PSCA: DC, IRA assets nearing $8 trillion

Assets invested in defined contribution accounts and individual retirement account rollovers now total $7.8 trillion, according to new research from the Plan Sponsor Council of America (PSCA).

PSCA’s 56th Annual Survey reports on the 2012 plan-year experience of 686 plans with 10.3 million participants and $769 billion in plan assets. Among other topics, the survey includes: Percentage of plans with a frozen DB plan; the average company contribution by type of contribution (match and non-match); average number of funds offered per asset class; glide paths and management styles of target date funds; and percentage of plans offering comprehensive financial education programs. 

“Those critical of the DC system in the past thought that the system would collapse during a sharp economic downturn,” says PSCA Executive Director Bob Benish. “They were wrong."

“Was the system impacted the same way everything else in the economy was?” he adds. “Sure, but it is recovering and becoming stronger as both companies and participants are refocusing on saving and looking at more holistic approaches to financial wellness.” 

The results of PSCA’s “56th Annual Profit Sharing and 401(k) Survey” argues that defined contribution plans are achieving success in the marketplace and continue to improve. During the last couple of years, participation rates, deferral rates and company contributions have increased steadily and are now “equal to or higher than they were before the recession.”

According to PSCA:

  •  87.6 percent of eligible employees have a balance in the plan.
  •  Participants are saving an average of 6.8 percent of pay (up from 6.4 percent in 2011, and 6.2 percent in 2010).
  •  95.3 percent of plans made the matching contribution in 2012, when provided for in the plan (up from 89.0 percent in 2010 and 85.2 percent in 2009). 
  •  The average company contribution is now 4.5 percent of pay, up from 4.2 percent in 2011 and 3.7 percent in 2010.

 

The report adds that plan sponsors continue to add plan design features to help their employees save:

 

  • Automatic enrollment is used by nearly half of plans (47.2 percent), including 61.5 percent of large plans. 
  • More plans are using a default deferral percentage higher than 3 percent of pay (35.2 percent); and nearly 60 percent of plans automatically increase the default deferral percentages over time. 
  • Roth after-tax contributions are now available at more than half of companies.

 

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