Practical analysis for investment professionals
26 January 2023

DC Plan Sponsors: Seven Priorities for 2023

Defined contribution (DC) plans, among other retirement savings vehicles, are the most common ways that US workers save for retirement. DC plan programs in the United States totaled $8.9 trillion in assets as of Q3 2022 and represent 22% of total retirement assets in the country. Plan sponsors thus have a tremendous responsibility to provide and manage retirement benefits on behalf of their employees.

To help plan sponsors, we curated seven topics that we believe are top priorities for retirement programs in 2023.

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1. Saving for Retirement: Lower for Longer Investment Expectations

Setting aside the 2022 bear market for equities and most other fixed-income types, capital market assumptions about investment performance over 10-year and 30-year horizons are lower than their historical averages. All else equal, this implies that retirement savers need to save more to build their desired retirement nest egg. This is especially concerning for retirement savers who are unaware of the changing expectations or the resulting need to up their savings rates.

Because retirement savers don’t always know about the dichotomy between past and expected future investment performance, plan sponsors should maximize their communications and prioritize educational methods that encourage increased savings rates. Two specific approaches have succeeded with our clients. The first is high-quality, one-on-one or group financial education. The second is assessing whether a plan’s automatic enrollment and automatic increase deferral percentages are set to appropriate levels given lower-for-longer investment expectations. Reviewing tools, such as retirement calculators, can also be useful to help ensure their settings reflect lower expected returns.

2. Examining the Investment Menu Review Process

Creating and maintaining an investment menu that empowers plan participants to select and build a diversified investment portfolio is among DC plan sponsors’ most important duties. Reviewing the menus should be a regular, well-documented, and ongoing exercise — and not just during or following challenging years like 2022.

In particular, we’ve noticed more plan sponsors want to reaffirm their target date fund (TDF) suite selection or consider a change. As participant demographics evolve over time, does the current TDF remain appropriate? That is a critical question to evaluate. We encourage plan sponsors to integrate guidance from the Department of Labor’s (DOL’s) “Target Date Retirement Funds — Tips for ERISA Plan Fiduciaries” into the review and document the process and outcome. We recommend regular reviews, at least every three-to-five years, and potentially more often when there are material changes to the composition or characteristics of the participant group or to the glide path or composition of the TDF.

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3. Driving Employee Engagement through Plan Advocates/Plan Champions

Labor trends and the war for talent are forcing employers to highlight the value and quality of their
retirement benefits. We work with clients to analyze how competitive their plans’ key features are within their industry. With that in mind, even the most competitive DC plan is only as effective as the degree to which employees engage with it.

To bring more employees in, we recommend customizing messaging and communications based on their different knowledge levels and backgrounds. As the Baby Boomer generation nears retirement and Gen Z enters the workforce, workforce demographics are changing — and communication strategies need to adapt to stay relevant.

We also encourage empowering “plan advocates” outside of the HR team who can help champion the plan to other employees. This works especially well when hiring managers are among the plan advocates. They can leverage their plan knowledge both in their recruiting efforts and to retain the teams they manage.

One final note: Statistics show that not all demographic groups are benefiting equally from their DC plans. Better communication methods can help close that gap. Generic, one-size-fits-all messages won’t. Plan advocates with diverse backgrounds, experience, and career levels can help customize messaging in a way that resonates across the organization.

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4. Delayed Retirements Due to 2022 Market Downturn

The 2022 market downturn led some individuals to delay or consider delaying retirement. Those who chose to delay need to re-examine and re-affirm their asset allocation or TDF vintage. Industry surveys show that participants have a general misunderstanding about TDFs, particularly around equity risk at retirement age and the protection of principal. Plans sponsors need to clear up this confusion for those at or near retirement or who might be 10 to 15 years away from their planned retirement age.

To this end, plan sponsors in 2023 should consider communications and participant education focused on planning for retirement. This education should familiarize participants with adjusting asset allocation based on expected retirement date, adequacy of savings, risk tolerance, and general financial planning, among other topics. Further, we believe this education is best delivered by unbiased, non-commissioned educators who are not driven by rollovers or commissions. The programs should be available at different times, including early morning and at night, to fit all employees’ schedules. These efforts together can not only help those near or at retirement get back on course; they can also improve employee morale over the long term.

