And the beat goes on. Total retirement assets reached $23 trillion at the end of 2013, according to the ICI. While this reflects a healthy increase of 5% in the fourth quarter of the year, assets in TDFs grew at an even greater rate: 8%.
The move toward participant directed retirement plans continues, with DC plans at $5.9 trillion (up 5.1%) and IRAs at $6.4 trillion (up 5.3%) at year end 2013. Private sector DB plans stood at just under $3 billion, up 3.4% for the year. State pension plans also continue to grow, reaching $5.6 trillion — but a dark cloud of unfunded liabilities hangs heavy over them.
Diving deeper into the numbers on 401(k)s:
• 401(k) plans held $4.2 trillion, constituting more than 70% of total DC assets
• 60% of assets in 401(k) plan were in mutual funds
• since 2008, 401(k) assets have almost doubled
Turning to IRAs, mutual funds accounted for 45% of IRA assets, which grew more slowly than 401(k) plans last year.
But the big winners, as usual, were TDFs. In addition to their 8% growth rate in the last quarter of 2013, ICI reported that assets in TDFs have nearly tripled since 2008; 90% of TDF assets were held in mutual funds, with a total of 90% in either DC plans (70%) or IRAs (20%).
No wonder state and federal governments are paying so much attention to the participant directed retirement market — bringing to mind Willie Sutton’s famous sentiment when asked why he robbed banks.
