Recession Triggers DC Changes

Large U.S. companies have made changes to the investment lineups of their defined contribution (DC) plans, according to Watson Wyatt.

More than half (56%) of 85 surveyed senior-level financial executives reported making changes since June 2008 or are planning to by the end of 2009. Nearly half (45%) of companies added new U.S. equity funds to their lineup, while 62% dropped an existing U.S. equity fund.

The vast majority (93%) of companies offer a default investment option in their DC plan. Of these companies, 71% offer a target-date fund.

One in five (20%) companies have either already made or plan to make changes to their target-date funds, despite the relative newness of these products. Of those companies, 11% have chosen to apply more conservative strategies, 42% have made changes to lower costs, and 32% have made changes to build custom strategies.

The Watson Wyatt survey was conducted in August 2009.

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