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Goldman Sachs Asset Management Statement on the Russia-Ukraine War. Read it here.    

Defined Contribution Quarterly 1Q 2022

Trends for 2022 and Beyond

With a backdrop of broad dynamics impacting the workforce, such as the Great Resignation, potential challenges and opportunities exist for DC plan sponsors. Our research highlights how the role of the employer continues to evolve, including the role companies play in providing employees with a holistic benefits offering.

In our latest Defined Contribution Quarterly, we examine last quarter flows, dive into specific trends impacting sponsors and participants, and reflect on our Retirement Survey & Insights Report to better understand the current obstacles working individuals face as they prepare for retirement.

Key Findings

Target Date Flows

Similar to prior quarters in 2021, target date flows continued to be negative for retirement and near retirement vintages, while traditional plan participants continued to favor bonds over equities. Year-to-date active manager outperformance has been strong in most categories and strongest in small cap growth equities.

Net Target Date Fund Investment Flows

 

Source: Strategic Insight, Simfund as of 12/31/2021; For open-end mutual funds only.

Broad Dynamics Impacting the Workforce

We continue to see potential challenges and opportunities that may impact DC Plans.

War For Talent

Competition for labor is intense and potentially creates a spotlight on the need for competitive benefits offerings. DC plans are highly valued benefits, and therefore may be more likely to be promoted and/or enhanced.

 

The Shifting Regulatory Regime

The regulatory environment under a new Administration bodes changes heading into 2022 and we could see a focus on ESG rulemaking and competition from new plan types emerging (PEPs and state-run plans).

 

Unusual Market Environment

A strong but volatile market environment, may have benefited certain participants, but does their asset allocation need a rebalance? We could see an opportunity for education, tools and automation to address the potential need for participant rebalancing.

 

Technology as a Driver of Innovation

The use of technology can drive more personalized participant experiences (how participants interact with the plan, more customized solutions for participants) and tie more features together (more holistic retirement programs). 

Plan Sponsor Takeaways

 

Industry consolidation continues to play a role with fewer providers for services and a demand for holistic benefit programs that are broader than just retirement. 

Plan types also continue to develop and may lead to an evolution in DC structures and plan competition. 

The retirement regulatory and litigation environment is ripe for review in 2022 both on the ESG front and with a focus on understanding practices for maintaining cybersecurity. 


Participant Takeaways

 

Automatic enrollment and deferral rates drive success and new research finds higher default savings rates are more effective than a higher employer match in driving participant savings rates.  We are also seeing more participants staying in plans post-retirement. 

More inclusive and holistic plan designs may be on the horizon to support diverse workforce needs. 

Investment solutions continue to evolve and increased digitization may support more personalized advice and solutions. 

Related Insights

THESE MATERIALS ARE PROVIDED SOLELY ON THE BASIS THAT THEY WILL NOT CONSTITUTE INVESTMENT ADVICE AND WILL NOT FORM A PRIMARY BASIS FOR ANY PERSON’S OR PLAN’S INVESTMENT DECISIONS, AND GOLDMAN SACHS IS NOT A FIDUCIARY WITH RESPECT TO ANY PERSON OR PLAN BY REASON OF PROVIDING THE MATERIAL OR CONTENT HEREIN. PLAN FIDUCIARIES SHOULD CONSIDER THEIR OWN CIRCUMSTANCES IN ASSESSING ANY POTENTIAL INVESTMENT COURSE OF ACTION.

The views expressed herein are as of 1/25/2022 and subject to change in the future. Individual portfolio management teams for Goldman Sachs Asset Management may have views and opinions and/or make investment decisions that, in certain instances, may not always be consistent with the views and opinions expressed herein.

THIS MATERIAL DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY JURISDICTION WHERE OR TO ANY PERSON TO WHOM IT WOULD BE UNAUTHORIZED OR UNLAWFUL TO DO SO.

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This material is provided for informational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. This material is not intended to be used as a general guide to investing, or as a source of any specific investment recommendations, and makes no implied or express recommendations concerning the manner in which any client’s account should or would be handled, as appropriate investment strategies depend upon the client’s investment objectives.

Economic and market forecasts presented herein reflect a series of assumptions and judgments as of the date of this presentation and are subject to change without notice. These forecasts do not take into account the specific investment objectives, restrictions, tax and financial situation or other needs of any specific client. Actual data will vary and may not be reflected here. These forecasts are subject to high levels of uncertainty that may affect actual performance. Accordingly, these forecasts should be viewed as merely representative of a broad range of possible outcomes. These forecasts are estimated, based on assumptions, and are subject to significant revision and may change materially as economic and market conditions change. Goldman Sachs has no obligation to provide updates or changes to these forecasts. Case studies and examples are for illustrative purposes only.

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© 2022 Goldman Sachs. Goldman Sachs & Co. LLC, member FINRA. All rights reserved.

Date of first use January 25, 2022. 266065-OTU-1543178

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