DC Plans Embrace Active Bonds, Private Credit and Inflation Hedges
Institutional consultants are signaling a meaningful shift in how defined contribution (DC) plans will build portfolios for retirement savers, with a stronger role for active fixed income, private markets and income-focused defaults over the next several years.
According to PIMCO’s 20th Annual DC Consulting Study, more than half of institutional consultants expect most of their plan sponsor clients to add active non-core fixed income options, while 45% anticipate greater use of multi-asset inflation-hedging strategies on DC menus.
“What we’re seeing in this study is a clear shift: consultants and plan sponsors recognize that participants need access to a broader range of fixed income solutions in order to better navigate today’s market environment and improve long-term retirement outcomes,” said Rene Martel, managing director and head of retirement at PIMCO.
The survey, which gathered responses between January 5 and February 16, 2026 from 36 consulting and advisory firms overseeing more than 53,000 DC plans and over $10.2 trillion in assets, also points to rising interest in private credit within asset allocation solutions. Roughly half of consultants and 91% of aggregator firms ranked private credit among the most likely private assets to be added in the near term.
Default design is evolving alongside menu construction. Nearly 80% of consultants and advisors expect sponsors to migrate toward blended target-date funds that combine active and passive management, and sponsors are increasingly willing to pay more for active bond strategies where they see clear value-add potential. Demand for customization is growing as well: 46% of aggregators anticipate wider adoption of fully customized TDFs, while 85% expect rising interest in participant-personalized TDFs as “next-gen” defaults.
Private markets are steadily moving into defaults and managed accounts. All aggregator firms surveyed expect at least some sponsors to introduce private market exposure within target-date funds or managed accounts over the next 12 months, up sharply from 37% in last year’s study. Most institutional consultants (57%) report similar expectations but emphasize the need to balance return potential with asset quality, cost and liquidity to meet daily DC flows.
Retirement income is also becoming central to plan design. More than half (52%) of plans working with consultants already offer in-plan retirement income solutions, and 93% of aggregators plan to add such options within a year. Target-date funds with embedded annuities are emerging as a key innovation area, marking a shift from pure accumulation to income-oriented outcomes.
Finally, the study highlights divergent strategies in participant engagement. About 93% of aggregators now provide one-on-one financial planning, versus 30% of consultants, who more often rely on third-party providers. That gap underscores intensifying competition around advice, education and holistic financial guidance inside DC plans.