In The News

When corporate pension plan sponsors faced significant underfunding and long-duration liabilities, along with persistent low interest rates, after the global financial crisis, many pursued liability-driven-investment programs to address the critical problem.

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NEPC’s annual Corporate Defined Benefit Peer Study and Survey, released in April, showed plans did not de-risk further in 2025, with the average fixed-income allocation across the consultancy’s peer group roughly unchanged year-over-year.

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Matt Maleri, head of insurance at NEPC, says some pension plans are selling their long-duration fixed-income holdings, something considered unlikely five or 10 years ago, and buying in the belly of the yield curve. But he hesitates to say pension funds will no longer buy longer-duration debt.

“There are still many plans that need to buy long-duration fixed income, and there will be many that continue to hold it, but certainly you’re seeing a more emphasis and a bigger shift toward intermediate duration,” Maleri says.

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Maleri says NEPC is not sold on the idea that all the bond alternatives are perfect liability matches, but for plans with heavy fixed-income and hedging assets, exploring these alternatives as diversifiers makes sense.

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Maleri says NEPC is seeing many plans stick with their current investment managers, but change their mandates, such as moving into intermediate-duration bonds from long-duration bonds. Plan sponsors may need to use specialist firms to invest in nontraditional hedges, although he says more traditional LDI players are starting to offer these kinds of diversifying asset classes.

“They know they have an audience that is going to be a natural buyer of them,” he says.

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The past few years have been great for corporate pension funds. Strong portfolio performance has improved the funded status of corporate defined benefit pensions across the board, returning most plans to funding levels not seen in more than a decade.

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Most of these plans are well hedged through liability-driven-investing models. Even plans that use other investment frameworks, such as total return, saw similar increases in funded status and strong performance, according to data from Milliman and NEPC.

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Matt Maleri, partner in and head of insurance at NEPC, says, “We’re seeing much more attention paid to duration exposures and trying to match liabilities across the yield curve, not just in totality—also understanding the split between credit and Treasury bonds that is needed to match their liabilities.”

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NEPC’s Maleri agrees with the focus on long-term thinking.

“The purpose of an evergreen vehicle, in our view, is that you don’t need to constantly make new commitments to a fund that calls capital, draws it down and returns it,” Maleri says. “But we would caution plan sponsors that these aren’t really tools for liquidity.”

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In March, a representative of Blue Owl, the embattled private-credit fund manager, dialed into a meeting with local officials in Columbia, Missouri.

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“We have had a couple of clients participate in these funds where they have been able to drive unique economics or terms,” said Oliver Fadly, head of private debt at institutional investment consulting firm NEPC, referring to nonpublic BDCs. “Where we have also seen it a little bit is in public BDCs with folks that are looking to park capital for a shorter amount of time. It’s either a bridge or they’re waiting to move money somewhere else.”

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Defined benefit plans may not have the preeminence they once did, but they’re holding their own. In fact, more than holding their own, according to a recent study.

Funding status, interest in retaining a pension plan, plans for surplus assets, and more all auger well for DB plans, according to a report by NEPC in its 2026 Corporate Defined Benefit Peer Study and Survey. In the report, NEPC used data from survey responses from 46 plan sponsors and from the Securities and Exchange Commission 10-K reports filed by 218 plan sponsors in 2025.

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The years-long trend of improvement in private pension plan funding levels that NEPC has been reporting continues, according to its findings. The level stood at 87% in 2019; in 2025 it was 16 percentage points higher, 103%. With the exception of a 1 percentage point drop from 2022-2023, the trajectory for plans in the aggregate has been consistent in NEPC reckoning

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The NEPC report shows that plan liabilities as a percentage of market cap dropped by 9 percentage points during the period 2018-2025, starting at 19% in 2018 and landing at 10% in 2025. Here’s a year-to-year look:

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NEPC found that surplus asset use centers on cost management. They report that their survey results indicate that most plan sponsors whose plans have surplus assets intend to use them to (1) cover future expenses related to the plan or (2) reduce potential future contributions to the plan.

