401(k) plans had more than 47 million active participants as of Dec. 31 - more than twice the 21 million participants in defined benefit plans offered by private companies, according to an Investment Company Institute study that was first reported late Monday on Pensions & Investments' website, www.pionline.com. In addition, 401(k) plans had assets of $2.4 trillion as of Dec. 31, compared with $1.9 trillion for private pension plans, according to the study. About half the 401(k) assets are in mutual funds.
When 401(k) plans were created - the 25th anniversary of the legislation that created 401(k) plans is Nov. 10 - they were envisioned as a supplement to traditional pensions, but 90% of 401(k) plans are now the only retirement plan offered by employers, the study also noted. Their growth has generally been fueled by changes in the economy and the work force, not by companies dropping traditional DB plans in favor of 401(k)s, according to the study.
"Because traditional pensions generally favor employees with long service at one company, younger workers tend to place more value on defined contribution pension benefits," according to a news release about the study.
