NEPC’s 20th Annual Survey Reveals Two Decades of Evolution in Defined Contribution Plans
Milestone survey underscores shift toward passive TDFs, fee compression, and selective use of alternatives
BOSTON, MA – February 17, 2026 – NEPC, LLC (“NEPC”), a leading investment consultant and outsourced chief investment officer, today released findings from its 20th annual Defined Contribution (DC) Plan Trends Survey, which examines innovations across DC plans and notable shifts in participant behavior. The survey reveals a sustained shift toward passive target date funds (“TDFs”), an increase in managed account terminations, continued fee compression, changes in US large cap equity structures, and a selective approach to alternative investments.
Two decades of growth and fee compression
To mark the survey’s 20th year, NEPC analyzed key metrics over the last two decades to examine the growing role that DC plans play in retirement outcomes. Over this period, DC plans in the survey expanded significantly, with plan assets growing 27-fold while the number of participants increased 8-fold.
This growth has been accompanied by sustained fee compression, as investment management fees have declined by approximately 67% over the past 20 years, driven by scale, competition, and changes in plan design. Recordkeeping fees also continued to trend lower, decreasing by 26% over the past decade.
“Viewed over a 20-year horizon, these trends reflect structural change rather than cyclical market effects,” said Emma O’Brien, Partner at NEPC. “Plan growth and fee compression are the result of deliberate sponsor decisions and ongoing refinement of the DC model.”
Shift toward passive and blended TDFs
TDFs continue to anchor DC plan design, with this year’s survey showing a sustained transition away from fully active strategies toward blended and passive implementations. Today, 59% of plans offer passive TDFs, reflecting lower implementation fees and increased glidepath risk-level flexibility available from passive providers.
“As target date funds represent a growing share of participant assets and contributions, plan sponsors are placing greater emphasis on glidepath construction, cost efficiency, and how default strategies address longevity risk,” said O’Brien.
Movement in the US large cap equity space
In the past five years, approximately one-third of DC plan sponsors have made a change to their US large cap equity options – an asset class that represents the largest share of participant assets outside of TDFs. These changes reflect the broader movement toward passive strategies, particularly within large cap growth, as well as a reassessment of traditional style-box offerings, such as value and growth.
Increased index concentration within U.S. large cap equities has contributed to these shifts, as active managers have faced growing challenges in consistently outperforming benchmarks. As a result, plan sponsors are reevaluating whether active management and style segmentation continue to deliver sufficient value within DC menus.
Managed accounts face increased scrutiny
Over the last three years, 14% of DC plans have terminated their managed accounts services. These decisions reflect more formal fiduciary reviews as DC governance has matured, along with heightened fee sensitivity and closer evaluation of participant engagement and personalization.
Plan committees are reassessing whether managed accounts deliver sufficient value relative to their cost.
Custom solutions and alternative investments remain selective
As interest in alternative investments continues to grow in today’s marketplace, 21% of DC plans use custom solutions, where exposure to private assets is more likely to occur. Within custom TDFs, private real estate is the most commonly used private asset, with 58% of custom TDF clients allocating to the asset class.
Interest in other private assets remains measured. While asset managers have increasingly promoted private equity and private credit solutions, DC plan sponsors continue to approach these offerings more cautiously, focusing on fees, liquidity, operational complexity, and participant suitability.
“Where private assets are used, sponsors tend to incorporate them selectively through custom solutions,” said Mikaylee O’Connor, Partner and DC Team Leader at NEPC. “The emphasis remains on understanding how these assets function within a DC framework and ensuring they align with fiduciary objectives.”
About NEPC’s 20th Annual Defined Contribution (DC) Plan Trends and Fee Survey
The survey explores current investment trends, features, and innovations in key sectors, as well as how these plans have developed over time. Respondents to the 2025 survey include 148 clients representing $448 billion in aggregate assets and 3.2 million plan participants.
NEPC’s DC team will discuss the survey’s findings during a webinar on February 17, 2026. Those interested in hearing how NEPC is advising plans can register for the webinar here.
The 20th Annual Defined Contribution (DC) Plan Trends and Fee Survey results can be downloaded here.
For additional information, please refer to the latest insights from the DC Solutions team here.
About NEPC, LLC
NEPC, LLC is a leading investment consultant, private wealth advisor, and OCIO provider, serving over 400 retainer clients and $1.9 trillion in total assets. Combining a proprietary investment team dedicated to the long-term challenges facing investors with our client-centric model, NEPC builds forward-looking investment portfolios for institutional investors, ultra-high-net-worth individuals, and families. To learn more, visit nepc.com.
