The ICI says its latest study of retirement plan participant behaviors, “Defined Contribution Plan Participants’ Activities, First Half 2014,” compiles the experiences of about 25 million defined contribution (DC) plan participants, focusing on account data from January through June of this year. The research shows assets in all DC plans have grown to represent more than one-quarter of total U.S. retirement savings. Furthermore, DC accounts now represent almost one-tenth of U.S. households’ aggregate financial assets, as of the first half of 2014.
ICI researchers say the vast majority of DC plan participants continued contributing to their plans in the first half of 2014. Only 2.1% of DC plan participants stopped contributing during the first half of 2014, compared with 1.5% in the first half of 2013. Additionally, DC plan withdrawals in the first half of 2014 remained low and were in line with the prior year’s activity, and participants generally did not tap out their accounts. Indeed, only 2.3% of DC plan participants took withdrawals in the first half of 2014, compared with 2.2% in the first half of 2013. Only 0.9% took hardship withdrawals during the first half of 2014, the same share as in the first half of 2013.
Some negative details also emerged in this year’s analysis, the ICI says. Loan activity edged up slightly by the end of June 2014, and it continues to remain elevated compared with six years ago. The data shows that at the end of June 2014, 17.9% of DC plan participants had loans outstanding, compared with 17.7% at the end of March 2014, 18.2% at year-end 2013, and 15.3% at year-end 2008.
The analysis suggests that most DC plan participants stayed the course in their asset allocations in the first half of 2014, due to positive and relatively stable equity market returns. The first half of the year saw only 6.6% of DC plan participants change the asset allocation of their existing balance and 4.3% change the asset allocation of their ongoing contributions—slightly lower than the reallocation activity observed in the first half of 2013.
ICI says it has been tracking participant activity through recordkeeper surveys since 2008. This update reports results from ICI’s survey of a cross section of recordkeeping firms representing a broad range of DC plans. The firm’s 401(k) resource page has more information.