Global DC savings still decades from resolving retirement cash crunch fears

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[{"type":"text","content":"NEW YORK, July 28, 2025 (GLOBE NEWSWIRE) -- Many defined contribution (DC) plans remain unconvinced that members are on track for sufficient income in retirement and expect the time frame to reverse this to take decades, according to new research by leading global advisory, broking and solutions company WTW’s (NASDAQ: WTW) Thinking Ahead Institute. The Global DC Peer Study 2025, conducted by the Thinking Ahead Institute, brought together 28 leading DC funds from across Asia Pacific; the Americas; and Europe, the Middle East and Africa. Collectively, the funds represent over $6.3 trillion in assets under management, with participants including both public pension funds and private retirement plans. Among these organizations, 60% of expert participants said retirement income was the biggest challenge facing DC funds over the next decade. These concerns are especially pronounced in regions where minimum contribution levels are low or where auto-enrollment is widely misunderstood as being “enough by default.” Several plans noted a growing focus on retirement adequacy — not just coverage or participation — as the next frontier of government reform and public attention. A majority of plans now offer soft-default pathways into retirement, but member behavior still lags behind: Many retirees engage late and tactically rather than strategically. Some plans are trialing collective defined contribution (CDC) or hybrid options to combine flexibility with sustainable income, but these remain exceptions. The study also found that alternative investments are now equal in average allocation to bonds, with both at 20% and equities making up the remaining 60%. This marks a quiet but significant shift in DC investment thinking, particularly in more mature markets such as Australia. While private markets bring new governance and communication challenges, the move reflects a growing belief that long-term return potential must be maximized — especially given the longer-term limitations of bond-heavy defaults. A strong theme across the peer group was concern that current lifecycle designs may be underdelivering, particularly by allocating too conservatively during the early stages of members’ investment journeys. Some peers are exploring time-dynamic risk budgets or even leveraged equities for younger cohorts, based on the logic that greater early ris...

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