Media Contact:
Prosek Partners
[email protected]
Pensions & Investments: Top retirement plans see third year of gains, but concentration risks pose new challenges
NEPC’s Aaron Chastain, partner and corporate solutions leader, was quoted in Pensions & Investments’ latest annual survey examining asset growth, allocation shifts, and evolving alternative investment strategies among the largest U.S. retirement plans. Read the full article on Pensions & Investments’ website to explore the trends shaping plan sponsor portfolios.
U.S. retirement plans in Pensions & Investments’ latest annual survey reported positive gains in assets for the third year in a row, despite considerable market volatility.
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After years of rapid growth as pension funds have built their alternative asset classes from scratch, those allocations have now settled a bit and sponsors say their discussions have evolved to topics around the construction of those existing portfolios, said Aaron Chastain, partner and corporate solutions leader at investment consultant NEPC.
“So we’ve got a private equity book. How do we make sure we re-up with strong GPs? How do we think about trimming our roster in some circumstances?” said Chastain.
In private debt, for example, a few years ago direct lending was a much smaller subset of investment managers.
“It was relatively easy to choose strong managers. Expected returns were all very similar,” said Chastain. “Now we’re focused a lot more on the portfolio construction aspect of whether you want regular direct lending, or are you thinking about other types of strategies that have come to market a little bit more specialized and nuanced? That may be more appropriate going forward, have a better return opportunity.”
Plan sponsors are much more focused now on manager selection, he said.
“With a lot more players in the space, it’s going to be very important to make sure you’ve got strong underwriting capabilities and you’re not going with covenant-lite managers that may be newer entrants and don’t have as much negotiating leverage. That’s where the focus is. It’s more to looking at within alternatives, rather than, ‘Let’s just continue to increase them at all costs.’”
Click here to continue reading the full Pensions & Investments article.
Pensions & Investments: Education key to unlocking private markets potential for sponsors, asset managers
In this Pensions & Investments article on the slow but evolving adoption of private markets in defined contribution plans, NEPC Partner Mikaylee O’Connor shares insight on implementation challenges and where these investments fit best. Visit Pensions & Investments to read the full article.
For alternatives asset managers coveting the DC market, questions of cost, transparency, administration and financial returns converge on one word: education.
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“Most plans have significant allocations to target-date funds,” said Mikaylee O’Connor, partner and team leader of NEPC’s defined contribution practice. It’s the easiest for sponsors to understand from a liquidity and allocation standpoint, she added.
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“Where we get hung up the most is the implementation” of new products, O’Connor said. “Who will create the best DC-friendly vehicles”
Sponsors also must be vigilant in assessing the quality of private markets asset managers, O’Connor said.
Click here to continue reading the full Pensions & Investments article.
FundFire: Volatility Narrows Endowment-Return Gap, See Best and Worst Performers
NEPC Principal Colin Hatton was quoted in this recent FundFire article examining how market volatility, active management, and AI exposure shaped endowment performance in 2025. Visit FundFire to read the full analysis and insights from NEPC’s latest endowment report.
Market volatility vastly impacted 2025 endowment performance, narrowing the gap between smaller and larger endowment returns and giving a boost to portfolios with actively managed funds.
The University of Wisconsin-Madison came out on top with a whopping 16.2% return for its $4.9 billion endowment, according to NEPC‘s most recent report on endowments.
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“For those that had strong performance, active management certainly added to returns, but that was not the case across the board,” said Colin Hatton, principal on NEPC’s endowments and foundations team. “There was a large dispersion amongst manager returns across public and private equity markets.”
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Lower middle-market buyouts and growth equity/venture had certain funds with very strong returns, he said. And venture capital returns got a boost from some of the early artificial intelligence winners that had significantly higher valuations, Hatton added.
Publicly traded AI-related stocks also fueled gains for the top-performing funds, according to the report.
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“We think this is going to be a trend with more institutions using the secondary market as a portfolio management tool,” Hatton said. “2025 saw overall [limited partner] secondary transactions increase to all-time highs. In some cases, it will be to rebalance towards targets, in others, it may be based on broader portfolio management considerations and expectations on… forward looking returns from their capital.”
Chief Investment Officer: How Higher Education Endowments Thrived in Fiscal 2025
NEPC Principal Colin Hatton was quoted in Chief Investment Officer on the drivers behind strong FY2025 university endowment returns, including the impact of public equities, active management, and AI-related exposure. Visit Chief Investment Officer to read the full article and explore the complete analysis.
Higher allocations to public markets and prudent stock selection led those with top-quartile returns in fiscal 2025, according to NEPC.
