DC Pulse // 2Q 2025 in Review
Research, regulations, returns and trends in DC
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MFS DC Takes
2Q2025
MFS DC Takes
Retirement is Personal. So is Social Security.
Retirement Expectations vs. Reality
Retirement Expectations
49% of retirees say they retired earlier than expected.
Only 22% of sponsors currently offer a program that allows employees to gradually transition into retirement.
Social Security Expectations vs. Reality
% Retirement income expected to come from Social Security
Retirees report 41% of their monthly income comes from Social Security.
How a participant approaches retirement and how a retiree lives in retirement are personal choices. When to claim Social Security is also a personal choice. These complex decisions highlight the value of advice near and in retirement.
Sources: MFS 2024 Global Retirement Survey and 2024 MFS DC Plan Sponsor Survey. For surveys methodology, please click here.
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DC Regulatory and Legislative Happenings
DC Regulatory and Legislative Happenings
Unanimous Supreme Court
The Supreme Court unanimously ruled in Cunningham v. Cornell University that plaintiffs suing employers under ERISA are not responsible for addressing prohibited transaction exemptions, or lack thereof, in their complaints.
This results in a lower bar for plaintiffs to defeat early motions to dismiss (and reach the discovery stage). This is likely to embolden the plaintiffs’ bar and could make offering and insuring retirement plans more expensive due to increased litigation risk and costs.
Spotlight on Alternatives
The Department of Labor (DOL) rescinded 2022 guidance for plan fiduciaries to exercise “extreme care” before adding a cryptocurrency option to a 401(k)–investment menu. The current DOL says it is “neither endorsing, nor disapproving of, plan fiduciaries who conclude that the inclusion of cryptocurrency in a plan’s investment menu is appropriate.”
An appeals court affirmed the dismissal of a long-running lawsuit alleging the inclusion of alternative investments in a DC menu was a breach of fiduciary duty.
Regulatory Quick Hits
The DOL says it will replace the previous administration’s rulemaking on ESG considerations in retirement plans. Rather than defend the ESG rulemaking in court, the DOL intends to draft a replacement, although no timeline has been given.
The DOL announced a program of opinion letters across five of its agencies, including EBSA, aiming to clarify various labor laws. EBSA will release advisory opinions and information letters which, while not legally binding, can help sponsors understand how to interpret the law. This guidance may be in lieu of additional regulatory activity impacting retirement plans.
Tax Legislation and Retirement
The One Big Beautiful Bill Act was passed in July 2025 and is primarily focused on extending tax cuts.
However, there are implications in the bill for workers, retirees and long-term savings. Examples include additional deductions for seniors, increased uses for 529 plans and exemptions for a portion of student loan payments, among others.
Furthermore, the bill creates a new savings option called a “Trump account” that can be created for young children, initially funded by the federal government, with the option for family members to make additional contributions.
Importantly, the tax treatment for 401(k)s and IRAs have not been touched by the legislation.
Sources:
23-1007 Cunningham v. Cornell Univ. (04/17/2025),
DOL Rescinds 2022 Cryptocurrency Guidance for 401(k) Plans | PLANADVISER,
9th Circuit Affirms Dismissal of Long-Running Intel Investment Lawsuit | PLANSPONSOR,
DOL to Craft New ESG Retirement Investing Rule | PLANSPONSOR,
DOL Launches Multi-Agency Opinion Letter Program to Boost Compliance Assistance | PLANSPONSOR
Congress.gov, “H.R.1 - One Big Beautiful Bill Act,” 2025
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DC Market Data
DC Market Data
Social Security and the impact on retirement confidence
Worker expectations for sources of income in retirement vs. retirees’ actual income sources
Workers planning to retire n=951; Retirees n=1,005
Retirees rely on Social Security as a key source of income in retirement. Workers and retirees are both concerned about possible changes to Social Security and the potential impact on income in retirement and overall retirement confidence.
