Markets Make Mark on Retirement Plan Assets
Updated data from government filings finds that plans, participants and benefits all increased between 2014 and 2015 — but for the first time since 2008, total amount of assets held by pension plans decreased.
While the data is now a couple of years old, it is “official,” according to the Private Pension Plan Bulletin
, an abstract of 2015 Form 5500 Annual Reports published by the Employee Benefits Security Administration. The abstract finds that in 2015, driven primarily by low investment returns, the total amount of assets held by pension plans decreased for the first time since 2008 — by 1.8%, from $8.3 trillion to $8.2 trillion. Defined benefit plan assets decreased 4.1% to roughly $2.9 trillion, while defined contribution plan assets slipped 0.6%, to $5.3 trillion. (It seems safe to expect that they have recovered that ground by now.)
That said, the total number of pension plans grew again in 2015 (up 1.3% from 2014) to approximately 694,000 plans. Yes, the number of DC plans grew (albeit just by 1.2%), but the number of defined benefit plans also increased in 2015 — and by 1.8%.
There was a 1.8% increase in participants (to 134.9 million), comprised of a 3.0% increase in DC plan participation but a 1.2% reduction in DB plan participation. The ratio of active to total participants increased slightly (from 67.9% in 2014 to 68.6%).
The share of DB plans reporting being fully frozen decreased, albeit to 20.5% of all DB plans, though the share of assets in fully frozen DB plans increased from 14.9% to 15.4% in 2015.
DC plan contributions increased by 7.7% (to $434.6 billion) between 2014 and 2015, and DB plan contributions increased by 10.9% (to $108.6 billion). In total, contributions to pension plans increased by 8.3% in 2015 to $543.2 billion.
As for outflows, in 2015, pension plans disbursed $686.4 billion for payment of benefits ($235.8 billion being disbursed from DB plans, but nearly twice as much — $450.6 billion — from DC plans). These amounts reflect a 5.2% increase for DC plans and a 6.4% increase for DB programs. That said, overall, pension plans disbursed $143.2 billion more than they received in contributions during 2015. Defined benefit plans disbursed $127.2 billion more than they collected in contributions, while DC plans disbursed $15.9 billion more than they received in contributions.
The number of 401(k)-type plans increased yet again in 2015 (by 2.5%), from 534,000 to 547,000. There were 65.3 million active participants in 401(k)-type plans.