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, Feb. 17, 2026 /PRNewswire/ -- 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. This year's 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," added 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 US 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 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.
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:
Chaneigh Bernard
Prosek Partners
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SOURCE NEPC
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