Sources: Employee Benefit Research Institute and Greenwald Research, 2025 Retirement Confidence Survey. Status of the Social Security and Medicare Programs, A Summary of the 2025 Annual Reports https://www.ssa.gov/oact/trsum/
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Investment Index Returns
Investment Index Returns
Sources:
SPAR, FactSet Research Systems Inc., MFS analysis. Illustrative 60/40 portfolio comprises 60% S&P 500 and 40% Bloomberg US Aggregate and is rebalanced monthly.
This hypothetical example is for illustrative purposes only. MSCI indices shown are net returns.
Cash is based on returns for the FTSE 3-month Treasury Bill Index.
The historical performance of each index cited is provided to illustrate market trends; it does not represent the performance of a particular MFS® investment product. It is not possible to invest directly in an index. Index performance does not take into account fees and expenses. Past performance is no guarantee of future results. You should consider your client’s financial needs, goals, and risk tolerance before making any investment recommendations.
Disclosures
“Standard & Poor’s®” and “S&P®” are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and have been licensed for use by S&P Dow Jones Indices LLC and sublicensed for certain purposes by Massachusetts Financial Services Company (“MFS”). The S&P 500® is a product of S&P Dow Jones Indices LLC, and has been licensed for use by MFS. MFS’ product(s) is not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P, or their respective affiliates, and neither S&P Dow Jones Indices LLC, Dow Jones, S&P, their respective affiliates make any representation regarding the advisability of investing in such product(s).
Frank Russell Company ("Russell") is the source and owner of the Russell Index data contained or reflected in this material and all trademarks, service marks and copyrights related to the Russell Indexes.
Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell's express written consent. Russell does not promote, sponsor or endorse the content of this communication.BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively "Bloomberg"). Bloomberg or Bloomberg's licensors own all proprietary rights in the Bloomberg Indices. Bloomberg neither approves or endorses this material, or guarantees the accuracy or completeness of any information herein, or makes any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith.
MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI.
Source FTSE International Limited ("FTSE") © FTSE 2022. "FTSE®" is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data and no party may rely on any FTSE indices, ratings and/or data underlying data contained in this communication. No further distribution of FTSE Data is permitted without FTSE's express written consent. FTSE does not promote, sponsor or endorse the content of this communication.
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 from the Advisor. No forecasts can be guaranteed.
Unless otherwise indicated, logos and product and service names are trademarks of MFS® and its affiliates and may be registered in certain countries.
2Q2025
MFS DC Takes
Retirement is Personal. So is Social Security.
Retirement Expectations vs. Reality |
|
|
49% of retirees say they retired earlier than expected.
Only 22% of sponsors currently offer a program that allows employees to gradually transition into retirement.
Social Security Expectations vs. Reality |
|
|
How a participant approaches retirement and how a retiree lives in retirement are personal choices. When to claim Social Security is also a personal choice. These complex decisions highlight the value of advice near and in retirement.
Sources: MFS 2024 Global Retirement Survey and 2024 MFS DC Plan Sponsor Survey. For surveys methodology, please click here.
DC Regulatory and Legislative Happenings
Unanimous Supreme Court
The Supreme Court unanimously ruled in Cunningham v. Cornell University that plaintiffs suing employers under ERISA are not responsible for addressing prohibited transaction exemptions, or lack thereof, in their complaints.
This results in a lower bar for plaintiffs to defeat early motions to dismiss (and reach the discovery stage). This is likely to embolden the plaintiffs’ bar and could make offering and insuring retirement plans more expensive due to increased litigation risk and costs.
Spotlight on Alternatives
The Department of Labor (DOL) rescinded 2022 guidance for plan fiduciaries to exercise “extreme care” before adding a cryptocurrency option to a 401(k)–investment menu. The current DOL says it is “neither endorsing, nor disapproving of, plan fiduciaries who conclude that the inclusion of cryptocurrency in a plan’s investment menu is appropriate.”
An appeals court affirmed the dismissal of a long-running lawsuit alleging the inclusion of alternative investments in a DC menu was a breach of fiduciary duty.
Regulatory Quick Hits
The DOL says it will replace the previous administration’s rulemaking on ESG considerations in retirement plans. Rather than defend the ESG rulemaking in court, the DOL intends to draft a replacement, although no timeline has been given.
