Products June 30, 2021

DCIIA Publishes Resource for Incorporating ESG Investments in DC Plans

The paper aims to provide plan sponsors with tactical steps consistent with their fiduciary obligations.

Reported by

The Defined Contribution Institutional Investment Association (DCIIA) has published “Incorporating ESG in DC Plans: A Resource for Plan Sponsors,” which provides tips for plan fiduciaries considering how to incorporate environmental, social and governance (ESG) investing into a defined contribution (DC) plan.

“This comprehensive overview is the output from a cross-industry group of expert collaborators. It has been subject to extensive peer review and represents our industry’s best thinking on this topic from an educational, product-agnostic perspective,” DCIIA says.

Get more!  Sign up for PLANSPONSOR newsletters.

Institutional investors have reported that ESG approaches will be a future focus, and individual investors, including retirement plan participants, are increasingly demanding ESG investments. However, retirement plan sponsors might still be cautious about offering ESG funds while regulatory guidance is stalled.

In its paper, DCIIA aims to provide plan sponsors with tactical steps that are consistent with their fiduciary obligations. Key recommendations include:

  • Define “sustainability” and clarify investment beliefs on ESG considerations in relevant plan documents, such as a statement of investment beliefs or an investment policy statement (IPS);
  • Examine key considerations and differences among three implementation options for DC plans to understand which path is most appropriate for the plan: material ESG factor integration across all investments, selective sustainable investing funds in the plan lineup, or self-directed brokerage windows;
  • Measure and monitor sustainable investments in a manner consistent with the assessment of other investment options. Sustainable investing funds in alignment with pecuniary benefits, and other funds with goals or objectives independent of, but in alignment with pecuniary benefits, can be more deeply reviewed for intentionality and for the ESG attributes of the underlying holdings;
  • Consult with legal counsel and investment consultants when assessing whether, when and how to implement sustainable investing; and
  • Maintain clear documentation throughout the process to establish procedural prudence.

The paper also includes sections about participant communications and monitoring ESG investments.

It is DCIIA’s second paper on the subject, the first being the 2019 paper, “Sustainable Investing in DC Plans.”
Products June 30, 2021

Public Plans Database Has Been Expanded

Users can now find comprehensive data about public DC plans as well as public DB plans.

Reported by

MissionSquare Research Institute (formerly the Center for State and Local Government Excellence) has announced that the Public Plans Database (PPD) has been expanded to include data from nearly 50 public sector defined contribution (DC) retirement plans.

This represents nearly $140 billion in retirement assets and 2.5 million members. Additional DC plans and data will be added on an ongoing basis, the firm notes.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

The database already contains detailed information on the largest state and local defined benefit (DB) pension plans in the U.S. The public pension plan data spans fiscal years 2001 to 2020 and includes 210 DB plans (119 state-run and 91 locally-run) that account for 95% of U.S. public pension assets and members.

The PPD is updated quarterly and is free to access. It allows users to:

  • Browse key statistics on individual plans and in the aggregate;
  • Search data in real time;
  • Produce customized tables with specific variables; and
  • Download raw data for in-depth analysis.

The enhanced PPD now offers information on DC assets, membership, investment options, contributions, plan types and provisions. It includes 401(a), 457, 401(k) and cash balance plans, along with mandatory, optional, supplemental and primary DC plans.

The database is developed and maintained through the collaborative efforts of MissionSquare Research Institute, the Center for Retirement Research at Boston College (CRR), the Government Finance Officers Association (GFOA), and the National Association of State Retirement Administrators (NASRA).

“Now, users have a better picture of public sector retirement plan assets. This is increasingly important as plan sponsors continue to look at innovative approaches for increasing contributions to DC plans,” says Joshua Franzel, managing director at MissionSquare Research Institute.

«