Successful Defined Contribution Investment Design
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Оглавление
Gao Ying. Successful Defined Contribution Investment Design
Disclosure
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
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
IN CLOSING
QUESTIONS FOR PLAN FIDUCIARIES
CHAPTER 3. Plan Investment Structure
TIERS AND BLENDS: INVESTMENT CHOICES FOR DC PARTICIPANTS
TIER I: “DO-IT-FOR-ME” ASSET ALLOCATION INVESTMENT STRATEGIES
TIER II: “HELP-ME-DO-IT” STAND-ALONE OR “CORE” INVESTMENT OPTIONS
TIER III: “DO-IT-MYSELF” MUTUAL-FUND-ONLY OR FULL BROKERAGE WINDOW
CONSIDERING AN OUTSOURCED CHIEF INVESTMENT OFFICER
IN CLOSING
QUESTIONS FOR PLAN FIDUCIARIES
CHAPTER 4. Target-Date Design and 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?
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
IN CLOSING
QUESTIONS FOR PLAN FIDUCIARIES
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?
INVESTMENT-GRADE AND HIGH-YIELD CREDIT
BOND INVESTMENT STRATEGIES: PASSIVE VERSUS ACTIVE APPROACHES
ANALYTIC EVALUATION: COMPARING BOND STRATEGIES
FIXED INCOME WITHIN TARGET-DATE GLIDE PATHS
OBSERVATIONS FOR FIXED INCOME ALLOCATION WITHIN TARGET-DATE STRATEGIES
IN CLOSING
QUESTIONS FOR PLAN FIDUCIARIES
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
IN CLOSING
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 INFLATION RISK 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
IN CLOSING
QUESTIONS FOR FIDUCIARIES
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
IN CLOSING
QUESTIONS FOR PLAN FIDUCIARIES
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 IN RETIREMENT: 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
IN CLOSING
QUESTIONS FOR PLAN FIDUCIARIES
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
ANALYTIC FACTORS TO CONSIDER: SUMMARY BY ASSET PILLAR
IN CLOSING
Closing Comments
PRIORITY 1: INCREASING PLAN COVERAGE AND INDIVIDUAL SAVINGS RATES
PRIORITY 2: MOVING TO OBJECTIVE-ALIGNED INVESTMENT APPROACHES
PRIORITY 3: BROADENING OPTIONS FOR RETIREMENT INCOME
NUDGING ONE ANOTHER ALONG A PATH TO SUCCESS
Index
Отрывок из книги
Successful Defined Contribution Investment Design
How to Align Target-Date, Core, and Income Strategies to the PRICE of Retirement
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Finally, in our closing comments, we’ll identify some top priorities for future action. These include 1: increasing plan coverage and savings rates, 2: moving to objective-aligned investment approaches, and 3: broadening options for retirement income.
As readers proceed through the book, they will find dozens of design examples and insights from plan sponsors such as Intel Corporation, The Boeing Company, and Nestlé USA, among others. We also draw on the rich insights and perspectives that DC plan design consultants can offer, including Aon Hewitt, Callan, Mercer, NEPC, Rocaton Investment Advisors, LLC, Russell Investments, and more.
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