August 22, 2023
A June 2023 report by the Georgetown University’s Center for Retirement Initiatives (CRI), in conjunction with CEM Benchmarking (CEM), Has the Lack of Asset Diversification in DC Retirement Plans Been a Costly Missed Opportunity?, found that adding illiquid assets, such as private equity, real estate, and infrastructure, to the target date funds (TDFs) of defined contribution (DC) retirement plans would have resulted in a 0.15% (15 basis points) increase in return per year over a decade. When applied to all U.S. target date options, such an increase would currently represent $5 billion in additional annual net returns. For an individual participating in a DC plan, this improved return on investment, if obtained over their career, would result in an additional $2,400 per year in spending power for a retiree with $48,000 per year in retirement income.
On July 10, 2023, nine of the United Kingdom’s largest DC pension providers pledged their support for a voluntary agreement — the Mansion House Compact — to allocate 5 percent of assets in their default funds to unlisted equities by 2030.
Moderator:
- Angela Antonelli, Research Professor and Executive Director, Center for Retirement Initiatives, Georgetown University’s McCourt School of Public Policy
Panelists:
- Mark Fawcett, CEO, Nest Invest (UK)
- Chris Flynn, Head of Product Development and Research, CEM Benchmarking
- Anne Lester, Member, Board of Directors, Partners Group; and Member, Board of Directors, Smart USA
- Jani Venter, Co-President, Defined Contribution Real Estate Council (DCREC); and Head of DC Real Estate Solutions, J.P. Morgan Chase