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2023 Retirement Plan Landscape Report

The Current State of the U.S. Retirement System

Millions of Americans rely on the U.S. retirement system to save and invest for their futures. Expanding access to employer-sponsored retirement plans is essential to ensuring Americans are saving enough for the future, but it’s also necessary for the current system to address its weaknesses. In the second iteration of our annual report, we take a comprehensive look at the overall health of the U.S. retirement system, cast a light on its weaknesses, and outline implications for the industry and policymakers alike. Download the full report below or read on for a summary of our findings.

New Findings for 2023

Despite the retirement system’s recovery to pre-pandemic trends in 2021, the Covid-19 pandemic in 2020 exposed vulnerabilities in the U.S. DC system.

Year-Over-Year Trends in the U.S. Retirement Landscape

What follows are highlights of what our researchers have found consistently within our annual report, looking at our four major areas of study: the DC market overview, the DC plan costs, the DC plan investment strategies, and the DB market overview.

Defined-Contribution Market Overview

The U.S. defined-contribution retirement system appears stable, but that appearance masks an underlying churn in the system. A small group of large plans accounts for a significant portion of the system, giving them outsize influence and possibly affecting system-related policy changes.

44,000 plans on average were created per year, while roughly 37,000 plans closed per year between 2012 and 2021.

Less than 0.4% of plans cover 50% of participants.

Only 2/3 of all workers are covered by the system.

Defined-Contribution Plan Costs

The cost plan participants pay to invest in their DC plans continues to depend significantly on their employers. Pooled Employer Plans (PEPs), created in 2021, could help close the cost gap for small employers, but the data is still too recent to see if PEPs have had any effect.

Defined-Contribution Plan Investment Strategies

Two investment strategies of note include plans' usage of collective investment trusts (CITs), as well as the exposure of participants to environmental, social, and governance (ESG) risks. As CITs and sustainable strategies grow, participants may reap the benefits.

88% of CIT assets are in mega plans.

79% of investors were interested in sustainable investing, but only 16% of plans offer a fund using sustainable strategies.

Defined-Benefit Market Overview

Active defined-benefit plans are shrinking, but millions of Americans are still collecting traditional pension benefits. Workers at companies transitioning from a DB to a DC system could benefit from more personalized advice because of the complexity these transitions create for workers.

33 million people currently or will receive benefits from defined benefit plans.

Take a deeper dive into the results and trends.

About The Morningstar Center for Retirement & Policy Studies

Our mission is to help improve the U.S. retirement system by arming decision-makers with unbiased and actionable analyses. Founded within the Retirement Solutions Group at Morningstar Investment Management LLC (the registered investment advisory arm of Morningstar, Inc.), research drives our products and services in order to improve people’s retirement outcomes. Our goal is simple—to give those who are able to change the retirement industry the information they need to help them make better decisions.

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