What DC Plan Members Really Want

12 Pages Posted: 1 Oct 2011 Last revised: 17 Sep 2012

Date Written: September 21, 2011

Abstract

Target-date or lifecycle funds are popular because they simplify decision making, but they are blunt instruments in dealing with market risk and personal goals. We reengineer age-based lifecycle funds, making them more responsive to individual goals and to market conditions, by structuring a dynamic risk-based glide path that targets replacement income. We conclude that adjusting portfolio risk based on progress toward a goal improves the likelihood of achieving a target income with lower expected risk than current lifecycle funds and other popular strategies.

Keywords: Defined Contribution Plan, Dynamic Glide Path, Lifecycle Fund, Pension Fund, Target-Date Fund

Suggested Citation

Yamada, Mark S. and Tretiakova, Ioulia, What DC Plan Members Really Want (September 21, 2011). Rotman International Journal of Pension Management, Vol. 4, No. 2, p. 60, Fall 2011. Available at SSRN: https://ssrn.com/abstract=1936014

Mark S. Yamada (Contact Author)

PUR Investing Inc. ( email )

309-1179 King Street West
Toronto, Ontario M6K 3
Canada

Ioulia Tretiakova

PUR Investing Inc. ( email )

309-1179 King Street West
Toronto, Ontario M6K 3
Canada

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