DC plan participants continue to save, ICI data shows

Defined contribution (DC) plan participants continued to save in their workplace plans in 2012, according to a recent study released by the Investment Company Institute (ICI). The study, Defined Contribution Plan Participants’ Activities, 2012, is based on DC plan recordkeeper data covering nearly 24 million plan participant accounts. Assets in all DC plans represented more than one-quarter of assets in the total retirement market and accounted for almost one-tenth of U.S. households’ aggregate financial assets at the end of 2012.

Contributions and withdrawals

The study found that DC plan participants’ contribution activity in 2012 continued at a slightly higher rate than observed in 2011. Only 2.6% of DC plan participants stopped contributing in 2012, compared with 2.8% in 2011.

Furthermore, DC plan withdrawals in 2012 remained low and were in line with the prior year’s activity, the study found. Only 3.4% of DC plan participants took withdrawals in 2012, as was the case in 2011. Only 1.7% took hardship withdrawals during 2012, also the same pace as in 2011.

Loan activity

Loan activity edged down slightly in 2012, the study found, although it continues to remain elevated compared with four years ago. According to ICI data, 18.2% of DC plan participants had loans outstanding at the end of December 2012, compared with 18.5% at year-end 2011, and 18.2% at year-end 2010.

Asset allocations

The ICI found that, as stock values generally rose throughout the year, most DC plan participants stayed the course in their asset allocations. In 2012, 9.7% of DC plan participants changed the asset allocation of their account balances and 6.6% changed the asset allocation of their contributions—similar reallocation levels as observed in 2011.

Source: ICI press release, April 25, 2013.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer’s Benefits Reports.

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