By Randy Myers
Retirement savings plans seek to deliver a common goal—a financially secure retirement—to large and diverse groups of people. But technological innovations are now making it easier to offer a more personalized approach, says Lew Minsky, president and chief executive officer of the Defined Contribution Institutional Investment Association.
Speaking at the Stable Value Investment Association’s 2025 Spring Forum, Minsky outlined three distinct phases in defined contribution plan evolution:
1. The retail phase began after the 1974 Employee Retirement Income Security Act, featuring daily valued recordkeeping models and 401(k) plans using mutual funds as investment options.
2. The institutional phase, starting in the late 1990s, focused on creating architectures that could lead participants to better decisions and default pathways promoting success.
3. The current personalization phase considers shifting away from limited investment menus toward customized approaches that meet participants where they are—particularly important for engaging younger generations who expect personalized experiences.
Minsky cited research showing that while most retirement professionals believe current investment lineups meet the needs of early and mid-career workers, only a minority believes this is true for late-career workers and retirees.
“More and more voices are willing to speak up and say that maybe we’ve gotten too limited in menu construction, and maybe the inability to have choice is discouraging some people,” he said.
Indeed, 18% of plan sponsors surveyed by MFS Investment Management last year reported recently making changes to the brokerage window portion of their investment lineup, according to Jeri Savage, retirement lead strategist at MFS, who joined Minsky at the SVIA Spring Seminar.
Participants want and need more help
Savage shared key findings from the 2024 MFS Global Retirement Survey and MFS DC Plan Sponsor Survey. The results revealed that many participants aren’t on track to meet retirement savings goals. Seventy-four percent said they need to save more, 59% said they will need to work longer than planned and 27% don’t expect to be able to retire at all. Further, 72% would work with an advisor if their plan offered access to one.
In the last year, 45% of participants changed their retirement investments—44% becoming more aggressive and 52% becoming more conservative. In both cases, economic concerns drove these changes.
For both active participants and retirees, the top priority for retirement portfolios is predictable payments, followed by inflation adjusted payments. Insurance protection was a top-three priority for 47% of active participants but only 25% of retirees.
Savage suggested stable value funds could help deliver the predictable payments retirees seek.
Plan sponsors focused on SECURE 2.0, investment menus
The plan sponsor survey showed that the most common area of focus for sponsors over the next 12 months is reviewing the SECURE 2.0 Act and adopting its provisions, cited by 82% of survey respondents. Next up is evaluating the investment lineup holistically (57%) and focusing on operational issues (43%).
Right now, 28% of sponsors offer only nine investment options or less in their plans, while 45% offer 10 to 14 options and 27% offer 15 or more. Notably, sponsors with only defined contribution plans are much more likely to offer 15+ investment choices than those with both defined contribution and defined benefit plans (34% vs. 18%).
While 53% of plan sponsors said they offer a stable value fund as their capital preservation option, only 17% offer a money market fund. Another 28% offer both, while 2% offer neither. The survey indicates that 81% said stable value can be useful during both the accumulation and decumulation phases of retirement plan participation.
Minsky noted that as default investment alternatives evolve beyond off-the-shelf target date funds toward custom solutions, including managed accounts, opportunities will expand for stable value and other options within these frameworks.
“The vast majority of assets are going to go to and stay in default investment structures,” Minsky predicted. He compared participant preferences to consumer shopping habits, noting that many people prefer Trader Joe’s over traditional supermarkets because experts have curated the best products for them. Most DC plan participants, he reasoned, want their investment choices similarly curated.
Retirement income still on back burner for some sponsors
In discussing their objectives for the next 12 months, only 37% of plan sponsors are prioritizing the establishment or refinement of their retirement income philosophy. Minsky noted this reveals a disconnect between sponsors’ priorities and the retirement industry’s focus on retirement income solutions.
Plan sponsor hesitancy to adopt new retirement income products, Minsky said, can be attributed primarily to fear of litigation but also to a fear of obsolescence.
“They (sponsors) see the marketplace continuing to evolve and don’t want to get locked into a solution or product that becomes outdated in a year or two,” Minsky said.
Ironically, litigation fears can be stronger among the nation’s largest plans, whose size makes them more attractive targets for lawsuits, than among smaller plans with fewer assets to pursue.
“To some degree, the ability to innovate actually goes up as you go down market,” he observed.
Nevertheless, Minsky believes some larger plans are starting to rationalize that if they face litigation risks regardless of their actions, they might as well focus on doing what’s best for their plan participants.