The DOL announced a program of opinion letters across five of its agencies, including EBSA, aiming to clarify various labor laws. EBSA will release advisory opinions and information letters which, while not legally binding, can help sponsors understand how to interpret the law. This guidance may be in lieu of additional regulatory activity impacting retirement plans.
Tax Legislation and Retirement
The One Big Beautiful Bill Act was passed in July 2025 and is primarily focused on extending tax cuts.
However, there are implications in the bill for workers, retirees and long-term savings. Examples include additional deductions for seniors, increased uses for 529 plans and exemptions for a portion of student loan payments, among others.
Furthermore, the bill creates a new savings option called a “Trump account” that can be created for young children, initially funded by the federal government, with the option for family members to make additional contributions.
Importantly, the tax treatment for 401(k)s and IRAs have not been touched by the legislation.
Sources:
23-1007 Cunningham v. Cornell Univ. (04/17/2025),
DOL Rescinds 2022 Cryptocurrency Guidance for 401(k) Plans | PLANADVISER,
9th Circuit Affirms Dismissal of Long-Running Intel Investment Lawsuit | PLANSPONSOR,
DOL to Craft New ESG Retirement Investing Rule | PLANSPONSOR,
DOL Launches Multi-Agency Opinion Letter Program to Boost Compliance Assistance | PLANSPONSOR
Congress.gov, “H.R.1 - One Big Beautiful Bill Act,” 2025
DC Market Data
Social Security and the impact on retirement confidence
Worker expectations for sources of income in retirement vs. retirees’ actual income sources
Workers planning to retire n=951; Retirees n=1,005
Retirees rely on Social Security as a key source of income in retirement. Workers and retirees are both concerned about possible changes to Social Security and the potential impact on income in retirement and overall retirement confidence.
Sources: Employee Benefit Research Institute and Greenwald Research, 2025 Retirement Confidence Survey. Status of the Social Security and Medicare Programs, A Summary of the 2025 Annual Reports https://www.ssa.gov/oact/trsum/
Investment Index Returns
Sources:
SPAR, FactSet Research Systems Inc., MFS analysis. Illustrative 60/40 portfolio comprises 60% S&P 500 and 40% Bloomberg US Aggregate and is rebalanced monthly.
This hypothetical example is for illustrative purposes only. MSCI indices shown are net returns.
Cash is based on returns for the FTSE 3-month Treasury Bill Index.
The historical performance of each index cited is provided to illustrate market trends; it does not represent the performance of a particular MFS® investment product. It is not possible to invest directly in an index. Index performance does not take into account fees and expenses. Past performance is no guarantee of future results. You should consider your client’s financial needs, goals, and risk tolerance before making any investment recommendations.
Disclosures
“Standard & Poor’s®” and “S&P®” are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and have been licensed for use by S&P Dow Jones Indices LLC and sublicensed for certain purposes by Massachusetts Financial Services Company (“MFS”). The S&P 500® is a product of S&P Dow Jones Indices LLC, and has been licensed for use by MFS. MFS’ product(s) is not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P, or their respective affiliates, and neither S&P Dow Jones Indices LLC, Dow Jones, S&P, their respective affiliates make any representation regarding the advisability of investing in such product(s).
Frank Russell Company ("Russell") is the source and owner of the Russell Index data contained or reflected in this material and all trademarks, service marks and copyrights related to the Russell Indexes.
Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell's express written consent. Russell does not promote, sponsor or endorse the content of this communication.
BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively "Bloomberg"). Bloomberg or Bloomberg's licensors own all proprietary rights in the Bloomberg Indices. Bloomberg neither approves or endorses this material, or guarantees the accuracy or completeness of any information herein, or makes any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith.
MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI.
Source FTSE International Limited ("FTSE") © FTSE 2022. "FTSE®" is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data and no party may rely on any FTSE indices, ratings and/or data underlying data contained in this communication. No further distribution of FTSE Data is permitted without FTSE's express written consent. FTSE does not promote, sponsor or endorse the content of this communication.
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 from the Advisor. No forecasts can be guaranteed.
Unless otherwise indicated, logos and product and service names are trademarks of MFS® and its affiliates and may be registered in certain countries.