April 27, 2016 (New York, NY) – J.P.Morgan Asset Management today released a new piece, "Retirement Reset: How re-enrollment can help strengthen U.S. retirement security." The paper explores the state of the U.S. retirement system 10 years after the passage of the Pension Protection Act (PPA), finding that although progress has been made for defined contribution (DC) participants, many Americans remain woefully unprepared for a retirement that may last upwards of 30 years.
Re-enrollment quickly improves asset allocation for many participants, especially when the plan’s QDIA is a target date fund (TDF). Because participants are defaulted into a TDF based on their age, the asset allocation reflects their investment time horizon, while the fund’s “glide path,” which changes with a participant’s age, helps ensure participants maintain an appropriate allocation over time. For plan sponsors, a re-enrollment can bolster confidence that participants are on a sensible investing path and have a decent chance of staying on that path.
“It’s important not to underestimate the damage that can be caused by inappropriate asset allocation by DC plan participants. Re-enrollment is one action plan sponsors can take that can quickly help move the needle toward better retirement outcomes for plan participants. We are optimistic and have every confidence that as the adoption of re-enrollment continues to increase it will go a long way toward strengthening retirement security for millions of American workers. As we approach the 10-year anniversary of the PPA, we’re calling on the entire industry of plan sponsors, financial advisors, consultants and record keepers to carefully evaluate the benefits of this strategy.”
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J.P.Morgan Asset Management, with assets under management of $1.7 trillion, is a global leader in investment management. J.P.Morgan Asset Management’s clients include institutions, retail investors and high net worth individuals in every major market throughout the world. J.P.Morgan Asset Management offers global investment management in equities, fixed income, real estate, hedge funds, private equity and liquidity. JPMorgan Chase & Co. (NYSE: JPM), the parent company of J.P.Morgan Asset Management, is a leading global asset management firm with assets of approximately $2.4 trillion and operations in more than 60 countries. Information about JPMorgan Chase & Co. is available at JPMorganChase.com.
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