2026 Retirement Outlook

Jon: Hi, I’m Jon Barry, Head of Client Strategy

Jeri: And I’m Jeri Savage, Lead Retirement Strategist

Jon: We’ve recently published our 2026 Retirement Outlook, covering key themes for both defined contribution and defined benefit plans. Jeri, it’s the 20^th anniversary of the Pension Protection Act. Tell us a little more about the impact on DC plans.

Jeri: Jon, the Pension Protection Act, or PPA for short, transformed the US retirement system. On the DC side, it introduced automatic enrollment and most importantly, the concept of a qualified default investment alternative (or QDIA) and really helped launch the popularity of target date funds. So here we are 20 years later with over 4 trillion dollars in target date funds and over 65% of all contributions in 401k plans going into the strategies. But PPA also impacted DB plans – why don’t you tell us a bit about the impact there?

Jon: For DB plans, PPA imposed more rigorous funding rules and increased PBGC premiums. These changes came into effect as the Global Financial Crisis took place, resulting in significant funded status declines for many sponsors and in many companies closing or freezing their DB plans. As funded status has improved over the past few years, driven largely by higher interest rates, we’ve seen a significant increase in pension risk transfer activities such as annuity buyouts and lump sum cashouts. Now 20 years later, DB plans are rare and DC plans are dominant.

So Jeri, this isn’t all we cover in our Retirement Outlook. What are some of the key themes we tackle this year for DC plans?

Jeri: When it comes to key DC themes, we cover investment themes around the QDIA, the core menu and more. What innovation should we be on the lookout for? We also look at key regulatory, legislative and litigation topics for 2026, and use our proprietary survey data to see what’s on the minds of plan sponsors, advisors and participants. We see mixed levels of retirement confidence and specifically look at what’s keeping plan sponsors up at night, what concerns advisors have about their retirement business and what participants say are their leading financial concerns.

Jon, what do we see when it comes to DB plans?

Jon: For DB plans, we take a look at the path forward for corporate DB plans, with funded status improvements and de-risking implications. For example, sponsors who want to maintain their DB plans should consider how to structure growth assets in a derisked portfolio and refine the duration of their fixed income as liabilities mature.

 

 

Throughout our Retirement Outlook we have actions to consider for both DB and DC plan sponsors when looking ahead to 2026 and beyond.

Keep in mind that all investments, including mutual funds, carry a certain amount of risk, including the possible loss of the principal amount invested.

This material is for general information purposes only, with no consideration given to the specific investment objective, financial situation and particular needs of any specific person. This material does not constitute any promotion of or advice on MFS investment products or services. The views expressed are those of the author(s) and are subject to change at any time. These views are for informational purposes only and should not be relied upon as a recommendation to purchase any security or as a solicitation or investment advice. Past performance or any prediction, projection or forecast is not indicative of future performance. The information contained herein may not be copied, reproduced or redistributed without the express consent of MFS. While reasonable care has been taken to ensure the accuracy of the information as at the date of publication, MFS does not give any warranty or representation, expressed or implied, and expressly disclaims liability for any errors or omissions. Information may be subject to change without notice. MFS accepts no liability for any loss, indirect or consequential damages, arising from the use of or reliance on this material.

FOR INSTITUTIONAL AND INVESTMENT PROFESSIONAL USE ONLY. Should not be shown, quoted, or distributed to the public.

Distributed by: U.S. – MFS Institutional Advisors, Inc. (“MFSI”), MFS Investment Management and MFS Fund Distributors, Inc., Member SIPIC, Boston, MA; Canada – MFS Investment Management Canada Limited.

Unless otherwise indicated, logos and product and service names are trademarks of MFS® and its affiliates and may be registered in certain countries. MFS® does not provide legal, tax, or accounting advice. Clients of MFS should obtain their own independent tax and legal advice based on their particular circumstances. No forecasts can be guaranteed

67084.1