Deals & People June 7, 2017

Ascensus Takes On Cash Balance Provider Kravitz

As a result of the acquisition, Ascensus will serve approximately 50,000 retirement plans.
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Service and technology provider Ascensus announced the acquisition of Kravitz Inc., an independently owned retirement administration firm and cash balance plan specialist.

Kravitz, founded in 1977, designed its first cash balance plan in 1989 and has since grown into what many describe as the nation’s cash balance plan leader. The firm offers training, education and support on cash balance plans to its clients and an extensive network of financial advisers and third-party administrator (TPA) partners. Employing 85 individuals, it services more than 1,400 clients with retirement plans.

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During a recent conversation with PLANADVISER, Raghav Nandagopal, executive vice president of corporate development and mergers/acquisitions at Ascensus, said the firm is charging full steam ahead on the goal of rapidly building scale, partly through organic growth but also through rapidly paced mergers and acquisitions.

As a result of the acquisition, Ascensus will serve approximately 50,000 retirement plans. Kravitz will maintain its focus on cash balance plans, with Dan Kravitz continuing in a senior leadership role.

“Kravitz is renowned for its cash balance plan expertise, market leadership and client focus—we’re excited for its team of actuaries and retirement plan professionals to join the Ascensus family,” says Shannon Kelly, Ascensus’ president of retirement. “Cash balance plans are sophisticated and complex retirement plans that require a superior level of actuarial acumen; under Dan’s ongoing leadership, we anticipate extending our company’s growth into the mid-market segment.”

“The Kravitz team is looking forward to becoming part of Ascensus and continuing to help our clients save for a more secure retirement,” says Kravitz. “Our clients, employees and industry partners can expect us to keep providing state-of-the-art plan design and expert administration while remaining dedicated to our values of innovation, accountability and integrity.”

Data & Research June 7, 2017

DC Plan Participants Keep Withdrawals and Loans Down in 2016

At year end 2016, the percentage of participants with an outstanding loan balance was 17.0%, compared with 17.4% at year end 2015.
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Withdrawal and contribution data indicate that essentially all defined contribution (DC) plan participants continued to save in their retirement plans at work last year, according to “Defined Contribution Plan Participants’ Activities, 2016,” by the Investment Company Institute (ICI).

ICI data shows that in 2016, 3.3% of defined contribution plan participants took withdrawals from their  plan accounts, with 1.5% taking hardship withdrawals. These levels of activity are similar to 2015, ICI says.

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Loan activity in 2016 remained in line with more recent quarters, when it stabilized after a three-year rise. The percentage of defined contribution plan participants with loans outstanding rose from the end of 2008 (15.3%) through 2011 (18.5%). That percentage leveled out in 2012 through 2014. At year end 2016, the percentage was 17.0%, compared with 17.4% at year end 2015.

The ICI research also found the share of participants that stopped making contributions last year was in line with activity in prior years. In 2016, 2.7% of DC plan participants stopped contributing, compared with 2.6% in 2015 and 2.8% in 2014. It is possible that some of these participants stopped because they had reached the annual contribution limit, ICI says.

During 2016, 9.4% of DC plan participants had changed the asset allocation of their account balances, compared with 9.7% during 2015. Reallocation activity regarding contributions in 2016 was slightly lower than in recent years: 5.6% of DC plan participants changed the asset allocation of their contributions in 2016, compared with 7.6% in 2015 and 6.6% in 2014.

Defined contribution plan assets are a significant component of Americans’ retirement assets, representing more than one-quarter of the total retirement market and about one-tenth of U.S. households’ aggregate financial assets at year end 2016, according to ICI data.

ICI has been tracking participant activity through recordkeeper surveys since 2008. The recordkeeping firms represent a broad range of DC plans and cover more than 29 million employer-based defined contribution retirement plan participant accounts as of December 2016.

The full report is here.

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