2 Key Issues Could Drive 2026 Innovation in DC Market: Natixis
A newly released 2026 outlook for the defined contribution market from Natixis Investment Managers says two key developments have the potential to push the DC marketplace out of its recent innovation slump: including CITs in 403(b) plans and exploring alts in DC plans.
Liana Magner, Head of US Retirement and Institutional for Natixis Investment Managers, writes that the defined contribution marketplace stands at a crossroads. “For years, it has been criticized for its slow pace of change, hampered by fee obsession and litigation fears,” her analysis states. “But in 2026, will we finally see meaningful innovation that improves retirement outcomes for participants?”
The two key topics she says are dominating headlines and poised to redefine the landscape are allowing collective investment trusts (CITs) in 403(b) plans, and adding alternatives in DC plans. From her analysis:
CITs in 403(b) Plans: Lower Costs, Better Outcomes
The push to allow collective investment trusts (CITs) in 403(b) plans is not just regulatory tinkering—it’s a potential game-changer. By reducing costs, CITs can directly enhance participant outcomes, making retirement more attainable for millions.
This concept has been discussed for several years, but to date has still not passed legislation to become a reality. The recent passage of the INVEST Act in the House signals renewed momentum, but the Senate remains a hurdle given competing priorities and limited time.
Will industry advocacy finally tip the scales? And if so, will there be an onslaught of flows out of mutual funds and into their CIT counterparts? Are plan sponsors and key stakeholders ready operationally for this change?
Alternatives in DC: Expanding Access, Raising the Bar
The executive order to clarify fiduciary guidance around alternatives in DC plans opens the door to a broader investment universe—real estate, private equity, digital assets, commodities, infrastructure, and lifetime income strategies.
Institutional investors have long been allocating to private market alternatives, expanding access into the defined contribution marketplace (within professionally managed portfolios) serves to democratize access to investments that promise to expand the opportunity set and offer the potential for increased risk-adjusted returns.
Asset managers are staffing up and racing to launch new vehicles, but will plan sponsors embrace the change and deliver on the promise of better outcomes? Or will regulatory ambiguity, perceived fiduciary risks, higher cost and the complexity of due diligence hinder adoption?
Manger concludes by asking whether these changes are mere headlines, or will they catalyze a true transformation? She adds that the ultimate measure of success is whether these innovations will actually improve participant outcomes.
“If CITs drive down costs and alternatives unlock new growth, 2026 could mark the beginning of a new era—one where innovation is not just possible, but essential,” Manger writes. “Yet, without overcoming legislative, operational, and fiduciary hurdles, the promise of innovation may remain just out of reach.”
DC outlook one of many for 2026
Natixis asked investment professionals from Natixis Investment Managers and its affiliated investment managers to predict where markets are headed this year and received views from across asset classes including private real estate, undervalued stocks, bonds and options writing strategies—as well as insight into private equity, exchange-traded funds (ETFs), and retirement security trends. Check out the Jan. 7 press release to read what they expect in 2026.
SEE ALSO:
• Advocates for CITs in 403(b)s Express Support for INVEST Act that Could Pass House Today
• DC Participants Open to Private Markets—and AI—with Guardrails: Invesco Survey
• Higher Returns, More Active Management Add Complexity to Private Investments in DC Plans
• Institutional Investors Brace for 2026 Market Pullback Amid Rising Geopolitical, AI Risks
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.