Defined contribution (DC) plans sit at the center of the US retirement system. As of the second quarter of 20251, US DC plans held $12.6 trillion, representing approximately 26% of all US retirement assets2. That concentration of capital places a significant fiduciary burden on plan sponsors, who must balance participant outcomes, regulatory expectations, cost pressures, and a rapidly evolving investment and technology landscape.
Looking ahead to 2026 and beyond, incremental tweaks are unlikely to be enough. Technology is reshaping how participants engage with their plans. Education is shifting from generic communication to personalized, life-stage–based support. Investment lineups are being tested by higher volatility, new product structures, and renewed debate around alternatives. At the same time, litigation risk and regulatory change continue to redefine what “prudence” looks like in practice.
Against this backdrop, plan sponsors are being asked to make more consequential decisions with less margin for error. The following sections highlight priority areas plan sponsors should consider as they evaluate and manage their retirement programs in the year ahead.
Advancing Technology
The expansion of personalized retirement solutions is increasingly driven by advancements in technology, particularly the rise of AI-powered participant engagement tools. These innovations promise guidance tailored to the unique financial behaviors, goals, and life circumstances of individual participants.
A comprehensive retirement plan involves more than just looking at a single retirement plan account. A holistic approach considers the entirety of a participant’s financial life, including spending habits, debt, and savings outside of retirement accounts. This creates inherent scalability challenges. While human advisors offer depth and nuance, they can be costly. Conversely, robo-advisor or automated solutions, though efficient, may risk delivering generic or imprecise advice.
There is no one-size-fits-all answer to this trend. Plan sponsors should carefully evaluate available solutions to determine the most appropriate fit for their participants, with particular attention to investment outcomes, service quality, and associated fees.
Evolving Education
Effectively supporting employees throughout the various phases of their lives and careers is a challenge many organizations face. A thoughtful yet flexible approach can make a meaningful difference, providing employees with the resources they need to grow their financial confidence and expand their knowledge.
When employees feel empowered, they tend to be more engaged, collaborative, and productive. Empowerment comes not only from access to resources but from personalization — support that reflects both their career stage and current life circumstances.
One-on-one education sessions offer an opportunity for employees to ask questions and explore retirement planning in a way that feels relevant and approachable. Continuity, such as recurring meetings with the same educator and building on previous conversations, can enhance the experience and reinforce progress.
Personalized education is no longer considered optional; it is an expectation. Organizations that offer accessible, individualized support are better positioned to meet the evolving needs of their workforce and foster longer-term financial well-being.
Resource Assessment
When assessing tools and resources offered by recordkeepers, it is critical to evaluate how these platforms enhance participant engagement, foster financial wellness, and promote retirement readiness. Managed accounts and professional advice services represent a growing area of interest. These features provide customized investment strategies tailored to individual participant goals, risk tolerance, and financial situations. Many of these solutions combine algorithmic portfolio management with access to human advisors, enabling participants to make more informed and personalized decisions.
Plan sponsors should consider usability, fee transparency, integration with plan data, and quality advice to meet both fiduciary standards and participant needs. In our role as advisor, while we do not recommend these solutions as the qualified default investment alternative (QDIA) for a plan, a well-vetted solution may serve as a valuable tool for participants seeking personalized investment support.
Investment Strategy
Alternative assets and target date funds
The August 7, 2025, Executive Order “Democratizing Access to Alternative Assets for 401(k) Investors,” continues to generate ongoing public debate. While the Executive Order does not mandate that 401(k) plans offer alternative investments, it directs the Department of Labor and the Securities and Exchange Commission to reduce any regulatory barriers that may prevent fiduciaries from considering such options for their plans’ participants.
Some commentators are focusing on integrating alternative investments into target date and target risk funds. As such funds are developed and considered by plan sponsors, fiduciaries must employ a prudent and well-documented process when evaluating these investment vehicles. Attention should be paid to how target date and target risk funds manage the traditionally unique characteristics of alternative investments such as limited liquidity, infrequent valuation, and higher fee structures.
Active vs. passive fixed income strategies
Investors are increasingly pivoting from passive fixed income strategies to active management. The shift may be driven by increased volatility in the bond markets over the last five years, as measured by the Merrill Lynch Option Volatility Estimate (MOVE) Index. Contributing factors driving increased volatility include economic uncertainty, greater geopolitical risk, and interest rate changes. When volatility increases, the stage is set for active bond managers to add value by dynamically adjusting the portfolio’s duration, credit exposure, and sector allocations, as well as locking in durable yields and navigating tightening credit spreads.
Alternatively, passive fixed income managers seek to track broad fixed income indexes, which represent the entirety of a bond market’s sector(s) and are most heavily weighted in the most indebted issuers. Passive funds by their nature are unable to adapt quickly to bond market volatility and interest rate changes, limiting their ability to adapt in real time.
Regulation and Compliance
In 2025, the DC industry witnessed critical developments in litigation and regulation, reshaping the compliance requirements for plan sponsors.
The Supreme Court’s 2025 decision in Cunningham v. Cornell University3 shifted the burden of proving exemptions in prohibited transaction cases to the defendants. This decision is expected to increase the number of lawsuits involving DC plans as it makes it easier for plaintiffs to withstand early motions to dismiss.
The SECURE 2.0 regulation continues to significantly influence the retirement savings landscape for participants. In addition to the plan design changes spurred by SECURE 2.0, plan sponsors should be aware of two key initiatives: automatic portability and the Retirement Savings Lost and Found Database. Both are designed to help participants maintain or reclaim retirement savings as they transition between jobs throughout their career.
Plan Design and Developments
Planning ahead, plan sponsors should take a deep dive into plan design decisions to determine if the desired outcome has been achieved. SECURE 2.0 has reinvigorated the discussion around certain plan elements, including but not limited to automatic features, catch-up contributions, distribution options, and part-time worker eligibility. Plan sponsors need to regularly assess if their plan is designed appropriately to meet industry standards and the needs of their workforce. It’s not enough to set it and forget it.
Key Questions to Revisit
We encourage plan sponsors to engage in meaningful dialogue with their advisor during their next committee meeting. Consider the following questions:
When was the last time your committee reviewed your adoption agreement and/or basic plan document?
Have the demographics, savings behaviors, or financial needs changed since your last review?
Is your plan fully compliant with all applicable SECURE 2.0 requirements?
References
1 Board of Governors of the Federal Reserve System (US), Defined Contribution Pension Funds; Total Financial Assets, Level [BOGZ1FL594090055Q], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/BOGZ1FL594090055Q, November 18, 2025.
2 Board of Governors of the Federal Reserve System (US), Households and Nonprofit Organizations; Retirement Assets, Level [BOGZ1FL153050015Q], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/BOGZ1FL153050015Q, November 18, 2025.
3 Cunningham v. Cornell Univ., 604 U.S. 693 (2025), available at https://www.supremecourt.gov/opinions/24pdf/23-1007_h3ci.pdf
The material presented herein is of a general nature and does not constitute the provision by PNC of investment, legal, tax, or accounting advice to any person, or a recommendation to buy or sell any security or adopt any investment strategy. The information contained and the opinions expressed herein are subject to change without notice. The information was obtained from sources deemed reliable. Such information is not guaranteed as to its accuracy, timeliness, or completeness by PNC.
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