Nine out of 10 participants in 401(k) plans stuck with target-date funds from 2007 through 2009, and 97% of participants using auto enrollment did the same, according to EBRI research announced Tuesday.
Also, younger participants with lower account balances were more likely to continue using target-date funds during that time period, according to the Employee Benefit Research Institute.
“The people who were really moving away (from target-date funds) only had a portion of their assets in them,” Craig Copeland, senior research associate at EBRI and author of the report, said in an interview.
“The people that use TDFs seem committed to them. There wasn’t a lot of changing in and out of them. And, since they have very low dropout rates, the glidepath is the allocation they are most likely to have while in the plan,” Mr. Copeland said.
By the end of 2009, 33% of 401(k) participants were in target-date funds, EBRI found, up from nearly 20% in 2007.
The EBRI/ICI 401(k) database represents 20.7 million people, or an estimated 42% of all active 401(k) participants. Based on information provided by several 401(k) providers, it represents 51,852 plans and $1.2 trillion, or 44%, of all 401(k) plan assets, according to EBRI.
