Retirement Plan Participation and Asset Allocation, 2010

20 Pages Posted: 27 Apr 2013

See all articles by Craig Copeland

Craig Copeland

Employee Benefit Research Institute (EBRI)

Date Written: April 1, 2013

Abstract

To establish current savings behavior, one necessary measurement of retirement preparation is identifying the percentage of workers with employment-based retirement plans, as well as understanding the characteristics of workers with and without access to such programs. The findings from this paper show that there has been a significant increase in the percentage of family heads with a defined contribution (DC) plan (typically a 401(k)-type plan) over time. The likelihood of a working family head participating in a retirement plan increased with the size of his or her employer. In 2010, among family heads working for employers with 10-19 employees, 22.4 percent participated in a plan, compared with 67.2 percent of family heads who worked for employers with 500 or more employees. In 2010, 18.9 percent of family heads who participated in an employment-based retirement plan had a defined benefit (DB) plan only, while 65.0 percent had a defined contribution (DC) plan only, and the remaining 16.1 percent had both a DB and a DC plan. This was a significant change from 1992, when 42.3 percent had a DB plan only, and 40.8 percent had a DC plan only. Asset allocation within a family head’s retirement plan seems to be affected by his or her ownership of other types of retirement plans. Those who own an IRA are more likely to be invested all in stocks if they also own a 401(k)-type of plan. Those who own a DB plan and a 401(k)-type plan are less likely to allocate their DC plan to all interest-earning assets. Due to the increased participation in DC plans, the manner in which participants allocate assets within these plans could have a significant effect upon the financial resources they ultimately will have available in retirement. The distribution of participants invested in each proportion of stocks was found not to vary significantly with age between ages 35-64, although higher educational attainment, income, and net worth were correlated with more investment in stocks. Taken together, this suggests that, even with increased experience, availability, and use of these types of plans, there remains a need for more financial education of participants.

The PDF for the above title, published in the April 2013 issue of EBRI Notes, also contains the fulltext of another April 2013 EBRI Notes article abstracted on SSRN: “Characteristics of the Population With Consumer-Driven and High-Deductible Health Plans, 2005-2012.”

Keywords: Asset allocation, Defined benefit plans, Defined contribution plans, Employment-based benefits, Individual retirement accounts (IRAs), Pension plan assets, Pension plan coverage, Pension plan participation, Retirement plans

JEL Classification: D31, D91, G11, J26, J33

Suggested Citation

Copeland, Craig, Retirement Plan Participation and Asset Allocation, 2010 (April 1, 2013). EBRI Notes, Vol. 34, No. 4 (April 2013), Available at SSRN: https://ssrn.com/abstract=2257057

Craig Copeland (Contact Author)

Employee Benefit Research Institute (EBRI) ( email )

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Suite 878
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