Plan loan activity was down for the sixth consecutive winter, according to a report from the Investment Company Institute.
According to the report from Sarah Holden and Daniel Schrass at ICI, 17.4% of plans had outstanding loans in the first quarter of 2015, the lowest number since the first quarter of 2014. Since 2011, total loan activity has followed a typical pattern of gradually rising in the middle of the year, then decreasing in Q4 and further in Q1 of the following year.
The percentage of DC plan participants with loans out has been at or below 18% since the end of 2011, which the authors interpret as a good indicator of investor confidence and economic health.
“Likely responding to financial stresses, the percentage of DC plan participants with loans outstanding rose from the end of 2008...through 2011,” Holden and Schrass wrote. “This pattern of activity is similar to that observed in the wake of the bear market and recession earlier in the decade. The share of DC plan participants with loans outstanding then leveled out in 2012 through 2014, perhaps reflecting loans supporting resumed consumer spending or home purchases.”
Similarly, the number of Americans withdrawing from their plans, or suspending contributions altogether, remained flat compared with previous years, and markedly lower than during the Great Recession. All told, 1.3% of plan participants took a withdrawal of any kind in Q1 2015, within 0.1% of the reported totals for the first quarters of 2010 through 2014. In Q1 2009, 2.7% of participants took a withdrawal, and an additional 2.7% stopped contributing to their plans entirely.
According to the survey, there are now $24.9 trillion in American retirement assets, and $6.8 trillion are in defined contribution plans, as the percentage of total U.S. retirement assets held in DC plans edged higher in the first quarter of 2015. The value of all retirement assets has increased by over $10 trillion since the depths of the Great Recession at the end of 2008, and the total invested in 401(k) plans specifically has more than doubled since that time, from $2.2 trillion in 2008 to $4.7 trillion at the end of the first quarter of 2015.
To view the full report, click here.
