ICI: Funds Held Quarter of US Retirement Market

May 12, 2005 (PLANSPONSOR.com) - Mutual funds accounted for $3.1 trillion, or 24%, of the $12.9 trillion US retirement market, according to the Investment Company Institute's (ICI) latest annual yearbook.

ICI’s  2005 Investment Company Fact Book , reported that of the $3.1 trillion (up from $2.65 trillion in 2003), $1.56 trillion was in employer-sponsored accounts such as K plans (up from $1.35 trillion in 2003) while $1.48 trillion was in IRAs (up from $1.3 trillion in 2003) (See ICI: Funds In Retirement Accounts Continue To Grow ). The current $3.1 trillion retirement market figure represented about 38% of year-end 2004 total fund assets, ICI reported.

The remaining $9.8 trillion in retirement assets were in pension funds, insurance companies, banks and brokerage firms, ICI said. Funds also held about 97% of the $52 billion 529 education savings market.

According to ICI, the US fund industry’s share of the employer-sponsored defined contribution market has skyrocketed from 8% 15 years ago to nearly half at the close of 2004. DC assets held in funds were $1.6 trillion at year-end 2004, up $210 billion, or 15%, from the year before. At year-end 2004, the DC market had an estimated $3.2 trillion in assets in K plans, 403(b) plans, 457 plans, Keoghs and other DC plans, ICI said.

ICI said the assets held in K plans has skyrocketed from $385 billion in 1990 to $2.11 trillion at year-end 2004. The latest figure included $1.01 trillion in funds and $1.02 trillion in other assets.

Among assets in other employer plans, ICI said at year-end 2004:

  • private sector defined benefit plans contained $1.8 trillion,
  • state and local government pension plans had $2.1 trillion,
  • $1.3 trillion was in annuity reserves, and
  • $1 trillion was in federal government defined benefit plans and the federal Thrift Savings Plan (TSP).

ICI said 92% of Americans were saving for retirement with 84% owning defined contribution plan accounts.

Overall mutual fund industry figures represented almost 95% of the total $8.6 trillion held by US registered investment companies – an $800 billion spike over 2003, ICI said.

Marketwide data show that as of year-end 2004:

  • 92 million individuals in 54 million US households own mutual funds
  • Fund owners have a median age of 48; 71% are married while 56% are college graduates, 77% are employed, 49% are baby boomers and 24% are members of Generation X.