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5. Legislative and Regulatory Activity

Congress and the DOL have been actively revising DC plan rules and regulations over the past couple of years. Late in 2022, President Joseph Biden signed the omnibus spending package, which includes the Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act. The Act expands on SECURE Act 1.0 themes and concepts intended to expand retirement plan access and make saving for retirement easier for employers and employees alike. It also introduced provisions impacting plan distributions, among other initiatives. The Act has widespread implications for the industry and will increase many Americans’ saving potential.

Some SECURE 2.0 provisions took effect on 1 January 2023. The required minimum distribution age rose to 73, for example. Other aspects, such as requiring automatic enrollment for new 401(k) and 403(b) plans, will start in 2025. Most plan sponsors are not required to amend the plan to comply with the Act until the end of the 2025 plan year. There is no doubt that plan sponsors will be focusing on the SECURE Act 2.0 throughout 2023 and working with their plan providers to understand and implement the changes.

Also worthy of note: The DOL issued a Final Rule addressing how plan fiduciaries may consider the inclusion of relevant environmental, social, and governance (ESG) factors as part of the risk/return analysis when selecting investment options for plan lineups. While the headlines may give the impression that use of ESG factors comes without additional requirements, there are specific provisions in the Final Rule that require scrutiny.

The Final Rule includes standards for meeting fiduciaries’ Duty of Loyalty and Duty of Prudence should they decide to consider ESG factors. These requirements are broadly described and will require interpretation and proper documentation in their application. We view the Final Rule, on its face, as a door that is slightly ajar, but not all the way open, for interested plan sponsors. Those that step through the door will need a strategy to comply with the full requirements outlined in the Final Rule.

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6. Resetting Plan Objectives

Retirement benefits can help recruit and retain top talent. With this in mind, plan sponsors should identify what they want their retirement plan to accomplish for their organization and its employees. The pace of retirement plan improvements has slowed for many organizations over the last couple of years as other priorities took precedence. In 2023, we expect more plan sponsors will reevaluate their retirement plan’s competitiveness within their industry and make changes accordingly.

Plan design and plan communications/employee education are two areas where we are seeing a lot of focus. Plan design changes around employer-matching formulas, among other highly marketable features, have become popular as recruiting tools. Workforce trends around virtual, in-person, and hybrid workers are also getting considerable attention. For plan communications and employee education to be effective, they need to meet employees where they are. And today, that increasingly means a mix of in-person and virtual strategies.

7. Supporting Employees Facing Financial Challenges

Pandemic- and inflation-related challenges have forced some plan participants to take loans or hardship withdrawals to cover expenses. Others reduced or ceased their contributions, especially as inflation rose in 2022. Plan sponsors know that continuous saving toward retirement (and keeping that money invested) drives positive retirement outcomes. Pausing saving or preventing savings from benefiting from long-term investment returns does just the opposite.

The good news is plan sponsors have many tools to help participants get back on track. Among the less-intensive options are increasing the group and individual retirement education sessions available to employees. More intensive options include re-enrollment at a meaningful default deferral and adding auto-escalation to deferral rates. The aggregate participant data available from recordkeepers can help to identify how much intervention a given workforce may require.

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Plan sponsors have a vital task: to help manage retirement programs to create positive retirement outcomes for participants. By focusing on these seven priorities, plan sponsors can direct their resources to where we believe they will have the most positive and outsized impact.

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

The material presented herein is of a general nature and does not constitute the provision by PNC of investment, legal, tax, or accounting advice to any person, or a recommendation to buy or sell any security or adopt any investment strategy. The information contained herein was obtained from sources deemed reliable. Such information is not guaranteed as to its accuracy, timeliness, or completeness by PNC. The information contained and the opinions expressed herein are subject to change without notice.

