DC Plan Sponsors Accelerate Investment Menu Modernization as Retirement Landscape Evolves, PIMCO Study Finds
The retirement savings industry is entering a new phase of transformation as defined contribution (DC) plan sponsors increasingly look beyond traditional investment structures to meet the changing needs of participants. According to the 20th Annual Defined Contribution Consulting Study conducted by PIMCO, one of the world’s leading active fixed income investment managers, consultants and plan sponsors are actively exploring new investment strategies designed to enhance diversification, improve retirement outcomes, and better navigate evolving market conditions.
The findings suggest that retirement plans are moving away from legacy investment frameworks and embracing a broader range of solutions, particularly within fixed income, inflation protection, private markets, target-date funds, and retirement income products. The study highlights a growing consensus among institutional consultants that the future of DC plans will involve more sophisticated investment menus capable of addressing market volatility, inflation risks, longevity concerns, and participant demand for personalized retirement solutions.
A Shift Beyond Traditional Fixed Income
One of the most significant trends emerging from the study is the increasing interest in active non-core fixed income strategies. More than half of institutional consultants surveyed expect a majority of their plan sponsor clients to add active non-core fixed income options to their investment menus in the coming years.
The shift reflects the dramatic evolution of global fixed income markets over the past decade. Historically, many DC plans relied heavily on traditional core bond funds as their primary fixed income offerings. However, changes in interest rate environments, inflation dynamics, market volatility, and the expansion of credit opportunities have led retirement professionals to reconsider the role of fixed income within participant portfolios.
Rene Martel, Managing Director and Head of Retirement at PIMCO, noted that while fixed income markets have become increasingly diverse and complex, many retirement plan investment menus still reflect outdated structures that fail to take advantage of newer opportunities.
According to Martel, consultants and plan sponsors increasingly recognize that retirement savers need access to a wider range of bond-related strategies in order to navigate today’s investment environment successfully. Active non-core fixed income strategies can provide access to a broader set of opportunities, including global bonds, emerging-market debt, securitized assets, and flexible credit sectors that may offer enhanced risk-adjusted returns compared with traditional fixed income allocations.
The growing interest in these solutions demonstrates a broader effort among retirement plan fiduciaries to modernize investment menus and provide participants with more resilient portfolio-building tools.
Inflation Protection Moves to the Forefront
Another major theme identified in the study is the increasing importance of inflation management within retirement portfolios.
Approximately 45% of institutional consultants expect plan sponsors to increase adoption of multi-asset inflation hedging strategies. This trend reflects lessons learned from recent inflationary periods that challenged conventional portfolio construction approaches and highlighted the potential impact of rising prices on retirement savings.
Inflation can significantly erode purchasing power over time, creating challenges for participants seeking long-term financial security. As a result, retirement plan sponsors are looking for investment solutions capable of protecting portfolios against inflation shocks while maintaining growth potential.
Multi-asset inflation strategies typically incorporate a variety of investments that may perform well during inflationary environments, including inflation-linked bonds, commodities, real assets, infrastructure investments, and other inflation-sensitive securities. By combining multiple asset classes, these strategies aim to provide diversified protection while reducing dependence on any single inflation hedge.
The increased interest in inflation-focused solutions underscores a broader recognition that retirement planning must address not only market risk but also the long-term impact of rising living costs.
Private Credit Gains Momentum
The study also highlights growing enthusiasm for private market investments, particularly private credit.
Approximately half of institutional consultants identified private credit as one of the most likely private asset categories to be added to retirement investment solutions in the near future. Interest is even stronger among aggregator firms, with 91% ranking private credit among the leading opportunities for future adoption.
Private credit has emerged as one of the fastest-growing segments of alternative investments globally. The asset class involves lending directly to businesses outside traditional public bond markets and has attracted investor attention due to its potential for enhanced yield, diversification, and lower correlation with publicly traded securities.
As retirement plan sponsors explore ways to improve participant outcomes, private credit is increasingly viewed as a potential complement to traditional fixed income investments. The growing institutional interest reflected in the survey suggests that private assets may play a larger role in DC plans over the coming years, particularly within professionally managed investment solutions.
The survey responses were collected between January 5 and February 16, 2026, capturing the views of a broad range of retirement industry professionals during a period of continued innovation across retirement investing.
Blended Target-Date Funds Become the Preferred Default
Target-date funds (TDFs) remain the dominant default investment option within retirement plans, but the study suggests that their structure is evolving.
Nearly 80% of consultants and advisors believe plan sponsors will increasingly adopt blended target-date funds that combine both active and passive management approaches. These hybrid strategies seek to leverage the cost efficiency of passive investing while incorporating active management in areas where skilled managers may add value.
