Product Type: Market Research Report
Published by: TowerGroup
Published: February 2007
Product Code: R301-1252Description Assets in defined contribution (DC) retirement savings plans in the United States have grown dramatically due to enabling regulation. A surge of growth is likely to result from the Pension Protection Act of 2006, designed to remedy the underfunding of many defined benefit plans and to revamp defined contribution plans. This TowerGroup Research Note discusses the impact of the new law on DC plan sponsors and recommends preparations that chief technology officers at asset management firms should make. Although this regulation affects only US firms, forward-thinking CTOs anywhere in the world cannot ignore the global shift from pensions to employee-directed retirement savings plans.Table of Contents
- TowerGroup Take-Aways
- Report Coverage
- Highlights of the Pension Protection Act
- Exhibit 1 Important Components of the Pension Protection Act for Defined Contribution Plans (2006)
- Title VI: Investment Advice, Prohibited Transactions, and Fiduciary Rules
- Title VIII: Pension-Related Revenue Provisions
- Title IX: Increase in Pension Plan Diversification and Participation
- Expected Reactions by Plan Sponsors
- Automatic Participation and Deferral Increases
- Exhibit 2 US Defined Contribution Plans with and without Automatic Enrollment and Deferral (2007P-2011P)
- Changes to Investment Default Options
- Exhibit 3 401(k) Default Investment Options: A Shift from Safety to Asset Allocation (2004-08P)
- Rising Interest in Managed Retirement Programs
- Concern with Retirement Income
- Considerations for Chief Technology Officers
- All Investment Managers: Go Where the Money Is
- Expect the Development of New Products
- Focus on the Defined Contribution Channel
- Full-Service DC Providers: Emphasize "Service"
- Prepare for an Increase in Overall Participant Inquiries
- Consider the Unique Needs of Employees Nearing Retirement
- Upgrade Services for Retirees
- Improve Support for Advice Arrangements
- Get Ready for More Requests from Plan Sponsors
- Summary
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