News & Information

 

FEATURED PRODUCT

5500 Preparer's Manual for 2012 Plan Years

5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.

CCH® PENSION — 8/6/08

Retirement Assets Continue To Grow, Hybrid Funds Get Bulk Of New Money

From Spencer's Benefits Reports: Retirement assets grew in the United States from $16.509 trillion at the end of 2006 to $17.619 trillion at the end of 2007, according to a report issued by the Investment Company Institute (ICI) entitled The U.S. Retirement Market, 2007. The size of the market was even higher ($17.817 trillion) at the end of the third quarter of 2007, the ICI reported. Six categories make up the U.S. market, as follows:

Category12/31/200612/31/2007
IRAs$4.220 trillion$4.747 trillion
Defined Contribution4.119 trillion4.472 trillion
State & Local Govt.3.087 trillion3.186 trillion
Defined Benefit2.397 trillion2.360 trillion
Annuities1.545 trillion1.658 trillion
Federal Pensions1.141 trillion1.197 trillion

Of the $4.472 trillion held by defined contribution plans in 2007, $2.335 trillion (52.2%) was invested in mutual funds. At yearend 2006, 51.1% of defined contribution assets were held by mutual funds ($2.104 trillion). The bulk of mutual fund assets were held by 401(k) plans ($1.476 trillion in 2006 versus $1.656 trillion in 2007), followed by mutual fund assets held by 403(b) plans ($364 billion in 2006 versus $392 billion in 2007) and 457 plans ($71 billion in 2006 versus $78 billion in 2007). Other defined contribution plans including Keogh, profit-sharing, thrift savings, stock bonus and money purchase plans held $194 billion in mutual funds in 2006 versus $210 billion in 2007.

Of the $2.335 trillion invested by defined contribution plans in mutual funds in 2007, 55% is invested in domestic equity funds ($1.284 trillion), 16% is invested in foreign equity funds ($381 billion), 16% is invested in hybrid funds ($372 billion), 8% is invested in bond funds ($178 billion), and 5% is invested in money market funds ($120 billion). Only hybrid funds grew as a percentage of the total (from 14% in 2006 to 16% in 2007). ICI defines a hybrid fund as one that invests in a mixture of equity and fixed-income funds. The bulk of lifecycle and lifestyle funds are counted in this category.

The net new cash flow into mutual funds from defined contribution plans remained unchanged from 2006 to 2007 ($68 billion), the ICI estimated, but within asset categories, there was significant movement, as follows: equity funds declined from $28 billion to $1 billion; hybrid funds grew from $28 billion to $45 billion; bond funds grew from $4 billion to $9 billion; and money market funds grew from $8 billion to $14 billion.

A copy of the ICI survey, The U.S. Retirement Market, 2007 can be found at http://www.ici.org/pdf/fm-v17n3.pdf.

 

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

Visit our News Library to read more news stories.