The $700 billion growth in the defined contribution plan asset base stopped three years of 401(k) plan asset declines and was mirrored by a 17.5% hike in defined benefit plan assets and a 22% rise in the level of individual retirement plan (IRAs) assets, according to data in the latest Marketplace Update report from the Society of Professional Administrators and Recordkeepers (SPARK). In total, assets for all types of retirement plans increased 20%, reaching nearly $12 trillion.
“What a difference a year makes,” Bob Wuelfing, President of SPARK said in a news release. “Solid equity market performance and improving economic conditions were the driving factors in the turnaround,” he said.
Examining the defined contribution market, SPARK noted the average participation rate was 78% among plans with over $5 million in assets and 75% in smaller plans. Further, boosted by improving economic conditions, participants started shifting contributions back into stock investments, reversing the prior year’s activity, when most transfers came out of equities and into fixed income options. Participants ended the year with 64% of their balances in stock fund investments, up 5% from 2002’s close (See K Plan Participants Still Happy With Providers ).
The results are based on more than 395,000 401(k) plans, covering almost 45 million workers in the U.S. in 2003.
Looking toward the results of 2004’s report, Wuelfing said this year is a mix of good news and bad for the retirement industry. “The financial markets should continue improving, although not likely at the pace of 2003,” he said. “And, there will be further legislative and regulatory scrutiny of trading practices in the investment management business which will affect our industry.”
Copies of the 2004 Marketplace Update Report are available by contacting Jeff Close at (860) 658-5058.