The findings indicate that plan sponsors are becoming more selective about where they employ active management. While passive investing continues to play a central role in retirement plans, sponsors appear willing to pay somewhat higher fees for actively managed fixed income strategies, reflecting confidence that active bond managers may help navigate complex market environments more effectively than purely passive approaches.
This shift suggests that retirement plan fiduciaries are moving beyond the traditional active-versus-passive debate and instead focusing on identifying the most effective combination of investment approaches for participant success.
Personalization Drives the Next Generation of Retirement Solutions
The study also points to growing demand for personalized retirement investing.
Among aggregator firms surveyed, 46% expect increased adoption of fully customized target-date funds. These solutions allow retirement plans to tailor asset allocations, risk profiles, and investment selections to meet the specific needs of their participant populations.
Even more notable is the growing interest in participant-personalized target-date funds. Approximately 85% of aggregator firms anticipate rising demand for these next-generation retirement solutions.
Unlike traditional target-date funds, which generally apply a single asset allocation strategy to all participants within a particular age cohort, personalized target-date solutions incorporate individual participant characteristics such as savings rates, account balances, income levels, retirement goals, and risk preferences.
Advances in technology, data analytics, and retirement planning tools have made these personalized approaches increasingly feasible. Industry experts view personalization as a significant step forward in helping participants achieve retirement readiness while addressing the unique circumstances of individual investors.
Private Markets Enter the Mainstream Retirement Conversation
The study reveals a dramatic increase in expectations surrounding private market exposure within retirement plans.
Every aggregator firm surveyed expects at least some plan sponsors to introduce private market investments into target-date funds or managed account programs within the next 12 months. This marks a substantial increase from the previous year’s findings, when only 37% anticipated such adoption.
Institutional consultants share a similar outlook, with 57% expecting private market exposure to become more common in retirement plans.
As plan sponsors evaluate private market investments, consultants emphasize the importance of balancing return opportunities with practical considerations such as investment quality, fees, transparency, liquidity, and operational requirements.
Maintaining adequate liquidity remains especially important in defined contribution plans, where participants require daily access to their account balances and investment options. As a result, retirement professionals continue to carefully evaluate how private market assets can be integrated while preserving participant flexibility and fiduciary standards.
Retirement Income Emerges as a Strategic Priority
While retirement plans have traditionally focused on helping participants accumulate assets, the study indicates growing emphasis on generating income during retirement.
More than half of plans working with consultants already offer some form of in-plan retirement income solution. Additionally, 93% of aggregator firms expect to introduce retirement income options within the next year.
This trend reflects growing concern about longevity risk and the challenge participants face when converting retirement savings into sustainable income streams.
Among the innovations attracting attention are target-date funds that incorporate built-in annuity features. These solutions seek to combine long-term investment growth with guaranteed income components, helping participants transition more effectively from saving for retirement to spending during retirement.
Industry observers increasingly view retirement income as the next major frontier in retirement plan design. Rather than focusing solely on account balances, sponsors are beginning to prioritize outcomes that help participants achieve lasting financial security throughout retirement.
Competition Intensifies Around Participant Services
Beyond investment offerings, the study highlights growing competition among retirement service providers to deliver enhanced participant support.
Aggregator firms are making significant investments in financial wellness programs, education initiatives, and personalized guidance services. Approximately 93% of aggregators now provide one-on-one financial planning support to participants.
By comparison, only about 30% of consultants currently offer similar services directly, with many continuing to rely on external providers.
The disparity reflects a widening distinction in how firms position themselves within the retirement ecosystem. While some organizations focus primarily on investment consulting and plan oversight, others are expanding into comprehensive participant engagement and financial planning services.
As retirement planning becomes increasingly complex, participant education and personalized guidance are expected to play an increasingly important role in helping workers make informed decisions about saving, investing, and retirement income planning.
The 2026 Defined Contribution Consulting Study draws insights from 36 consulting and advisory firms representing more than 53,000 clients and overseeing aggregate DC assets exceeding $10.2 trillion. The breadth of the survey provides a valuable snapshot of how retirement industry professionals view the future of workplace savings plans.
The findings suggest that retirement plans are undergoing a period of significant modernization. From active non-core fixed income and inflation protection strategies to private credit, personalized target-date funds, retirement income solutions, and expanded participant services, plan sponsors are actively seeking new ways to improve outcomes for millions of retirement savers.
As market conditions continue to evolve and participant expectations grow, the retirement industry appears poised to embrace a more flexible, diversified, and outcome-focused approach to defined contribution investing. The next generation of retirement plans will likely look very different from those of the past, reflecting a broader commitment to helping participants achieve long-term financial security in an increasingly complex world.
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