DC plan participants demonstrated an ongoing commitment to retirement saving during the first half of 2017, as the latest recordkeeper data show that most participants maintained their asset allocations and contribution levels.
The Investment Company Institute’s (ICI) “Defined Contribution Plan Participants Activities, First Half 2017” study finds that nearly all participants continued contributing to their plans in the first half of 2017, with only 1.6% stopping their contributions, compared to 1.9% during the first half of 2016.
The study updates results of contributions, withdrawals and other activity based on DC plan recordkeeper data covering more than 30 million employer-based DC retirement plan participant accounts as of June 2017. ICI notes that during the first six months of 2017, stock prices generally rose, with the S&P 500 total return index up 9.3% during this period. The report also shows that DC plan assets now make up 28% of all U.S. retirement assets, compared to 25% in 2008.
Meanwhile, there was a minor uptick in account balance reallocation activity, while contribution reallocation activity was slightly lower compared to the same time frame in 2016. During the first six months of 2017, 6.8% of DC plan participants changed the asset allocation of their account balances, compared to 6.5% during the same period in 2016. Meanwhile, 4.3% changed the asset allocation of their contributions, compared to 5.3% during the same period in 2016.
Withdrawal activity also remained low in the first half of 2017 and was nearly the same as the first half of 2016. ICI found that 2.2% of DC plan participants took withdrawals in the first half of 2017, compared to 2.1% in the first half of 2016. Hardship withdrawal activity also was low and registered at the same level for the first halves of both 2017 and 2016, with only 0.9% of DC plan participants taking hardship withdrawals.
Loan activity also showed little change at the end of the first half of 2017. The report shows that 16.7% of plan participants had loans outstanding at the end of June 2017, compared with 16.6% at the end of March 2017 and 17% at year-end 2016. The study notes that loan activity continues to remain higher than at the end of 2008, when 15.3% of plan participants had loans outstanding (the data further shows that the level peaked at 18.5% in 2011).
