In 2024, plan sponsors put much of their focus towards investment management fees, fund/manager due diligence, and investment structure evaluation, according to new findings from Callan’s 2025 Defined Contribution (DC) Trends Survey.
The survey, which covers governance, investments, fees, and plan design in DC plans, includes responses from 89 plan sponsors. Over 90% of the plans surveyed had $200 million in assets, and 58% had more than 10,000 participants. Its intention is to highlight the top trends impacting defined contribution workplace plans.
“Not only does the survey provide a benchmark for sponsors to evaluate their plans compared to peers, but it also gives them the information they need to improve their plans and outcomes for participants,” said Patrick Wisdom, a vice president and DC consultant at Callan. “This year’s survey demonstrates the persistence of trends, such as sponsors’ focus on effective governance and fees while they examine their appetite for private markets investments and guaranteed income.”
Plan sponsors highlighted the top fiduciary actions they’ve taken on when administering a DC plan, like reviewing the investment policy statement (IPS), at 86% of total respondents, and completing formal fiduciary training, at 73%.
Unsurprisingly, almost all respondents to the survey said they offer a target date suite (96%), and 93% used a target-date fund (TDF) as their default for non-participant-directed monies.
However, just a small number of respondents said they offered an annuity platform service or a TDF with a guaranteed income component, Callan reports. According to the findings, 12% of plan sponsors weighed the option of incorporating retirement income solutions within a TDF framework, and only 2% added the features to their fund offering. Looking at 2025, 20% of respondents plan to evaluate guaranteed lifetime income in their plans, and 6% say they plan to add it. Further, 19% said they are considering a TDF with an integrated participant option to purchase an immediate annuity.
Other findings from Callan’s research include:
- Half of respondents offered a mirrored active/passive investment lineup in 2024, an all-time high. A mirrored lineup is when virtually all core asset classes are represented by both active and passive options.
- Most plans offered some sort of retirement income solution to employees in 2024. Partial distributions (75%) and installment payments (63%) continued to be the most common. Adoption of solutions with a guaranteed income component was low to date.
- More than half of respondents (57%) offered managed account services, and 74% said they monitor or benchmark these services.
- 84% sought to retain assets of retirees, and 54% sought to retain assets of terminated participants.
- Of the nearly 100 provisions in the SECURE 2.0 Act passed in 2022, the most commonly implemented provision was increased catch-up contributions for participants aged 60 to 63.
- Plans reported high levels of satisfaction with investment advisory services. Financial wellness services received the highest overall marks, with 96% of respondents very or somewhat satisfied.
- Survey respondents noted that Roth deferrals (84%) and automatic enrollment (80%) were the most common enhanced savings features.
Additional findings from Callan’s DC Trends Survey can be found here.
SEE ALSO:
· Plan Sponsors Focused on Reining in Fees: Callan
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news. She is originally from Queens, New York, but now resides in Denver, Colorado.