The DBing of DC Plans
The DBing of DC Plans is our white paper that explains the advantages of our application of DB methodology to add actuarial structure to individual DC plan accounts. The industry is talking about adding DB features to DC plans via automatic enrollment designs using default contribution levels and target date funds as proxies for calculated funding rates and investment return objectives.
However, the actuarial structure of DB plans can tell participants their income replacement ratio, whether or not their current account balance leaves them under or over funded, and if the rate of return they actually earned is greater or less than the return required to meet their funding goal. If after doing this, funding shortfalls are anticipated, it can be used to calculate guidance to achieve adequate benefits. All of this is missing from both traditional savings plans and automatic plans.
Article
The DBing of DC Plans is our white paper that explains the advantages of our application of DB methodology to add actuarial structure to individual DC plan accounts. The industry is talking about adding DB features to DC plans via automatic enrollment designs using default contribution levels and target date funds as proxies for calculated funding rates and investment return objectives.
However, the actuarial structure of DB plans can tell participants their income replacement ratio, whether or not their current account balance leaves them under or over funded, and if the rate of return they actually earned is greater or less than the return required to meet their funding goal. If after doing this, funding shortfalls are anticipated, it can be used to calculate guidance to achieve adequate benefits. All of this is missing from both traditional savings plans and automatic plans.
Article
