A new report finds that two factors appear to influence defined contribution plan participants’ loan activity.
That report by the Investment Company Institute (ICI), “Defined Contribution Plan Participants’ Activities, First Quarter 2016,” notes that those two factors are a reaction to financial stresses and a seasonal pattern.
As a consequence, and likely responding to financial stresses, the report finds that the percentage of DC plan participants with loans outstanding rose from the end of 2008 (15.3%) through 2011 (18.5%), a pattern it says is similar to that observed in the wake of the bear market and recession earlier in the decade. The report goes on to note that the share of DC plan participants with loans outstanding then leveled out in 2012 through 2015, perhaps reflecting loans supporting consumer spending or home purchases. As of March 2016, 17.0% of DC plan participants had loans outstanding, compared with 17.4% at year-end 2015.
The ICI analysis was drawn from the ICI Survey of DC Plan Recordkeepers, tracking the activity of more than 27 million employer-based DC retirement plan participant accounts as of March 2016.
’Tis the Season?
ICI notes that loan activity also appears to have a quarterly seasonal pattern, and that the first quarter of the year tends to have lower percentages of DC plan participants with loans outstanding compared with later quarters. In fact, the report notes that loan activity edged down in the first quarter of 2016, following the seasonal pattern observed over the past several years.
The ICI report found little change in the participant accounts it tracks. In the first quarter of 2016, 1.1% of DC plan participants took withdrawals, about the same share as the year before. Similarly, levels of hardship withdrawal activity also remained low; only 0.4% of DC plan participants took hardship withdrawals during the first quarter, the same share as in the same period in 2015.
Ditto the commitment to contribution activity in the first quarter; just 1.1% of DC plan participants stopped contributing, about the same pace as in as in the first quarter of 2015.
In the first quarter of 2016, 4.3% of DC plan participants changed the asset allocation of their account balances, the same share as in first quarter 2015. Similarly, while in the first quarter of 2016, 5.2% of participants changed the asset allocation of their contributions, 4.2% did so in the first quarter of 2015.
These levels of reallocation activity are roughly in line with the activity observed in the same time frame in recent years, according to the report.
That report by the Investment Company Institute (ICI), “Defined Contribution Plan Participants’ Activities, First Quarter 2016,” notes that those two factors are a reaction to financial stresses and a seasonal pattern.
As a consequence, and likely responding to financial stresses, the report finds that the percentage of DC plan participants with loans outstanding rose from the end of 2008 (15.3%) through 2011 (18.5%), a pattern it says is similar to that observed in the wake of the bear market and recession earlier in the decade. The report goes on to note that the share of DC plan participants with loans outstanding then leveled out in 2012 through 2015, perhaps reflecting loans supporting consumer spending or home purchases. As of March 2016, 17.0% of DC plan participants had loans outstanding, compared with 17.4% at year-end 2015.
The ICI analysis was drawn from the ICI Survey of DC Plan Recordkeepers, tracking the activity of more than 27 million employer-based DC retirement plan participant accounts as of March 2016.
’Tis the Season?
ICI notes that loan activity also appears to have a quarterly seasonal pattern, and that the first quarter of the year tends to have lower percentages of DC plan participants with loans outstanding compared with later quarters. In fact, the report notes that loan activity edged down in the first quarter of 2016, following the seasonal pattern observed over the past several years.
The ICI report found little change in the participant accounts it tracks. In the first quarter of 2016, 1.1% of DC plan participants took withdrawals, about the same share as the year before. Similarly, levels of hardship withdrawal activity also remained low; only 0.4% of DC plan participants took hardship withdrawals during the first quarter, the same share as in the same period in 2015.
Ditto the commitment to contribution activity in the first quarter; just 1.1% of DC plan participants stopped contributing, about the same pace as in as in the first quarter of 2015.
In the first quarter of 2016, 4.3% of DC plan participants changed the asset allocation of their account balances, the same share as in first quarter 2015. Similarly, while in the first quarter of 2016, 5.2% of participants changed the asset allocation of their contributions, 4.2% did so in the first quarter of 2015.
These levels of reallocation activity are roughly in line with the activity observed in the same time frame in recent years, according to the report.
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