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The NEPC 2026 Corporate Defined Benefit Peer Study and Survey is available here.

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Some of the biggest growth prospects for record keepers are coming from some of the smallest defined contribution plans, thanks to regulatory changes, competition for scale in a crowded market and greater interest among sponsors.

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“The industry has struggled with overcapacity,” said Michael Contorno, principal and head of DC vendor management at the NEPC consulting firm, who expects more consolidation among larger record keepers.

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“We have 20, but it could be eight or 12,” he said. “There are too many providers chasing clients.”

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Contorno said record keepers can adjust to the crowded market by pursuing deals with PEPs. “If you’re not in it, what chances do you have to succeed?” he said.

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Among the largest players, record keeping remains a scale business, especially for companies facing financial challenges when competing against the industry’s giants, said Bill Ryan, a former long-time DC plan consultant for NEPC who joined Carlyle Group in January as managing director and head of retirement solutions.

Record keepers are expanding their services to retain existing clients and attract new ones, responding to ongoing pressure from plan sponsors, many of which are conducting searches and reviews this year.

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DC consultant Michael Contorno said sponsors are focusing more on a “value for service lens — what services are they getting for what they’re paying” — than on new investments when issuing RFPs.

Their goal is: “Let’s pick a record keeper who is best for us, and the cost will work itself out,” said Contorno, principal and head of DC vendor management at NEPC.

Record keepers need improved technology to increase plan efficiency, reduce costs and provide better communication to participants. However, helping participants save more “is not solved only by technology,” Contorno said. “This is a people business. You need a strong service team.”

The proposed Department of Labor rule on private market investments in DC plans won’t have much impact on record keepers, according to some industry experts, but record-keeping executives say they will need time to review the 56 pages of fine print published in the Federal Register before making official comments.

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“Most record keepers can already administer these strategies within existing platforms when packaged appropriately,” said Michael Contorno principal and head of DC vendor management at the NEPC consulting firm, referring to liquidity and daily net asset value.

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Even though the DOL safe harbor proposal “reduces fiduciary uncertainty,” the heavy lifting belongs to asset managers, who must solve for things like liquidity, daily net asset valuation and cost “particularly in a DC system built on daily liquidity,” Contorno said.

While the drumbeat grows for incorporating alternatives into defined contribution plans, consulting firms are split on whether to include those investments in their pooled employer plans — some are holding off despite mounting pressure from the industry while others have already begun adding private real estate and infrastructure to those plans.

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On March 16, NEPC became the latest investment consultant to announce it was launching a PEP, allowing unrelated businesses to join together in a single, shared DC plan.

NEPC’s plan — Stratum One — will be available beginning May 1.

Mikaylee O’Connor, partner and DC team leader at NEPC said in an interview earlier this month that the firm has “spent decades advising plan sponsors on best practices in governance, investments, and fees, and the timing felt right to apply that experience within a PEP structure as the market continues to mature.” NEPC has $1.9 trillion in assets under advisement.

One asset class that won’t be part of NEPC’s PEP, at least initially, is alternatives.

“We believe adoption (of alternatives) should be thoughtful and deliberate,” O’Connor said. “Our approach is to prioritize simplicity, transparency, and cost efficiency — particularly important considerations for pooled plans with diverse participating employers and participant demographics.”

She noted the firm will continue to monitor regulatory developments, market innovation, and evolving best practices, and “may consider private or alternative investments in the future where they clearly enhance participant outcomes and can be implemented in a fiduciary‑prudent manner.”

In January, Sarah Samuels was promoted to chief investment officer at NEPC, a Boston-based investment consulting firm with $1.9 trillion in assets under advisement.

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“The power of capital is tremendous, and the work that we do truly changes lives,” she says, from helping parents save for their children’s college educations to making sure retirees can live comfortably.

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She says “nonlinear careers‘’ are valuable—she was a German major at the University of New Hampshire and earned an M.B.A. at Boston University. “I encourage people to take some risks with their careers because careers are pretty resilient, and the risks will pay off.”