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The book is divided into three parts. Part One (Chapters 1–4) provides the background that readers will need to build their understanding of DC plan design rudiments. Part Two (Chapters 5–9) sets out a guide to understand the overall DC investment structure and menu of choices plan sponsors and participants face. In Part Three (Chapters 10 and 11), we return to a focus on the individual, both in the U.S. and other markets around the world. In it we explore the specific plan features and investment choices retirees seek as they consider whether to stay in their plans, and how a DC plan balance could be turned into a lifetime of retirement income.

Here’s what’s happening, chapter by chapter:

Chapter 1: We start with an overview of the new reality. For most workers success is up to the individual, as DC plans have replaced traditional pension plans as the primary source of employer-provided retirement income. While the objective is often the same, design around the globe varies significantly so we look at the types of plans by major market. Then we discuss what this shift means as fiduciaries design DC plans: What are a fiduciary’s responsibilities? How can consultants and advisors help? How can plans be designed to succeed? Where does a plan sponsor begin? This chapter includes an assessment of the extent to which workers globally may rely on DC plans for retirement income, showing how the audience for DC plans continues to expand. We discuss the challenges that plan sponsors face in governing plans and share views on the importance of both contribution and investment design. We also consider automatic enrollment and contribution escalation, and then turn our attention to investment design.

Chapter 2: In this chapter, we introduce a framework for evaluating and structuring DC plans. We discuss how to align investment design to the plan objective and introduce the innovative PIMCO Retirement Income Cost Estimate (the “PRICE” approach) as a methodology to quantify both the historical and prospective cost of buying a lifetime income stream. The PRICE approach helps fiduciaries to identify the number, or amount of savings, a worker needs to retire. In this chapter, readers will be able to ask – and answer – the questions: What is the PRICE of retirement? Is your company’s DC plan on track? We also reach into the world of behavioral finance to help understand why numeric or quantitative frameworks can provide an important counterpoint to the biases that may otherwise shape our behavior.

Chapter 3: Here we turn to plan investment structure, including an investigation of the number of tiers and investment structures available in plan design. We consider qualified default investment alternatives (QDIAs), including the types of investments and prevalence of each. Then we look at the core investment lineup, helping readers understand how to think about the number and type of investment offerings. We also consider active versus passive investment choices, and brokerage windows (whether full or mutual-fund-only). Finally, we consider the investment structure, whether mutual fund, collective investment trust (CIT), or separately managed account. We also explore white label or multimanager approaches, including considering when a delegated or outsourced chief investment officer approach might make sense.

Chapter 4: In Chapter 4, we delve into target-date funds. We consider the types available, including packaged, custom, and semicustom. What type of fund may be desirable by plan size? Why may a custom or semicustom approach make sense? We review evaluation criteria and how to apply these during both selection and monitoring of the funds. Among the criteria, we include the objective of the fund, diversification, investor loss tolerance versus capacity, and more.

Chapters 5–9: Part Two includes Chapters 5 to 9 in which we review core investment offerings in DC plans, including options for capital preservation, fixed income, equity, and real assets. In Chapter 9, we consider whether and how alternative assets fit within plan offerings. Together these chapters allow readers to gain insight into the full range of investment options for DC plans, and the trade-offs, benefits, and costs of different approaches – including how to evaluate plan options in the face of a changing regulatory and economic backdrop. How might an environment of equity levels at record highs and interest rates at record lows, for example, require plan sponsors to review their core lineups? What is the role of active strategies with global exposure, or the importance of inflation hedging? In these chapters, we evaluate how considering options from both return and risk perspectives can help provide the assortment of solutions retirees will likely need.

Chapter 10: In Part Three, we shift from accumulation to distribution with a more in-depth look at the options available for retired plan participants. We grapple with how retirees make the decision to stay in or exit their plans; and we investigate what plan features and investment choices retirees need, both from the point of view of expert observers and the retiree. Questions include: What role should plans play in encouraging retirees to leave assets in the plan at retirement, and what features cause retirees to stay? How do individuals think about and accommodate the impact that increasing longevity may have on their retirement income plans?

Chapter 11: We wrap up with the best ideas for improving defined contribution plan success, including a summary of suggestions made throughout the book. We will consider how retirement plan coverage might be improved, including ideas from outside the United States. Among potential improvements, we’ll look at increasing contribution rates, reducing plan leakage, and aligning investment design to a retirement objective.

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.

In this volume, we have likewise turned to prominent and insightful academics in the world of retirement income planning – including the father of modern finance, Harry Markowitz. Through our interviews with these masterful observers, we broaden the scope of our discussion to include everything from the impact of the field of behavioral finance on individual behavior and DC plan design, to demographic issues such as the effect of increasing longevity for Americans on DC plan design and outcomes, among other topics.

And while this book focuses primarily on U.S. DC plan design, we intend that non-U.S. readers find the framework, case studies, and consultant insights relevant and helpful. We also hope that U.S. readers will be enriched by the information and insights we pull in from other economies around the world.

How should readers use this book? You might think of it as akin to a cookbook, or car-repair manual, to give two examples. While it has been designed to flow logically from start to finish, readers might find it most useful to dip into or refer to specific ideas or chapters – without necessarily reading in a linear fashion. To that end, we’ve written it so the sections and chapters can function independently, versus requiring you to build knowledge that carries from one section to another. And both the Contents and Index can help readers locate specific conversations that are of particular interest. All that said, readers should engage with this volume in whatever way best suits their needs.