More DC Money Flows to Stable Value

May 23, 2002 (PLANSPONSOR.com) - Retirement plan participants had more of their money in stable value funds at year-end 2001 than in the last six years, according to an annual industry survey.

According to the Stable Value Investment Association (SVIA), defined contribution plans had 29.1% of their assets – or $261 billion – allocated to stable value funds in 2001. Increasing allocations and positive investment returns produced a 15% growth in stable value investments over their 2000 level, the group said.

The SVIA data showed that stable value outperformed money market funds by an average annual 125 basis points over the last five years with stable value returns ranging from 6.25% to 6.75% during the period. 

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The group also charted differences in the defined contribution plan stable value portfolio between 2000 and 2001. For example:

  • the amount of cash jumped from 3% in 2000 to 8% a year later,
  • the amount of guaranteed investment contracts dropped from 45% in 2000 to 37% in 2001. A guaranteed investment contract is an agreement between an insurance company and a pension plan that guarantees a specific rate of return over the time span of the agreement. 

The survey covers more than 120,000 defined contribution plans with more than $261 billion in stable value assets.

For further information, see the SVIA Web site at www.stablevalue.org

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