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“WISIMCO’s investment fund benefited from equity market gains generally and effective stock selection,” wrote Colin Hatton, a principal on the endowments and foundations team at NEPC, in its report. “In the endowment’s recent annual financial report, Michael Stohler, the WISIMCO CIO, noted that strong stock selection within their public equity allocation in particular, as well as in the private markets, did most to enhance results.”
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NEPC’s Hatton wrote that while large equity allocations benefited smaller endowments, investment managers’ returns were dispersed broadly.
“This suggests that active management was a meaningful factor in returns for the top performing funds,” Hatton wrote in the report. “We believe that manager selection will continue to be a driver for the strongest performing endowments going forward. This is particularly true within private markets, where the difference between top and bottom quartile performers is much broader than in public markets.”
Click here to read the full article on the Chief Investment Officer site.
NEPC Deepens Collaboration with MSCI to Enhance Private Markets Capabilities
Boston, MA – NEPC, LLC (“NEPC”), a leading investment consultant and outsourced chief investment officer, today announced that it has deepened its long-standing partnership with MSCI, a leading provider of critical decision support tools and services for the global investment community, by implementing MSCI’s Private Capital Solutions to enhance NEPC’s private markets analytics and capabilities.
Through this collaboration, NEPC will leverage MSCI’s private markets data, analytics, and research solutions to support portfolio construction, benchmarking, risk assessment, and performance analysis across private equity, private credit, real assets, and other private markets strategies. This collaboration reflects NEPC’s commitment to leveraging data-driven solutions and best-in-class technology to help clients navigate evolving market conditions amid growing demand for sophisticated private markets expertise.
“By expanding our work with MSCI, we are elevating the tools and insights we bring to clients as they evaluate opportunities, manage risk, and make informed investment decisions, reinforcing NEPC’s commitment to delivering high-quality analytics to clients,” said Kellie Kane, Partner and Chief Operating Officer at NEPC.
“As private markets allocations grow in scale and complexity, investors require deeper transparency, consistent benchmarking and more robust risk insights,” said Luke Flemmer, Head of Private Assets at MSCI. “We’re pleased to provide NEPC with integrated private capital data and analytics that enhance the precision and confidence behind their portfolio construction and advisory decisions.”
To learn more about MSCI’s Private Capital Solutions, visit here.
Dakota Live! Podcast: NEPC Uncovered: The OCIO Model, Private Markets & What’s Next with Scott Perry
NEPC’s Scott Perry joined the Dakota Live! podcast to discuss the future of the OCIO model, manager evaluation, private markets, strategic partnerships, and more. Listen to the podcast on Spotify or Apple Podcast.
“In this episode of Dakota Live!, Robert Morier welcomes Scott Perry, Partner and Head of OCIO Portfolio Strategy at NEPC, for a candid look at how the OCIO model is evolving amid rising complexity and growing demand for private markets. Scott breaks down NEPC’s “secret sauce”—from second-level thinking and cross-asset research collaboration to a 250-point due-diligence checklist and the operational “dirty work” that truly distinguishes a discretionary partner. He also discusses industry consolidation, NEPC’s strategic partnership with Hightower, and why private market capabilities and model portfolios are increasingly bridging the gap between institutional and wealth management, all while reflecting on the role of relationships, teamwork, and even a bit of basketball in building durable client trust.”
Pensions & Investments: Consultants find new paths through AI-concentrated markets beyond tech giants
NEPC’s Chief Investment Officer, Tim McCusker, is featured in this Pensions & Investments article discussing how AI-driven market concentration is shaping today’s investment landscape and influencing portfolio construction. Visit Pensions & Investments to read the full piece.
The boom around artificial intelligence has created persistent concentration at the top end of the U.S. stock market, leading to a multistep problem for investment consultants helping their clients navigate both a fast-evolving technology and a unique investment environment.
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The potential risks and rewards of AI stretch beyond just the performance of the Big Tech stocks, said Tim McCusker, partner and CIO at NEPC.
“I’m sort of thinking about it the way you have to think about technology now. There is a sector called technology, but technology is in every single asset class and every single sector. And I think you have to start thinking about artificial intelligence in the same way,” McCusker said.
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“Hedge funds seem to be back on the menu in a way that they haven’t been for most of the last few years,” NEPC’s McCusker said.
Meketa and NEPC are among the 10 largest consulting firms worldwide, according to P&I’s latest survey… NEPC reported $1.7 trillion, up more than 4% from 2024.
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However, McCusker said that clients looking to add geographic diversity to their stock exposures shouldn’t be too concerned that one good year has made international equities too expensive. He said relative weakness of the S&P 500 is explained more by a drop in the U.S. dollar than an underlying shift in the global economy.
“International has been a good place to be this year, but when you look through it, it’s really about the dollar more than anything else. … So it still seems like a reasonable time and a reasonable entry point to buy non-U.S. exposure,” McCusker said.
