Talking Points
Reported by PLANADVISER Staff
A Cents-ible Approach
Penny-framing can be used effectively to ease savings decisions for participants. For example, a 7% saving rate would be expressed as saving “7 pennies” from every dollar earned.
Source: Voya, “A Working Paper: Reducing Savings Gaps Through Pennies Versus Percent Framing”
Investment Menus
In an NEPC survey, plans that reported using tiered design offer investment lineup choices as follows:
| Saving Phase | Spending Phase |
| Professionally Managed | Professionally Managed |
|
• Target-date funds – 97% • Managed accounts – 38% • Target-risk or balanced funds – 38% |
• Target-date funds – 97% • Managed accounts – 38% • Target-risk or balanced funds – 38% |
| Self-Service | Self-Service |
|
• Additional choices – 100% • 3 or more index choices – 70% |
• Capital preservation – 99% • Installment payments from plan – 88% • Managed payout fund – 2% • Deferred annuity – 1% |
| Expanded Choice | Expanded Choice |
| • Brokerage window – 63% | • Out-of-plan annuity purchase window (offered by the recordkeeper) |
Note: Respondents represent 137 plans with an average asset size of $1.7 billion and 12,200 participants.
Source: NEPC 2021 Defined Contribution Plan Trends and Fee Survey Results