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 online at http://www.ici.org/pdf/ppr_10_rec_survey-q4.pdf.