U.S. Retirement Plan Assets Doubled in Last Decade

Retirement plan assets in the U.S. have nearly doubled in value since 1997, according to Watson Wyatt Worldwide’s 2008 Global Pensions Asset Study.

A press release said the study found that assets in U.S. pension funds, 401(k)s, individual retirement accounts (IRAs), and other retirement savings vehicles have increased from $7.9 trillion in 1997 to $15 trillion in 2007.

Growth rates for retirement assets worldwide began slowing in 2007, Watson Wyatt said. In the 11 countries with the largest workplace retirement systems, the estimated growth rate for retirement assets was only 2% in 2007 – a significant decrease from the 10.5% growth rate for the five-year period ending in 2007 and from the 7.4% per annum growth of the prior 10 years.

However, U.S. short-term returns were better, with retirement assets growing 8.3% in 2007 and 10.9% over five years. U.S. retirement assets make up an estimated 60% of assets in the 11 countries, although the U.S. share has been declining slowly.

In the United States, most retirement plan assets (59%) are invested in equities, while less than a quarter (23%) are in bonds, and 17% in alternative assets, including hedge funds, private equity, real estate, commodities, and infrastructure. The amount of assets invested in equities has remained relatively stable over the last 10 years, but the portion in alternative investments has grown from 9% in 1997 and the share in bonds has declined from 33% in 1997.

Over the last 10 years, in the U.S. the share of retirement plan assets in defined contribution plans such as 401(k)s and individual retirement accounts has increased from 47% to 56%.

The Global Pension Assets Study analyzes retirement plan assets in the United States, Australia, Canada, France, Germany, Hong Kong, Ireland, Japan, Netherlands, Switzerland, and the United Kingdom.

A report of the study results can be downloaded from http://www.watsonwyatt.com/globalpensionassets. A free registration is required.