Large Plan Assets Fell in 2000: CIEBA

November 27, 2001 (PLANSPONSOR.com) - Hampered by equity market volatility, year-end assets in defined contribution (DC) plans fell by 8%, compared to 3% for defined benefit (DB) plans in the 2000 calendar year, according to a recent survey by the Committee on the Investment of Employee Benefit Assets (CIEBA).

CIEBA, an affiliate of the Association of Finance Professionals representing large plan sponsors, also found that both types of plans were substantially invested in equities.

  • DB plans had 60% allocated to equities, while 
  • DC plans had approximately 70% in equity investments

DB Dominant

According to the survey 99% of CIEBA’s members offer both DB and DC plans, with DB plans representing the primary plan type. In comparison to DC plans, these types of plans had:

  • over 65% more assets, 
  • covered 74% more participants and 
  • paid out 18% more in benefits

While DB plans are the dominant plan type for CIEBA members, the number of participants in DC plans is increasing at a faster rate than those in DB plans, with participation in DC plans by eligible employees reaching 85% in 2000.

Asset Mix

According to the survey, for the sixth consecutive year,

  • DB plan benefit payments continued to represent about 6% of year-end assets, 
  • while DC plan benefit payments continued to exceed contributions, representing 9% of year-end assets

DC plan contributions averaged almost $6,000 per active employee with 30% provided in employer match.

At the close of 2000, 17% of pension plan and 16% of DC plan assets were managed internally. Over 80% of DB plan assets were actively managed, compared to 42% of DC plan assets.

Web Sense

The survey also found that the number of plan sponsors who use Web sites to communicate with plan participants increased from 66% in 1999 to 86% in 2000.

In addition, while over 80% of plan sponsors provided some type of investment education,

  • less than 30% of the surveyed companies make individual financial planning available, and
  • only 21% provided some type of interactive software advisory program

The CIEBA survey covered more than 115 corporate plan sponsors with over $1.3 trillion in assets. This total includes $884 billion in defined benefit assets and $509 billion in defined contribution plan assets, providing benefits for more than 16.5 million participants and beneficiaries.

– Camilla Klein                           editors@plansponsor.com

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