More Participants Staying Put in Retirement Plans

May 11, 2011 ( – The share of defined contribution plan participants that stopped making contributions in 2010 was significantly lower than the share that stopped contributing in 2009, according to research from the Investment Company Institute.

Only 2.4% of DC plan participants stopped contributing in 2010, compared with 3.4% during 2009 and 3.7% in 2008.   

As stock values wandered down and up during the year, most DC plan participants stayed the course with their asset allocations, ICI said. In 2010, 10.3% of DC plan participants changed the asset allocation of their account balances compared with 11.8% in 2009, and 8% changed the asset allocation of their contributions compared with 10.5% in 2009. These levels of reallocation activity were slightly lower compared with the activity observed a year earlier.   

The survey report said DC plan assets are a significant component of Americans’ retirement assets, representing more than one-quarter (26%) of the total retirement market and almost one-tenth of U.S. households’ aggregate financial assets at year-end 2010.

Loan Activity Up  

According to the ICI survey, DC plan participants’ loan activity continued to edge up throughout 2010, a pattern of activity that also was observed in the wake of the bear market and recession earlier in the decade. At the end of December 2010, 18.2% of DC plan participants had loans outstanding, compared with 16.5% at year-end 2009 and 15.3% at year-end 2008.  

However, other DC plan withdrawal activity in 2010 remained low and was similar to the prior year’s activity. In 2010, 3.5% of DC plan participants took withdrawals, compared with 3.1% in 2009. Levels of hardship withdrawal activity also remained low. Only 1.7% of DC plan participants took hardship withdrawals during 2010, compared with 1.6% in 2009.   

ICI surveyed a cross section of recordkeeping firms representing a broad range of DC plans and covering more than 23 million employer-based DC retirement plan participant accounts as of December 2010.  

The report is at