Dual Plan Holders More Drawn to Equities

EBRI research suggests people who own more than one type of retirement plan are more likely than others to invest a higher percentage in equities.

Using data from the Federal Reserve, the Employee Benefit Research Institute (EBRI) explored differences in investment styles related to the type of retirement plan an individual owns.

According to EBRI, individual retirement account (IRA) owners are more likely to be invested all in stocks if they also have a 401(k) plan. Those who had both a defined benefit (DB) pension plan and a 401(k) were less likely to invest their 401(k) into all interest earning assets, such as bonds.  

EBRI also found that older IRA owners were less likely to be invested all in stocks, but more highly educated IRA participants were less inclined to be 100% invested in interest-earning assets. Higher income and net worth were correlated with more investment in stocks, EBRI reported.  

The Federal Reserve data also showed that the types of retirement plans investors use has shifted in the last 20 years. In 1992, 42.3% of participants participated in employment-based retirement plans had a DB plan only, and 40.8% had a DC plan only. In 2012, 18.9% had a DB plan only, 65.0% had only a DC plan, and 16.1% had both a DB and a DC plan.  

More information is available in April EBRI Notes, “Retirement Plan Participation and Asset Allocation, 2010,” available at www.ebri.org.