Changes to Defined Contribution Plans Continue in 2011
Movement away from mutual funds to collective trusts and separate accounts will grow, according to a recent survey.
By Judy Ward
Inflation worries have spread to some retirement plan sponsors. Among the 30 percent of employers with a defined contribution plan that intend to add investments to their lineup in 2011, TIPS (Treasury Inflation-Protected Securities) funds and real-return funds came in first in a survey by consultant Callan Associates. At year-end 2010, 16 percent of DC plans offered one or both of these investment options. We have been having conversations with plan sponsors who are concerned about the prospects for inflation, and whether people at retirement with heavy fixed-income allocations have adequate ways to diversify, says Lori Lucas, Callans defined contribution practice leader. Real estate funds placed second for new fund additions, with sponsors interested primarily in REITs, and she also attributes that largely to inflation-protection issues. ....