Strong Growth for Largest Retirement Funds, Report Says

By John Iekel • February 07, 2018 • 0 Comments
The largest retirement plans — defined benefit as well as defined contribution — in the United States collectively amassed more than $10 trillion by the end of the third quarter of 2017, a recent report estimates.

In fact, together they accounted for $10.326 trillion — an all-time high — reports Pensions & Investments in its annual survey.

DB vs. DC

Defined benefit plans held slightly less than twice as much assets as DC plans by Sept. 30, and that disparity was even higher among the 200 largest retirement plans:

RETIREMENT 
PLANS
     ASSETS,
     DB PLANS 
     ASSETS, 
     DC PLANS
 
      DIFFERENCE, 
      DB VS. DC PLANS
 200 largest      $7.452 trillion      $2.234 trillion       +$5.218 trillion
 1,000 largest      $6.597 trillion      $3.729 trillion       +$2.858 trillion

The largest plans were in the public sector. The largest of all was the Federal Thrift Savings Plan, a DC plan that accounted for $531.49 billion. The second largest was the California Public Employees’ Retirement System.

Private-sector DB plan assets amounted to $1.245 trillion, 16.7% of the total. While DB plans in the aggregate had larger assets than DC plans, the P&I says that corporate DC plans “clearly” were “the primary retirement plan for U.S. private-sector employers.”

Growth

The assets held by the top 1,000 plans for the 12 months from Oct. 1, 2016 to Sept. 30, 2017 were 10% higher than at the same time one year before, says P&I. Growth among the 200 largest plans was virtually the same as that of the 1,000 largest, at 9.7%.

While the assets in DC plans were smaller than those held in DB plans, P&I’s report says that DC plans grew more dramatically than DB plans. The assets held by DB plans among the top 200 retirement plans grew 8% from the year before; those held by the DC plans among the top 200 grew by 13.9%.

Drilling down, P&I reports that the assets of DB funds among the 200 largest plans that were held in various assets grew in this manner:

INVESTMENT TYPE              
     GREW BY:       GREW TO: 
 Passive indexed equity assets      $962.2 billion       --
 Passive indexed bonds      56.6% $142.5.billion
 Private equity      10.4% $331.7 billion
 Real estate        6.0% $315.8 billion


The assets in the top 200 DB plans held in domestic equities fell slightly, comprising just under one-quarter of their collective assets.

DC plans comprised 36.1% of the top 1,000 retirement plans and 30% of the top 200. Private-sector DC plans among the 200 largest plans accounted for 18.3% of all assets, $1.36 trillion.