Click here to continue reading the full Pensions & Investments article.
NEPC Names Tim McCusker President; Appoints Sarah Samuels to CIO
McCusker named successor CEO, transitioning to the role in January 2027
BOSTON, December 10, 2025 – NEPC, LLC (“NEPC”), a leading investment consultant and outsourced chief investment officer, today announced the appointment of Tim McCusker as President, effective January 1, 2026. McCusker has nearly two decades of experience at NEPC, most recently serving as Chief Investment Officer (“CIO”), and will work closely alongside Chief Executive Officer (“CEO”) Michael Manning over the next twelve months before transitioning to the role of CEO in January 2027. With McCusker’s appointment to President, Sarah Samuels has been appointed to CIO, following seven years at the firm as Partner and Head of Investment Manager Selection, overseeing private markets, public markets and hedge fund investments.
“It has been a privilege to lead NEPC and work closely with our clients over the last 28 years of significant growth and change,” said Manning. “As we celebrate our 40th anniversary and look to the next chapter of NEPC’s evolution, Tim is the right choice to lead us forward. He has played an integral role at NEPC over the last two decades and has always exemplified the qualities that define NEPC: deep investment expertise, sound judgement and an unwavering commitment to our clients and our people. Importantly, Tim has worked within all of our client segments and has a keen understanding of the challenges and opportunities they face. I am confident in the positive impact that he and the rest of the leadership team will have on NEPC, our clients, and the industry.” Manning will remain CEO of NEPC through 2026, before transitioning into a senior advisory role, where he will focus on client engagement, developing emerging talent, and helping to guide the firm’s strategic direction.
In his role as CIO, McCusker led investment strategy development for NEPC and was responsible for overseeing a group of over 72 professionals dedicated to investment research across alternative investments, public markets, asset allocation, portfolio construction and OCIO investment strategy. He has been instrumental in shaping the firm’s strategic direction, advancing the firm’s business priorities – including establishing NEPC’s OCIO practice as a core investment solution – while guiding clients through complex market environments. Over the last two decades, he has held several leadership positions at NEPC and has been a member of the firm’s Executive Team since 2014.
“I have always been proud to work for a mission-driven organization that makes a real impact on society, and it is a privilege to work alongside an incredibly talented team that cares deeply about helping our clients achieve their goals,” said McCusker. “From Mike and many others at NEPC, I’ve learned the value of true leadership and how vital our culture is to our success. Having spent my career here, I know how special this firm and our offerings are, and I am excited to build on NEPC’s legacy of integrity, innovation and partnership, and evolve our business while preserving the client-first mindset that defines who we are.”
As CIO, Samuels will leverage two decades of experience as both an allocator and investor, most recently leading NEPC’s 45-person investment team and serving as a member of the firm’s Management Group. Before NEPC, she held senior roles at Massachusetts Pension Reserves Investment Management Board, the Wellesley College Investment Office and Wellington Management Company. A respected industry leader, she chaired the CFA Society Boston Board, founded the Boston Chapter of the Private Equity Women Investor Network (PEWIN), and served as Chair of the Investment Committee and Board Director at the University of New Hampshire.
About NEPC, LLC
NEPC, LLC is a leading investment consultant, private wealth advisor, and OCIO provider, serving over 400 retainer clients and $1.7 trillion in total assets. Combining a proprietary investment team dedicated to the long-term challenges facing investors with our client-centric model, NEPC builds forward-looking investment portfolios for institutional investors, ultra-high-net-worth individuals, and families. To learn more visit nepc.com.
Contact
Prosek Partners for NEPC
Chaneigh Bernard
Prosek Partners
[email protected]
Institutional Investor: NEPC’s McCusker to Succeed Manning as President… and CEO (in Due Course)
Institutional Investor spoke with Michael Manning, Tim McCusker, and Sarah Samuels about NEPC’s newly announced leadership transition, offering an inside look at the firm’s long-term succession strategy. Visit Institutional Investor’s website to read the full exclusive or read excerpts below.
NEPC’s longtime investment chief Tim McCusker will succeed Michael Manning to lead the $1.7 trillion investment giant — first as president, then as CEO — as part of a multiyear transition plan.
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Sarah Samuels, a partner at NEPC, has been appointed to CIO as part of this succession plan.
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“A really important part of this transition is to create continuity,” McCusker said. “That’s not to say we won’t change; NEPC will continue to evolve… we [just] want to do it in a way where our DNA, our values, our culture, don’t change.”
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“We’re going to maintain the strength of the investment team [and] enable our people to stretch and grow,” Samuels said.
Click here to read the full article on the Institutional Investor site.