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About the Author(s)
Christopher M. Dall, CFA

Christopher M. Dall, CFA, is managing director, Defined Contribution Retirement Solutions, for PNC Institutional Asset Management® (PNC IAM). In this role, he leads PNC IAM’s efforts to provide 3(21) investment advisory, 3(38) investment management, financial wellness, and employee education services for defined contribution plans. He provides functional oversight to the Retirement Plan Advisors and Employee Education Consultants who are responsible for providing defined contribution solutions to plan sponsors. Dall joined PNC in 2015 as an associate investment advisor. Most recently, he served as content manager, working closely with the IAM business and marketing teams to create thought leadership and other content for the Outsourced Chief Investment Officer (OCIO) and DC Retirement Solutions Groups. In addition, he has authored content featured on the CFA Institute Enterprising Investor blog and SHRM's blog, in addition to being quoted in industry news sources such as He has also presented on related topics at various industry conferences and local market events. Dall is a director on the Leadership Committee of Plan Sponsor Council of America (PSCA) and the chair of PSCA's Thought Leadership Council. He is an active member of the PNC IAM Diversity, Equity, and Inclusion Working Group and has served as the vice president of the Interfaith Employee Business Relations Group. Dall graduated with a bachelor's of science in finance from Penn State Erie, The Behrend College. He holds the chartered financial analyst® (CFA) designation. He also studied at Oxford College and Emory University.

Bradley Bonno

Bradley Bonno is a retirement sales and service director for PNC Institutional Asset Management® focused on driving strategy and accountability as he leads our Fiduciary Investment Services sales and service efforts. He provides functional oversight to the Retirement Plan Advisers (RPAs) and Employee Education Consultants (EECs) working within Institutional Asset Management who are responsible for the delivery of services to our defined contribution plan clients. Bonno’s insights and perspectives on financial wellness and participant education in the retirement industry have been featured in multiple articles, webinars and interviews. He has been a manager and director with PNC Institutional Asset Management for 18 years leading conversion, relationship management, and employee education teams during his tenure. Prior to joining the firm, Bonno worked with Federated Investors’ Retirement Plan Services group for more than six years. During his last four years with Federated, he served as the group’s conversion manager. In all, he more than 26 years of experience in the retirement plan industry. Bonno graduated with a bachelor's of science in business administration and accounting from Ohio State University.

Domenique DiSilvio

Domenique DiSilvio is a retirement sales and service director for PNC Institutional Asset Management® focused on driving strategy and accountability as she leads our Fiduciary Investment Services sales and service efforts. She provides functional oversight to the Retirement Plan Advisers (RPAs) and Employee Education Consultants (EECs) working within Institutional Asset Management who are responsible for the delivery of services to our defined contribution plan clients. Prior to taking on her current role in 2017, DiSilvio was a retirement sales manager responsible for overseeing a team of RBDOs who assist clients and prospects with their organization’s retirement services needs. Previously, she was a senior relationship manager with the Vested Interest group, a Vested Interest senior account manager and team leader. Prior to joining the firm in 1999, DiSilvio was a retirement plan administrator with Federated Investors. She graduated with a bachelor's of arts in English literature from and a master's of business administration from Robert Morris University. DiSilvio holds the Certified Investment Management Analyst and Accredited Investment Fiduciary® (AIF) designations.

Deana Harmon

Deana Harmon is the investment director for PNC Institutional Asset Management® responsible for leading the advisory services offering for defined-contribution plans. In her role, she is actively involved with the rollout and continued delivery of fiduciary investment services for existing and new clients. In addition, as an investment thought leader, Harmon heads the group’s investment insight and communications with clients, the media, and industry leaders. Prior to her current role, she was chief investment officer and retirement plan adviser for a registered investment advisor firm serving only retirement plans. There she provided leadership and advice to clients. Before that position, she was a senior relationship manager at a regional broker/dealer and registered investment advisor, where she was responsible for investment reviews and retirement plan advisory services. Harmon was acknowledged for her contributions to the retirement industry by being awarded NAPA Top Woman Advisors accolade in 2018, 2017 and 2015. She is also a member of the Investment Committee for the Plan Sponsor Council of America. Harmon graduated with a bachelor's of science from Ball State University and with a master's of business administration from Butler University. She holds the Certified Investment Management Analyst and Accredited Investment Fiduciary® (AIF) designations.

Taylor Wagner

Taylor Wagner is a product manager for defined contribution retirement solutions with PNC Institutional Asset Management®. In this role she helps drive PNC IAM’s efforts to provide 3(21) investment advisory, 3(38) investment management, financial wellness, and employee education services for defined contribution plans. Wagner graduated with a bachelor's of science in marketing from Boston College and with a master's of business administration in finance from The University of Pittsburgh, Katz Graduate School of Business. She holds the Accredited Investment Fiduciary® (AIF) designation as well as the FINRA Series 7 and 66 licenses.

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