April 01, 2013 10:00 ET

401(k) Consultants Say Target Strategies Are Key to Building and Managing Retirement Income

Glide Path Structure and Active Management Ranked Most Important in Selection and Oversight of These Global Strategies

NEWPORT BEACH, CA--(Marketwire - Apr 1, 2013) - Nearly all investment consultants think clients should offer 401(k) plan participants target date or target risk strategies and most believe that active management and reducing risk are important elements of investing globally for retirement, according to the 7th Annual Defined Contribution Consulting Support and Trends Survey released today by PIMCO, a leading global investment management firm and retirement solutions provider.

Of the 51 consulting firms PIMCO surveyed, virtually all (98%) believe that clients should offer a target date or target risk investment tier. The vast majority (94%) believe it is important to actively manage these global asset allocation strategies, including guarding participants' assets against a loss beyond their capacity -- defined by consultants as no greater than 8% in any one year for those at retirement age. Consultants suggest using inflation-hedging assets such as Treasury Inflation-Protected Securities (TIPS), a lower exposure to volatile assets and explicit tail-risk hedging strategies as ways to mitigate risk.

Consultants anticipate a decoupling of target-date strategies from their recordkeeper's proprietary products and toward custom solutions, particularly for plans over $500 million in assets. These survey results show that while delivering returns is important for 401(k) plan participants, consultants see risk management is a critical element for sound investing for retirement.

"Consultants still clearly believe we face considerable global economic headwinds. In fact, nearly two-thirds of the consultants said they expect this low-return, high volatility environment to continue," said Stacy Schaus, executive vice president and PIMCO's defined contribution practice leader.

"In such an uncertain economic landscape, it's more important than ever that plan sponsors help participants navigate their way to and through retirement with strategies which use active management and a robust risk management framework to find the best returns both in the U.S. and abroad, across a range of strategies in every asset class from fixed income to commodities to real assets," said Ms. Schaus.

About the Survey
PIMCO's DC Practice prepares the annual Defined Contribution Consulting Support and Trends Survey to help plan sponsors understand the breadth of views and consulting services available in the DC marketplace. The 51 consulting firms in the 2013 survey serve more than 6,600 clients with aggregate DC assets in excess of $2.4 trillion.

For survey highlights or other PIMCO DC publications, please contact us at 888.845.5012 or email us at 

PIMCO is a leading global investment management firm, with offices in 12 countries throughout North America, Europe and Asia. Founded in 1971, PIMCO offers a wide range of innovative solutions to help millions of investors worldwide meet their needs. Our goal is to provide attractive returns while maintaining a strong culture of risk management and long-term discipline. PIMCO is owned by Allianz S.E., a leading global diversified financial services provider.

Investing in foreign denominated and/or domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks, which may be enhanced in emerging markets. Commodities contain heightened risk including market, political, regulatory, and natural conditions, and may not be suitable for all investors. Investing in the bond market is subject to certain risks including market, interest-rate, issuer, credit, and inflation risk. Inflation-linked bonds (ILBs) issued by a government are fixed-income securities whose principal value is periodically adjusted according to the rate of inflation; ILBs decline in value when real interest rates rise. Treasury Inflation-Protected Securities (TIPS) are ILBs issued by the U.S. Government.

Except for the historical information and discussions contained herein, statements contained in this news release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including the performance of financial markets, the investment performance of PIMCO's sponsored investment products and separately managed accounts, general economic conditions, future acquisitions, competitive conditions and government regulations, including changes in tax laws. Readers should carefully consider such factors. Further, such forward-looking statements speak only on the date at which such statements are made. PIMCO undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

Contact Information

  • Contact:
    Michael Reid
    PIMCO - Media Relations