Retirement Summit: Key Takeaways

Written by Christian O’Dwyer, CFA
Christian is a Vice President at Innovest Portfolio Solutions

Innovest joined more than two hundred plan sponsors, advisors, and asset managers in New York City in May to discuss how the industry can continue improving products and services that drive better outcomes for retirement plan participants. The discussions, which took place at the J.P. Morgan Retirement Summit, included a variety of topics: auto enrollment and escalation, target date funds, fee-related regulatory and legislative updates, and protecting personal and plan information from cybercrime.

As the retirement landscape evolves, new trends have emerged. Total industry assets currently stand at approximately $27 trillion and are split evenly between defined contribution, defined benefit, and individual retirement accounts. Among defined contribution plans, 64% of plans have adopted autoenrollment, and 62% offer target date funds. Of the plans offering target date funds, 78% use them as the Qualified Default Investment Alternative. (1) These statistics demonstrate that many plan sponsors are facilitating retirement savings and helping younger employees to invest earlier. However, of the plans with auto enrollment, only 50% also use auto escalation, which has led to lower average contribution rates. Participants who are not actively engaged in monitoring and managing their retirement savings most likely will not save enough to fully fund retirement with average auto enrollment amounts of 3% to 6%. Therefore, plan sponsors should consider the appropriateness of adding auto escalation to their plans.

The retirement summit also focused on litigation pertaining to fiduciary responsibilities. As Innovest consistently reminds its clients, one of the key fiduciary responsibilities is to act prudently and in the best interest of plan participants. Two important court decisions in 2018 helped to clarify how plan sponsors can meet that standard when selecting investments. In White v. Chevron, participants in Chevron’s retirement plan alleged the plan sponsor breached its fiduciary duty by failing to select the cheapest investment vehicles and failing to monitor asset-based revenue sharing. In November 2018, the Ninth Circuit Court of Appeals affirmed the district court’s dismissal of the case. (2) According to the district court’s decision, “Fiduciaries have latitude to value investment features other than price (and indeed are required to do so)”, for example “potential for higher return, lower financial risk, more services offered, or greater management flexibility.” (3) Similarly, the Eight Circuit Court of Appeals recognized that the duty of prudence does not require selecting the investment strategy that ultimately performs best. (4) In the words of the district court’s opinion in that case, “one would expect the Wells Fargo and Vanguard funds to perform differently because the Wells Fargo funds have a different investment strategy than the Vanguard funds. …Therefore, it does not necessarily follow that the Wells Fargo funds were substandard compared to the Vanguard funds.” (5)

The summit provided Innovest with a great opportunity to discuss pressing issues with other industry professionals. Some of the key takeaways were that adding auto escalation, when appropriate, is an important complement to auto enrollment; selecting appropriate investments involves assessing the funds’ value, not only their costs; and protecting against cybercrime looms as a large challenge for sponsors and participants.


1 J.P. Morgan Plan Participant Research 2018

2 White v. Chevron Corp., 752 F. App’x 453 (9th Cir. 2018),

3 White v. Chevron Corp., 2016 WL 4502808 at *9-10 (N.D. Cal. Aug. 29,

2016), citing Tibble v. Edison Int’l, 729 F. 3d 1110 (9th Cir. 2013).

4 Meiners v. Wells Fargo & Co., 898 F.3d 820 , (8th Cir. 2018)

5 Meiners v. Wells Fargo & Co., 2017 WL 2303968 (D. Minn. 2017 ;)