U.S. retirement plan assets approached $20 trillion in Q3 2012, according to an ICI report, which is a new record. At $19.7 trillion, there was an increase of 3.7% compared with Q2, due mostly to an increase in equities, including DB, DC, IRA, annuity reserves and government plans. Both 401(k) plans and TDFs hit new records, at $3.5 trillion and $460 billion respectively, with 91% of TDF assets in 401(k) and IRA plans.
According to a joint study by EBRI and ICI reviewing 2011 end-of-year data, 401(k) participants continued to diversify their holdings, primarily through TDFs. Thirteen percent of 401(k) assets were in TDFs, up from 11% in 2010 and 5% in 2006. Seventy-two percent of plans offered TDFs, up from 57% in 2006; 39% of participants were invested in them, up from 19% in 2006. And new hires in their 20s increased their use of balanced funds (which include TDFs) at 51%, up from 24% in 2006.
Twenty-one percent of participants had outstanding loans, accounting for 14% of assets (which was basically unchanged from 2010). The average account balance was almost $59,000, with the median at $16, 649. Complete study.
The good news: Retirement assets are growing, and more participants are using diversified investment products. The bad news: Participants take too many loans, and account balances are still way too low.
Can’t we do better than “one size fits all” equity-heavy TDFs? What are your thoughts? Use the comment box below.
