The Markets March 18, 2009

Retirement Market Sheds Nearly a Quarter of Assets in 2008

Total U.S. retirement market assets, including both defined contribution (DC) and defined benefit (DB) plans, tumbled 24% to $7.86 trillion in 2008, down from $10.3 trillion the prior year, according to a new report by Spectrem Group.
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Assets held in defined contribution plans fell 21% in 2008 to $3.8 trillion, down from $4.8 trillion the year before, according to a Spectrem press release. However, the popularity of these plans continued to increase overall, with DC plans as a percentage of all retirement assets expanding to a record 49% in 2008.

In the corporate sector specifically, 401(k) plans, which account for 71% of all corporate retirement assets, fell to $1.94 trillion in 2008 (a 23% decline from $2.52 trillion in 2007). However, average annual growth remained positive at 7.8% from 1995 to 2008, the press release said.

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The Spectrem report, “Retirement Market Insights 2009,” is based on data derived from both public and private sources, as well as Spectrem surveys. To order the report, visit www.spectrem.com.

The Markets March 18, 2009

AMCORE Financial Cuts Retirement Contributions, Freezes Wages

AMCORE Financial is eliminating its cash contribution to retirement plans of all employees, but continuing to match 401(k) contributions up to a maximum 4%.
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The Rockford Register Star in Illinois reported AMCORE Financial has notified its nearly 1,300 workers that it is freezing the wages of both hourly and salaried employees.

AMCORE CEO Bill McManaman said in a memo to employees that 2008 “was the most difficult in AMCORE’s history, and unfortunately, this difficult economy doesn’t seem to be turning around. As a result, each aspect of how we run our business is under scrutiny, including how we manage our expenses,’ according to the news report.

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McManaman said the company plans to restore merit increases as soon as the economy and the firm’s performance allows.

The salary and benefit changes were announced three days after AMCORE detailed about $1.2 million in retention bonuses to its top five executives. AMCORE officials defended the bonuses as necessary to retain an executive team that was mostly brought in over the past three years.

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