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Stable value funds widely available in DC plans

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Most plan sponsors have been offering stable value as an investment option in their defined contribution plans for more than two years, according to a new report.

MetLife, New York, published this finding in its 2013 survey of plan sponsors and stable value fund providers. The company conducted the survey in conjunction with Asset International Inc. and Matthew Greenwald & Associates Inc.

The report finds that the large majority of plan sponsors (86 percent) have been offering stable value investment options for more than two years. Among the 14 percent that added stable value as an investment option in their DC plan in the last two years, 47 percent did so to provide a “capital preservation fund. Significant percentages of respondents also say that stable value “offers higher interest rates than other, comparable investments” and “was recommended by their record-keeper/third-party administrator” (37 percent each).

Among plan sponsors that access their stable value offerings through a stable value fund provider, investment-only stable value provider or an insurance company (with or without an advisor/consultant), more than three quarters (78 percent) are not planning to make changes to their stable value offerings within the next year.

Among the 22 percent that are considering making changes, the report states, one in five plan to increase the allocation to traditional guaranteed investment contracts (GICs).

Among plan sponsors that offer stable value as an investment in 401(k)s or 457 plans:

48 percent, indicate their plan’s stable value option is backed in part by traditional GICs;

31 percent of plan sponsors say they have separate account GICs; and

19 percent have synthetic GICs.

The largest plans (10,000 or more participants) are more likely than small plans (100 to 999 participants) to have a synthetic GIC (45 percent vs. 12 percent), as a well as a separate account GIC (50 percent vs. 24 percent), the report adds.


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