Since the introduction of the first private pension plan by American Express in 1875, pensions have evolved into a highly sophisticated institutional industry. With the need to meet pension obligations, defined benefit (DB) plans and their sponsors have looked at many different ways to achieve these objectives, leveraging broad asset allocation, investment structures and other techniques. While acknowledging that maintaining DB plans was either too expensive or too burdensome, many of the interviewed sponsors wanted to be able to replicate some of the efficiencies they had utilized in running DB plans. Comparing the DB experience to the more typical approach on the defined contribution (DC) side, a number of shortcomings are often identified with DC plans:

• Higher costs

• Limited access to alternative investments, limiting employees’ ability to increase returns and reduce risk through diversification

• Uncertain final benefit with participants bearing i