Stable Value's Expanding Role in Modern Retirement Plan Design

Stable Value has been a proven and enduring component of defined contribution (DC) plans. Today, many plan sponsors and fiduciaries are evaluating this asset class more strategically, considering how it can support better participant outcomes, enhance portfolio construction and help improve retirement readiness.

The needs of plan participants remain remarkably consistent. As individuals save for retirement, they want to grow their assets while also taking advantage of solutions that can help preserve capital, manage risk and navigate periods of market uncertainty.

Against this backdrop, Stable Value stands out for its ability to help balance capital preservation objectives within portfolios designed to support long-term growth goals.

A Proven Solution in an Evolving Retirement Landscape

The retirement landscape has changed considerably with the growth of target-date funds, increased attention to retirement income and greater use of professionally managed investment solutions. At the same time, market volatility and economic uncertainty have reinforced the importance of helping participants manage risk as they move closer to retirement.

Stable Value addresses these objectives through a combination of principal preservation, liquidity and the potential for higher credited rates than traditional cash alternatives. As a result, it remains one of the most widely utilized capital preservation options in retirement plans.

In fact, according to MetLife's 2024 Stable Value Study, 82% of defined contribution plan sponsors offer Stable Value as part of their investment lineup, reflecting its long-standing role in helping participants manage risk while pursuing retirement goals.¹

Aligning with Modern Fiduciary Priorities

To help ensure that participants are prepared for a secure retirement, fiduciaries today are expected to do more than select investments. They are increasingly focused on whether participants are on track for retirement and whether plan design can support better long-term outcomes. Beyond evaluating standalone performance, fiduciaries are examining considerations such as risk-adjusted outcomes, participant behavior, retirement readiness, fees and overall portfolio effectiveness.

Stable Value aligns well with many of these priorities. Its emphasis on preserving principal while providing daily liquidity can help mitigate participant concerns during periods of market stress and may reduce the likelihood of disruptive investment decisions driven by short-term volatility.

This participant-centered approach reflects an industry shift toward evaluating investments based on how they support retirement outcomes rather than solely on benchmark-relative performance.

Stable Value as a Portfolio Construction Tool

Perhaps the most significant evolution in the Stable Value discussion is the growing recognition of its potential role within broader portfolio frameworks. Rather than being viewed solely as a standalone capital preservation option, Stable Value may be considered alongside other asset classes as plan sponsors look for ways to establish more balanced risk profiles.

Increasingly, the conversation is moving beyond the evaluation of individual investments and toward how different solutions fit within a larger retirement strategy. As a result, Stable Value is being considered not only for its traditional capital preservation characteristics, but also for the role it may play within total portfolio design. How it is used will vary based on plan objectives and participant needs, but the discussion increasingly centers on where it may fit within the broader investment framework.

Opportunities Beyond Target-Date Funds

Stable Value may serve different purposes across professionally managed investment solutions. Within custom target-date strategies, for example, it may be evaluated as part of a capital preservation approach as participants near retirement. In model portfolios and managed account programs, it may be considered alongside other investment options within an asset allocation framework tailored to participant characteristics, risk tolerance and retirement goals.

Whether, and to what extent, Stable Value is incorporated into these approaches depends on a range of factors, including plan objectives, participant demographics, portfolio design and fiduciary considerations. As custom target-date solutions, model portfolios, managed accounts and other professionally managed strategies continue to evolve, plan sponsors have additional opportunities to evaluate where Stable Value's characteristics may complement their investment and participant outcome objectives.

Supporting the Next Generation of Participant Outcomes

Market volatility, retirement transition risk and participant decision-making during uncertain environments remain consistent challenges for plan sponsors and fiduciaries. Addressing these issues requires thoughtful plan design, disciplined portfolio construction and investment solutions that support both growth and risk management objectives.

Stable Value's combination of principal preservation, liquidity and risk management reinforces its continuing role in modern retirement plan design as sponsors seek to support stronger participant outcomes.