INTRODUCTION
401(k) plans are changing in terms of their roles, importance, and structures. Along with these shifts, we are seeing the emergence of different governance models - engaging an Outsourced Chief Investment Officer (or OCIO) to manage 401(k) investments continues to see growth in the US, and with the passage of the SECURE Act in 2019, the emergence of Pooled Employer Plans (PEPs) introduces an additional governance model for DC plan sponsors to consider.1
Given this evolving landscape, PGIM partnered with Coalition Greenwich and Curcio Webb to research changes in DC plan governance models, with a special focus on the OCIO landscape. We surveyed both DC plan sponsors and DC OCIO providers to compare views and trends.2
The DC plan sponsor survey includes 155 plan sponsors with at least one 401(k) plan and a minimum of $100 million in 401(k) assets, of which 31 plan sponsors (20%) use an OCIO provider. The OCIO provider survey includes 18 OCIO providers, representing $7.2 trillion in total DC assets (AUM and AUA) of which $505 billion is DC OCIO assets.
1 OCIO, in the context of a DC plan is where a third-party provider exercises discretion across the plan’s investment program. Often referred to as a 3(38) manager, an OCIO provider can assume discretion over some or all of a DC plan’s investment program.
2 Curcio Webb is an independent employee benefits advisor.
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