Description: This article summarizes the progression over the last three decades as to how contributions have been invested under qualified 401k and other defined conribution plans. It also discusses the current trend of investing in a single life style portfolio selected from a choice of three to five options and the benefits of this type of option.

Description: This article helps illustrate that a guaranteed income stream in retirement has much more value than merely longevity protection. Used properly, a payout annuity is also a hedge against one's retirement nest egg evaporating, leaving the retiree living check to check on a fixed income only. The article will be of interest to those involved in product development and design, sales and marketing, and payout annuities or guaranteed withdrawal benefits in general.

Description: In this session at the SOA 2003 Washington, DC Spring Meeting, the panelists discuss the value of deferred taxes to the owner of an IRA, 401k or similar product. The time it takes for tax-deferral benefits to overcome typical penalties levied on early distributions is reviewed. They also discuss the effect of tax deferral on the risk profile of investments.

Description: This paper examines the so called 1/n investment puzzle which has been observed in defined contribution plans whereby some participants divide their contributions equally among the available asset classes. It has been argued that this is a very naive strategy since it contradicts the fundamental tenets of modern portfolio theory. We use simple arguments to show that this behavior is perhaps less naive than it at first appears. We show that when we account for estimation error the 1/n rule has some advantages in terms of robustness and we demonstrate this with numerical experiments. From The Actuarial Research Council, Volume 38, No. 1.

Description: Many retirement actuaries have experience developing, implementing, and monitoring Liability Driven Investing (LDI) strategies for plan sponsors. These strategies typically involve modifying a plan’s investment strategy to remove a significant portion of the investment and interest rate risk now or at some point in the future when specific triggers are met. The tactics often involve the use of fixed income assets to cash flow and/or duration match the liabilities. In the spirit of helping actuaries expand their roles in an evolving defined contribution world, this article explores the application of LDI and derisking strategies within defined contribution and individual retirement accounts. The economic theory behind this approach is called the lifecycle hypothesis, or lifecycle finance. The benefits of the lifecycle finance method are that it provides a safe approach to save for retirement and a secure source of floor income during retirement. Similar to pension plans, each individual has his or her own idiosyncratic needs, wants, and risks that should be considered. Actuaries are uniquely situated to help defined contribution plan sponsors, individuals, and even themselves implement the lifecycle finance approach by developing and distributing tools and methods that focus on income (rather than wealth), LDI strategies, and personalization.

Description: This spreadsheet sets out a framework to evaluate the value and effectiveness of a defined contribution arrangement.

Description: This report presents a framework that could be used by employers and employees to assess defined contribution retirement plan benefits.

Description: In this article, the author discusses the impact automatic enrollment AE in 401k programs has on plan participants. From the Pension Section News, October 2011, Issue No. 75.

Description: This project has four phases. Phase 1 develops the framework for using a portfolio approach to developing retirement income strategies, and establishes a baseline for comparing to future phases. Phases 2, 3 and 4 analyze more complex retirement income solutions than Phase 1, to determine if the additional complexity improves projected outcomes and can be justified by the potential to deliver more favorable results. Interim reports have been prepared for each phase and can be found on the SCL and SOA websites. This report integrates the findings and conclusions from the Interim Reports, to help plan sponsors and their advisors consider the various goals, RIGs, and retirement income solutions that were analyzed in all four phases. This report references the analyses from the interim reports, but does not replicate all of these analyses. The Interim Reports provide many more details on our analyses for all four phases and should be used in conjunction with this report.

Description: This material summarizes work done to date to develop a model for a quantitative evaluation framework for retirement benefit systems.