Target-date funds are increasingly the norm in employer-sponsored defined contribution plans. The latest evidence of this comes from Fidelity Investments, which concludes in a new report that eight in 10 not-for-profit health care plans now have a target-date fund as the default investment.
The survey, “Defining Excellence: Plan Design and Retirement Readiness in the Not-for-Profit Healthcare Industry,” is the second in a series of reports from Fidelity that examines trends in retirement plan design, administration and best practices in the not-for-profit healthcare sector.
The percentage of health care plans with a target date fund as the default investment option has been steadily rising. The 80 percent penetration rate recorded in the fourth quarter of 2012 compares with 76 percent, 74 percent and 72 percent, respectively, in the fourth quarters of 2011, 2010 and 2009.
The survey also observes that the percentage of participants with age-based asset allocation drops markedly as age increases. In contrast, the percentage of participants with more aggressive and more conservative equity allocation increases.