Plan Design
DC/DB: Key topics for 2022
Toni Brown, CFA
Head of Retirement Strategy
Gary Veerman
Head of LDI Solutions

As market dynamics and geopolitical events continue to evolve, it’s important for plan sponsors to reevaluate a few key items.


Know your plans


Do your employees understand their retirement plan(s)? Do they value them? Are all segments of your population benefiting from the current design? Do different demographic sectors — race, gender, job type, ethnicity, age — benefit equally? How do you know? Increasing your knowledge about your employees can help you prioritize your budget into areas that can help the most.


Defined contribution (DC) plans
 

  • Environmental, Social and Governance (ESG): Understand how your existing investment managers incorporate ESG factors. Does the U.S. Department of Labor (DOL) guidance provide the appropriate level of fiduciary comfort? Is a stand-alone ESG option reasonable?
  • Qualified Default Investment Alternative (QDIA): A fiduciary should be well-versed in the QDIA. Does it work for retired participants? How does your manager view and protect against inflation?
  • Retirement paycheck: Many participants are looking for support to create a retirement paycheck. Consider encouraging retiring participants to stay in plan. Retirement income options could include your QDIA, investment options that are liquid with a flexible payout and/or investment options with guarantees.

Defined benefit (DB) plans


Funded status improvement

  • Although 2022 appears to be a volatile year, the funded status of many plans experienced dramatic improvement during 2021. How can plans make the most of this windfall?

Higher inflation

  • How should portfolios adapt to potentially higher inflation? What sorts of relationships to the yield curve should be considered? Do public and corporate DB plans need to think about these issues differently?

PBGC premiums increase again

  • Two separate pieces of 2021 legislation diminished future funding requirements for corporate DB plans. But with Pension Benefit Guaranty Corporation (PBGC) premiums on the rise, should plans contribute more, and maybe even borrow to do so?

Capital Group's Retirement Strategy & Solutions Group


Members of our Retirement Strategy & Solutions Group are available to discuss these topics or any other DC/DB issues that are important to you. Email us at RetirementStrategy@capitalgroup.com.


Our latest insights

Published on August 19, 2022

Toni Brown leads senior retirement strategy with 33 years of experience (as of 12/31/2022). She holds an MBA from Arizona State University and a bachelor’s degree in general business from the University of Denver. She also holds the Chartered Financial Analyst® designation.

Gary Veerman is head of LDI solutions with 23 years of industry experience (as of 12/31/23). He holds a master's degree in global financial analysis from Bentley University and a bachelor's degree in business administration with a concentration in finance from West Virginia University.

Learn more about
Plan Design
Defined Benefit
Defined Contribution
Liability-Driven Investing
Retirement Income

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