Professional defined benefit pension plan managers came out ahead of the do-it-yourselfers in 2007 and 2008.
Analysts at Towers Watson & Company, New York (NYSE:TW), have come to that conclusion in a commentary based partly on an analysis of Form 5500 pension disclosure data and partly on a survey of 79 employers that sponsored one defined benefit plan and one 401(k) plan in 2008.
The Towers Watson analysts used the employer survey data because they did not yet have complete 2008 Form 5500 data.
The defined benefit plans outperformed the 401(k) plans by about 1 percentage point in 2008, and some of the defined contribution plans had 2008 losses exceeding 40%, the analysts report.
The pension plans had median investment returns of -25.27% in 2008, while the 401(k) plans had median returns of -26.20%, the analysts report.
In 2007, the Form 5500 analysis shows that pension plans had a median return of 7.71%, and the 401(k) plans had a median return of 6.78%.
"Participants in 401(k) plans were less likely than DB plan sponsors to rebalance their asset portfolios while stock values ran up, leaving them more vulnerable to market declines," Mark Ruloff, a senior consultant at Towers Watson, says in a discussion of the performance analysis.
