The report also showed that government defined benefit (DB) plans have been slower to rebound. These DB plans, which account for 80% of total public-sector retirement assets, still trail 2007 levels, according to Spectrem Group’s 2012 Retirement Market Insights report.
Benefiting from ongoing employee contributions and market increases, corporate DC plans, including 401(k) plans, rose to $3.738 trillion in 2011, from $3.685 trillion in 2010, and up 5.8% from $3.533 trillion in assets in 2007. Public-sector DC plans reached $367 billion in 2011 compared with $354 billion in 2010 and an increase of 4% from $353 billion in 2007.
In contrast, assets in government DB retirement plans totaled $2.737 trillion in 2011, up slightly from $2.733 trillion in 2010 but still down 8.1% from 2007’s high of $2.961 trillion in assets in 2007.
“Defined benefit plans, especially those in the public sector, are suffering from negative cash flow as they pay out benefits and see too little money flowing in from cash-strapped state and local governments,” said George H. Walper Jr., president of Spectrem Group. “Even strong market returns on investments won’t be enough to relieve pressure on these plans any time soon, as governments struggle to cover their underfunded pension liabilities.”
According to the report, the U.S. retirement market had total assets in 2011 of $15.374 trillion:
- $10.4 trillion in total assets of employer-sponsored retirement plans, up 1.9% from $10.2 trillion in 2010; and
- Individual retirement accounts (IRAs) hold another $5.016 trillion in retirement savings
Of the $10.4 trillion in assets:
- $6.263 trillion in private sector, including corporate and union plans;
- $3.265 trillion in public sector, including government and 457 plans; and
- $829.3 billion in 403(b) plans—for education, health care and other nonprofits.