Defined contribution assets of the 200 largest U.S. retirement plans topped $1 trillion for the first time, Pensions & Investments' annual survey shows.
Defined contribution plans among the nation's largest 200 plan sponsors had a total of $1.042 trillion as of Sept. 30, a 9% increase from a year earlier. Among the 200, 153 reported offering defined contribution plans.
Scarlett Ungurean, a Chicago-based consultant for Mercer Investment Consulting Inc., said one reason for the asset landmark is that defined contribution plans are becoming the focus of many companies' retirement programs in place of defined benefit plans. She added that because of that switch, more corporations are increasing their matches to employee DC plan contributions.
Lori Lucas, defined contribution practice leader for Callan Associates, San Francisco, agreed that companies are trying to make DC plans more attractive to employees because of the shift to defined contribution programs. She said they are increasing contribution matches and adding target-date funds and managed accounts, among other things, all in an effort to boost employee participation and contributions.
"We're seeing more and more plans adding these options," she said, with plan participants particularly interested in target-date funds.And the companies' efforts seem to be working; the consultants attributed part of the asset growth to increased participant contributions.
In particular, Ms. Ungurean said more participants are investing in indexed equity options. "It was very difficult in '06 for active managers to outperform the index, so it's not so surprising," she said.