Defined contribution assets among the 200 largest retirement plans reached a record of $1.236 trillion for the 12 months ended Sept. 30, up nearly 4% from the previous year's $1.19 trillion, Pensions & Investments' annual survey shows.
The previous record was $1.194 trillion for the 12 months ended Sept. 30, 2007.
Among the Top 1,000 largest retirement plans, defined contribution assets rose 4.6% to $1.998 trillion.
Reflecting defined contribution's continuing popularity, the DC share of the P&I universe is rising. Defined contribution assets comprise 24.9% of the Top 200 and 29.8% of the Top 1,000 totals, compared with 24.4% and 29.1%, respectively, for the year-earlier period.
The most prominent DC plans among those in the Top 200 were 401(k) plans, with $422.1 billion in assets; 457 plans, $66.3 billion, and 401(a) plans, $43.7 million. The largest DC plan remains the Federal Retirement Thrift with assets of $281.4 billion, up 6.6% from the previous reporting period. It dwarfs the next largest defined contribution sponsor — International Business Machines Corp., with $34.5 billion.
A comparison of the aggregate asset allocation of DC plans in the Top 200 shows a drop in many popular asset classes in the year ended Sept. 30: domestic equities fell by 3.6 percentage points to 37.9%; international equities dropped 1.7 points to 6.7%; fixed income (excluding stable value) dipped by 0.3 point to 10.1%; and stable value dropped 1.6 points to 14.7%.
Those decreases were consistent when the asset mixes of corporate and public plans are looked at separately.
In fact, the only allocation showing an increase in the overall aggregate mix was cash, up slightly to 17.3% from 17%.
This was the first year P&I asked for target-date funds, inflation-protection securities and annuities in the asset mix, which could account for some of the drops.
Assets in target-date funds accounted for 9.6% of the aggregate DC mix. When broken out by category, they accounted for 9.5% of the asset mix for corporate plans; 5.4% for public plans and 5% for union plans.
Among corporate plans, sponsoring company stock has declined steadily since its five-year peak allocation of 25.8% for the period ended Sept. 30, 2007, less than two weeks before the Dow Jones industrial average hit a record of 14,164.53 on Oct. 9, 2007. For the latest reporting period, the allocation was 16.2%, a full percentage point lower from the year-earlier period.
“Company stock is not a diversified holding,” said Stacy Schaus, senior vice president and head of the defined contribution practice at Pacific Investment Management Co. LLC., Newport Beach, Calif. “Companies are communicating the need for diversification. Some are putting limits on it.”
The aggregate allocation percentage for all other equities — domestic and international, including real estate investment trusts — has declined almost steadily over the past five reporting periods. It was 36.3% in 2011, down from 38.6% in 2010 and from 42.5% in 2007.
For public DC plans, the aggregate equity allocation in 2011 was 46.7%, down from 50.2% in 2010 and from 54.4% in 2007.