Prudential Financial

The Next Phase in Retirement Thinking: A Closer Look at Defined Contribution Plans

With defined contribution (DC) plan asset levels declining more than one trillion dollars in 2008,* plan sponsors and participants are rightly concerned about retirement security. The market collapse placed a harsh spotlight on the entire retirement industry, revealing the following weaknesses with DC plans:
  • participants are not saving enough;
  • participants' retirement income is not protected from market downturns and can be exhausted if participants live too long; and 
  • too many individuals still lack access to a retirement plan at work.
And while some of the problems with DC plans were evident long before the market downturn, it has served as a reminder that long-term enhancements must arrive arrive sooner than later.

Prudential's report, Redefining Defined Contribution Plans to Enhance Retirement Security , introduces a new model for plan design and management to help put more American workers on the path to a secure retirement. Prudential, an industry leader in the retirement marketplace, recommends redefining DC plans by incorporating the following elements:
  • built-in risk protection,
  • autopilot retirement planning, and
  • streamlined plan operations.
An in-depth case study, based on analysis conducted by Ernst & Young, is integral to the report, and demonstrates how a redefined plan can dramatically improve outcomes for plan sponsors and participants.

Redefined DC plans will help reduce plan sponsors' fiduciary risk, make plans more efficient and easier to run, and increase retirement security for participants. By re-educating advisors, plan sponsors and participants, and legislators about these critical issues impacting millions of retirement plans, the existing retirement model can be redefined to better suit the needs of all involved.

Read the Redefining Defined Contribution Plans to Enhance Retirement Security report.


* Investment Company Institute, “2009 Investment Company Fact Book,” page 91.


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