DC Plan Participants Stay the Course with Contributions, Asset Allocations
The vast majority of DC plan participants continued making contributions to their plans in 2016 and most “stayed the course” with their asset allocations, according to the latest findings of the Investment Company Institute’s recordkeeper survey
Consistent with activity in prior years, the contribution data shows that essentially all DC plan participants continued to save in their employer-sponsored retirement plans, with only 2.7% of DC plan participants stopping their contributions in 2016, compared with 2.6% in 2015.
Similarly, only 3.3% of DC plan participants made withdrawals from their DC plan accounts in 2016, compared to 3.4% in 2015. Hardship withdrawals by participants have been relatively stable over the past several years, with the data showing a level of 1.7% for the period 2010-2014 and a minor improvement in 2016, dropping to 1.5%.
Asset allocation changes also held steady measured against previous years. The report shows that during 2016, 9.4% of plan participants changed the asset allocation of their account balances, compared to 9.7% in 2015.
Changes in asset allocation of contributions saw a slightly lower level compared to previous years, with 5.6% of plan participants changing the asset allocation of their contributions in 2016, as opposed to 7.6% in 2015 and 6.6% in 2014.
Finally, loan activity leveled out to 17% for 2016, slightly less than the 17.4% recorded at year-end 2015. ICI notes that these numbers are still high compared to eight years ago, when the percentage of plan participants with loans outstanding increased from 15.3% to 18.5% from 2008 to 2011, likely as a result of “financial stresses.”
Released in June 2017, the report updates results from ICI’s survey of a cross section of recordkeeping firms representing a broad range of DC plans and covering more than 29 million employer-based DC plan participant accounts as of December 2016.