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ICI: U.S. retirement assets drop 2% in 2nd quarter

U.S. retirement assets dropped 2% in value in the second quarter to $18.5 trillion, driven by declining domestic equities, according to an Investment Company Institute report on Wednesday.

Assets in public defined benefit pension plans had a net decline of 1.5% to $4.7 trillion at the end of June. Within public DB plans, federal plan assets rose 0.3% to $1.5 trillion, while state and local plans dropped 2.4% to $3.1 trillion.

Corporate DB plan assets decreased 2.5% to $2.4 trillion. Defined contribution plan assets, including corporate, 403(b) and 457 plans, fell 2.2% to $4.7 trillion. IRAs fell 2% over the quarter to $5.1 trillion.

Annuity reserves totaled $1.6 trillion.

Of the $4.7 trillion in employer-based DC plans, 401(k) plans accounted for $3.3 trillion. “Contributions and portfolio diversification helped to offset the stock market decline for DC plans last quarter,” said Sarah Holden, ICI senior director of retirement and investor research, in an interview. “The big picture is that it is still $18.5 trillion.”

Among all DC plan assets, 57% were managed by mutual funds; among IRAs, 46% were invested in mutual funds. DC plans and IRAs, which account for 91% of target-date mutual fund assets, grew 0.5% to $427 billion.

ICI analyzes data from the Federal Reserve Board, National Association of Government Defined Contribution Administrators, American Council of Life Insurers, and the Internal Revenue Service. The IRA and 401(k) data are estimates based on information from ICI mutual fund members and other sources. ICI estimates that retirement assets made up 36% of all household financial assets in the second quarter of 2012.

The full report, “The U.S. Retirement Market, Second Quarter 2012,” is available from the ICI website.