Many of the world's largest defined contribution (DC) plans are concerned that members are not on track for a financially secure retirement, with fixes expected to take decades, according to The Global DC Peer Study 2025, from WTW’s Thinking Ahead Institute.

Why it matters: The findings suggest the global shift toward DC plans has created a new, pressing challenge: ensuring savings are actually adequate for retirement. For the consultants and fiduciaries managing these plans, the focus is shifting from simply boosting participation to fundamentally redesigning investment strategies and contribution models.

By the numbers:

  • The study surveyed 28 global DC funds representing over $6.3 trillion in assets.
  • 60% of participants cited providing sufficient retirement income as the biggest challenge for the next decade.
  • The average asset allocation has shifted to 60% equities, 20% bonds, and 20% alternative investments.
The big picture: As DC plans have replaced traditional pensions in many countries, their shortcomings are becoming more apparent. The study points to a widespread misunderstanding among members that auto-enrollment or minimum contribution levels are sufficient for retirement.

  • This is forcing a pivot in attention from governments and plan sponsors toward "retirement adequacy" as the next major hurdle.
  • While most plans offer default pathways into retirement, member engagement remains low, with many making tactical, last-minute decisions rather than planning strategically over the long term.
Zoom in: In response to the income gap, plan managers are rethinking long-held investment philosophies.

  • A major shift to alternatives: The study found that allocations to alternative investments now equal those of bonds. This move into private markets is driven by a need to maximize long-term returns, especially as bond-heavy defaults appear increasingly limited.
  • Rethinking lifecycle funds: A growing consensus among plan managers is that traditional lifecycle funds are too conservative, particularly for younger members. Some are now exploring more aggressive strategies, such as time-dynamic risk budgets or even leveraged equities for early-career cohorts, to improve long-term outcomes.
What they're saying: "To resolve these concerns, there are only two core and fundamental ways to better address adequacy in retirement: first, greater contributions and second, greater long-term investment returns," said Jessica Gao, a director at the Thinking Ahead Institute.

"Maximizing returns on investment is essential, but it can only do so much," Gao added. "In many markets, a clear majority of pension savers still fundamentally need to save more for their retirement during accumulation."

What to watch: The study signals a potential for significant changes in plan design and public policy. The core issue remains that investment returns alone cannot solve a savings shortfall. This may lead to greater pressure on governments to reassess mandatory contribution levels and on plan sponsors to more aggressively communicate the realities of retirement saving to members.

The Global DC Peer Study 2025 may be viewed here.

SOURCE: WTW

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