401(k) Plan Asset Allocation, Account Balances, and …

[Pages:26]401(k) Plan Asset Allocation, Account Balances, and Loan

Activity in 2009

Research Webinar November 22, 2010

Washington, DC

Sarah Holden Senior Director, Retirement & Investor Research

Investment Company Institute

Jack VanDerhei Research Director Employee Benefit Research Institute

The EBRI/ICI Participant-Directed Retirement Plan Data Collection Project

? Year-End 2009 Database Covers

20.7 million 401(k) plan participants, in 51,852 plans, holding $1.210 trillion in assets

? Based on recordkeeper information

Investments and total account balance Loan amount outstanding Participant age, tenure, salary

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Annual EBRI/ICI Update Contains Three Types of Analysis

? Analysis of Consistent Group of Participants

Highlights the experience of ongoing participation in 401(k) plans. Analyze consistent participants because database snapshots over

time are affected by changing sample of plans and participants.

? Asset Allocation, Account Balances, and Loan Activity in

the Year-End 2009 Snapshot Highlights cross-sectional analysis of the wide range of 20.7 million

active 401(k) plan participants--participants across different ages, tenures, and incomes.

? Asset Allocation of Recently Hired Participants

Provides insight into how workers are investing in today's 401(k)

environment.

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Consistent 401(k) participants provide insights into the impact of ongoing participation.

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Analysis of Consistent Group of Participants

? Identified 4.3 million 401(k) participants with

account balances from year-end 2003 through year-end 2009

? 401(k) account balances are accounts held at

current employers and are net of plan loans. Amounts held in plans at previous employers or rolled over into IRAs are not included.

? Changes in account balances

New contributions; Total investment return; and Withdrawals, borrowing, and loan repayments

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Domestic Stock Market Index

S&P 500 total return index; month-end level,* January 2003?September 2010

3000 2500 2000 1500 1000

500 0

Dec. 2003

October 2007

Dec. 2009

February 2009

Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10

*The S&P 500 index consists of 500 stocks chosen for market size, liquidity, and industry group representation.

Sources: Investment Company Institute, Bloomberg, and Standard & Poor's

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401(k) Account Balance

Among 401(k) participants present year-end 2003 through year-end 2009

Average1, 2

$60,144

$72,173

$82,768

$99,644

$115,257

+31.9% $109,723

-27.8%

$83,161

2003

2004

2005

2006

2007

2008

2009

1Account balances are participant account balances held in 401(k) plans at the participants' current employers and are net of plan loans. Retirement savings held in plans at previous employers or rolled over into IRAs are not included. 2The analysis is based on a sample of 4.3 million participants with account balances at the end of each year from 2003 through 2009. Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project (See Figure 5 in ICI Perspective and EBRI Issue Brief, November 2010)

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Growth in Average 401(k) Account Balance

Among 401(k) participants present year-end 2003 through year-end 2009

Percent change in the average account balance1, 2

31.9

20.0

20.4

14.7

15.7

10.5

2003 to 2004

2004 to 2005

2005 to 2006

2006 to 2007 to

2007

2008

-27.8

2008 to 2009

2003 to 2009

(annual average)

1Account balances are participant account balances held in 401(k) plans at the participants' current employers and are net of plan loans. Retirement savings held in plans at previous employers or rolled over into IRAs are not included. 2The analysis is based on a sample of 4.3 million participants with account balances at the end of each year from 2003 through 2009. Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project (See Figure 7 in ICI Perspective and EBRI Issue Brief, November 2010)

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