Pensions and Retirement Training Course on Default Investment Strategies in DC Plans

Module 1: Introduction to Default Investment Strategies
Concept and significance of default investment options in DC plans
Global experiences and outcomes: UK NEST, Australia MySuper, US Target Date Funds
Characteristics of an effective default strategy
Member inertia and behavioral finance foundations
The balance between adequacy, affordability, and protection
Case study: The evolution of default strategies in the UK pension reforms

Module 2: Design Principles and Strategy Selection
Lifecycle, target-date, and balanced fund structures
Risk glide paths and transition phases (accumulation to decumulation)
Selecting appropriate asset allocations for different age cohorts
ESG integration in default strategies
Role of passive and active management in default designs
Workshop: Designing a lifecycle fund structure for a mid-sized DC scheme

Module 3: Regulatory, Governance, and Fiduciary Considerations
Global and local regulatory frameworks for default funds
Trustees’ fiduciary duties and prudence standards
Disclosure, transparency, and member communication requirements
Performance benchmarking and oversight responsibilities
Governance frameworks for reviewing and updating default options
Simulation: Trustee decision-making under a default fund review

Module 4: Risk Management and Performance Evaluation
Identifying and managing investment and operational risks
Techniques for performance attribution and benchmarking
Cost management: fees, transaction costs, and value-for-money assessments
Monitoring default fund consistency with member objectives
Stress testing and scenario analysis in market downturns
Group exercise: Constructing a risk evaluation matrix for a DC default fund

Module 5: Implementation, Communication, and Future Trends
Steps for launching and transitioning to new default structures
Aligning default design with communication and member education strategies
Use of technology and dashboards for performance transparency
Innovations: personalized defaults, digital advice, and robo-investing
Global trends in sustainable and impact-oriented default funds
Capstone session: Developing a policy brief for trustees on selecting an optimal default investment strategy