Longevity Risk . . . without Adding In-Plan Insurance Products

Living beyond 100: Planning for Longevity

Managing Longevity Risk: Considerations for Buying an Annuity

Immediate and Deferred Annuities: Why Out-of-Plan Makes Sense

Chapter 11 A Global View: The Best Ideas from around the Globe for Improving Plan Design

DC Plans: Becoming the Dominant Global Model

Retirement Plan Coverage and Participation

Investment Default and Growth of Target-Date Strategies

Retirement Income: The Global Search for Solutions

Defined Ambition in the Netherlands

New Solutions in Australia and Beyond: Tontines and Group Self-Annuitization

"Getting DC Right": Lessons Learned in Chapters 1 through 10

Chapter 1: DC Plans Today

Chapter 2: Aligning DC Investment Design to Meet the PRICE of Retirement

Chapter 3: Plan Investment Structure

Chapter 4: Target Date Design and Approaches

Chapter 5: Capital Preservation Strategies

Chapter 6: Fixed Income Strategies

Chapter 7: Designing Balanced DC Menus: Considering Equity Options

Chapter 8: Inflation Protection

Chapter 9: Additional Strategies and Alternatives: Seeking Diversification and Return.

Chapter 10: Retirement Income: Considering Options for Plan Sponsors and Retirees.

Notes:

Includes index.

Includes bibliographical references and index.

Description based on online resource; title from PDF title page (ebrary, viewed March 15, 2017).

ISBN:

9781119302568

1119302560

9781119302575

1119302579

OCLC:

972669406