Data & Research June 25, 2010

Retirement Plan Assets Concentrated in Higher Income Families

Individual account retirement plan assets are concentrated in families with higher net worth, higher family income, higher educational attainment, with older family heads, and with white non-Hispanic heads, according to a report by the non-partisan Employee Benefit Research Institute (EBRI).
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EBRI’s May 2010 Notes said only 1.2% of individual account retirement plan assets were owned by families with family income below $20,000, and 15.1% were owned by families with incomes of $100,000−$149,999. Meanwhile, nearly half of individual retirement plan assets (49.9%) were owned by families with incomes of $150,000 or more. 

Families in the top 10 percentile of net worth owned 59.6% of individual account retirement plan assets, compared with 0.5% of those in the bottom 25% of net worth.  

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In addition, EBRI’s analysis of the Federal Reserve’s Survey of Consumer Finances found approximately 70% of the employment-based retirement plan assets in 2007 were held by families headed by individuals ages 45−64. The largest concentration of IRA and Keogh assets were held by families with heads in the next oldest age group (ages 55−74), who own just over 60% of these assets.   

EBRI said the concentration of these IRA/Keogh assets in the accounts of older individuals is largely a result of rollovers from employment-based retirement plans, after retirement or job change.   

Two percent of individual account retirement plan assets were owned by families headed by individuals without a high school diploma, while the share for families with a head having only a high school diploma was 12.2%. Approximately 75% of individual account retirement plan assets were owned by families whose head was a college graduate.   

In addition, the data showed 89.3% of individual account retirement plan assets were held by families headed by white, non-Hispanic individuals.  

The May 2010 EBRI Notes is here.
The Markets June 25, 2010

Global Retirement Assets See Growth in 2009

Global retirement assets stood at $24 trillion in 2009, up from $21.4 trillion the year before, according to Cerulli’s Quantitative Update: Global Markets 2010.

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Cerulli projects retirement assets will grow at a compound annual growth rate (CAGR) of 7.2% between 2009 and 2014 to $34.3 trillion.  

According to a press release, Cerulli’s data showed global assets under management rose 12.3% in 2009 to $49 trillion as fiscal and monetary stimulus triggered a stock market surge, but Europe’s sovereign debt crisis is clouding the outlook for money managers in 2010. The rise in assets followed an 18.6% (or $10 trillion) slide in 2008.   

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Global assets under management remain short of 2007’s peak of $53.6 trillion but are projected to exceed it by the end of 2011, reaching $56.5 trillion. Cerulli projects global assets under management are projected to grow at a CAGR of 7.6% to $70.6 trillion by 2014, the announcement said. 

Global mutual fund assets grew 16.3% in 2009 to $21.3 trillion, but Cerulli noted market appreciation mostly accounted for the rise, with net inflows contributing just 1.1% to the $3 trillion increase. Cerulli projects that mutual fund assets will also exceed their 2007 peak by 2011, hitting $24.5 trillion, and will grow at a CAGR of 7.9% to $31.1 trillion by 2014. 

Regionally, Asia ex-Japan made the swiftest recovery from the financial crisis and is forecast to post 14.5% growth in assets under management between 2009 and 2014 to $3.8 trillion. The United States and Europe together, however, will continue to dominate the asset management industry, accounting for 78% of global assets, Cerulli said.  

More information is at http://www.cerulli.com.

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