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Data & Research February 11, 2015
Most DC Plan Participants Leave Balances Untouched in 2014
Fewer participants changed their defined contribution plan asset allocations in 2014 than in 2013.
Reported by Rebecca Moore
A report of defined contribution (DC) plan participant activity from the Investment Company Institute (ICI) shows withdrawal and account transfer activity was low in 2014.
Between January and September 2014, 8.1% of DC plan participants changed the asset allocation of their account balances. This level of reallocation activity was slightly lower than the reallocation activity observed during the comparable periods from 2009 through 2013, according to ICI.
Reallocation of participants’ contributions also was lower than rates observed in earlier periods; 5.6% of DC plan participants changed the asset allocation of their contributions during the first three quarters of 2014, compared with 6.8% in the first three quarters of 2013, 6.5% in the first three quarters of 2012, 8.4% in the first three quarters of 2011, and 7.1% in the first three quarters of 2010.
DC plan participants’ withdrawal activity during the first three quarters of 2014 was in line with activity observed during the same time period in 2009 through 2013, according to ICI. Between January 2014 and September 2014, only 3.1% of DC plan participants took withdrawals from their participant-directed retirement plans, with 1.4% taking hardship withdrawals.
The recordkeeper survey data indicated that only a negligible share (2.7%) of DC plan participants stopped making contributions during the first three quarters of 2014. ICI notes it is possible that some of these participants stopped contributing because they had reached the annual contribution limit.
Loan activity remains elevated compared with six years ago; however, the data show that at the end of September 2014, 18% of DC plan participants had loans outstanding, compared with 18.2% at year-end 2013. At year-end 2008, 15.3% of DC plan participants had loans outstanding.
The latest report from ICI updates results from its survey of a cross-section of recordkeeping firms representing a broad range of DC plans and covering more than 25 million employer-based DC retirement plan participant accounts as of September 2014. The report may be viewed here.