While most DC plan sponsors view retirement as the end of their relationship with their employees, some plan sponsors are taking an alternate approach by extending their DC retirement program to include a decumulation option.

Idan Shlesinger, managing partner, DC pensions and savings plans with Morneau Shepell, shared the best ideas from the topic discussed at the 2015 DC Plan Summit.


Key takeaways for employers:

  • The primary benefit to this approach is, plan members pay dramatically lower fees in decumulation and, as a result, enjoy significantly higher income in retirement. Other benefits include a continuation of the relationship between plan sponsors and their former employees, and an increase in the program’s asset pool, potentially reducing fees for the entire program
  • There are questions on what level of incremental fiduciary responsibility, if any, a plan sponsor might be taking on by setting up such a program versus a traditional DC plan, as well as the right governance structure required to mitigate the risk.
  • Plan sponsors need to consider their philosophy around their retiring members. Do they believe retirement should be viewed as an exit and end of the relationship? Or do they view retirement as an evolution of their relationship with retiring members? This philosophy needs to drive whether or not the benefits provided by these types of programs would outweigh the associated duties or risks for the plan sponsor.

View more videos from the 2015 DC Plan Summit.

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