Is the Status Quo a Good Thing for DC Plans?
A recent update of DC plan statistics suggests that loans, withdrawals, contributions and asset allocations were largely unchanged in 2014. But is that a good thing?
The report, by the Investment Company Institute (ICI), noted that DC plan withdrawal activity in 2014 remained low: In 2014, 3.6% of DC plan participants took withdrawals, compared with 3.5% in 2013, while just 1.7% of DC plan participants took hardship withdrawals during 2014, the same as in 2013.
Similarly, the vast majority of DC plan participants continued contributing to their plans in 2014. Last year, 2.9% of DC plan participants in the 25 million participant database stopped contributing, compared with 2.7% during 2013.
Only 10.5% of DC plan participants changed the asset allocation of their account balances in 2014, and even fewer (6.6%) changed the asset allocation of their contributions. These levels of reallocation activity were slightly lower than the reallocation activity observed in the same time frame a year earlier, according to the ICI report.
Loan activity was also in line with 2013 levels, though higher than at year-end 2008. At the end of December 2014, 17.9% of DC plan participants had loans outstanding, compared with 18.2% at year-end 2013, but up from the 15.3% noted at year-end 2008.
So, is the status quo a good thing or not? Let’s hear from you — start a discussion in the comment box below.