Data & Research October 28, 2016

DC Participants Mostly Stayed True to Contributing, Investing in 2016

Account balance reallocation activity was little changed and contribution reallocation activity was slightly lower compared with the same time frame a year earlier, ICI found.
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Most defined contribution (DC) plan participants stayed the course in their asset allocations, as stock values edged up during the first six months of the year, according to the Investment Company Institute’s (ICI)’s latest study of recordkeeper data.

According to the study report, “Defined Contribution Plan Participants’ Activities, First Half 2016,” in the first half of 2016, 6.5% of DC plan participants changed the asset allocation of their account balances, and 5.5% changed the asset allocation of their contributions. Account balance reallocation activity was little changed and contribution reallocation activity was slightly lower compared with the same time frame a year earlier.

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The data indicates savers remain committed to DC plans, finding that nearly all plan participants continued contributing to their plans during the first half of 2016. Only 1.8% of DC plan participants stopped contributing in the first half of 2016, the same share as in 2015.

In addition, withdrawal activity for DC plans remained low in the first half of 2016, as in the first six months of 2015. Levels of hardship withdrawal activity also were low, with 0.8% of DC plan participants taking hardship withdrawals during the first half of 2016, compared with 0.9% in the first half of 2015. 

DC plan participants’ loan activity was little changed. At the end of June, 17.1% of DC plan participants had loans outstanding, compared with 17% at the end of March. The first quarter of the year tends to have lower percentages of DC plan participants with loans outstanding compared with later quarters.

ICI’s study is based on plan recordkeeper data covering about 28 million participant accounts in employer-based DC plans.
The Markets October 28, 2016

Americans Worry That Post-Election, Volatility Will Rise

One-third saving for retirement expect the election results will negatively impact their nest eggs.
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Nearly six in 10 Americans, 59%, expect the markets to become more volatile following the results of the presidential election, Edward Jones found in a survey of 1,000 people between October 13 and 16.

Among those saving for retirement, 46% think the election results will have an impact on their long-term retirement savings and investment portfolio, and 33% think the impact will be negative.

“Investors can’t afford to let short-term volatility veer their retirement plans off course. Although the outcome of a presidential election certainly influences the overall direction of policy decisions, the mix of investments you own makes more difference to your long-term ‘victory’ or ‘defeat’ as an investor than any election results,” says Kate Warne, principal and investment strategist for Edward Jones. “With this in mind, consult with your financial adviser before making any changes to your portfolio to ensure that you aren’t overreacting as you prepare for retirement.”

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The survey echoes a recent BlackRock survey that found 63% of Americans say the election has impacted their investment choices over the past year.

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