- Making the Benefit Connection
- The importance of defined benefit plans in glide path evaluation.
- Key Insights
- Many employers have made major changes in their defined benefit plans, resulting in more varied benefit coverage across different participant groups.
- Defined benefit changes can affect defined contribution plans, particularly the evaluation of qualified default investment alternative (QDIA) glide paths.
- We intend to develop a series of papers highlighting our research on the potential impact of defined benefit plans and their features on glide path design.
Figures provided herein are provided as examples and are for illustrative purposes only.
Monte Carlo simulations model future uncertainty. In contrast to tools generating average outcomes, Monte Carlo analyses produce outcome ranges based on probability thus incorporating future uncertainty. The projections are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. The simulations are based on assumptions. The materials present only a range of possible outcomes. As a consequence, the results of the analysis should be viewed as comprehensive, but not exhaustive. Actual results are unknown therefore results may be better or worse than the simulated scenarios. The potential for loss (or gain) may be greater than demonstrated in the simulations. Users should also keep in mind that seemingly small changes in input parameters, including the initial values for the underlying factors, may have a significant impact on results, and this (as well as mere passage of time) may lead to considerable variation in results for repeat users.
This material is provided for general and educational purposes only and is not intended to provide legal, tax, or investment advice. This material does not provide fiduciary recommendations concerning investments or investment management.
The views contained herein are those of the authors as of February 2021 and are subject to change without notice; these views may differ from those of other T. Rowe Price associates.
This information is not intended to reflect a current or past recommendation concerning investments, investment strategies, or account types, advice of any kind, or a solicitation of an offer to buy or sell any securities or investment services. The opinions and commentary provided do not take into account the investment objectives or financial situation of any particular investor or class of investor. Please consider your own circumstances before making an investment decision.
Information contained herein is based upon sources we consider to be reliable; we do not, however, guarantee its accuracy.
Past performance is not a reliable indicator of future performance. All investments are subject to market risk, including the possible loss of principal. All charts and tables are shown for illustrative purposes only.
T. Rowe Price Investment Services, Inc. For Institutional Investors Only.
© 2021 T. Rowe Price. All rights reserved. T. ROWE PRICE, INVEST WITH CONFIDENCE, and the bighorn sheep design are, collectively and/or apart, trademarks or registered trademarks of T. Rowe Price Group, Inc.