Transfer activity among participants in 401(k) plans last month was the lowest for any January tracked by Aon Hewitt since 1998, the firm said Tuesday.
“We have never seen such passivity,” Pamela Hess, director of retirement research at Aon Hewitt, said of the daily average transfer volume in January of 0.023% of total defined contribution balances.
“Employees are confused and overwhelmed, and they don't know what to do,” Ms. Hess said in an interview.
The January daily average transfer volume since 1998 is 0.059%, according to an Aon Hewitt news release. The daily average for the past 12 months was 0.034%.
The monthly Aon Hewitt 401(k) Index tracks transfer volume by analyzing data from nearly 1.5 million participants in plans for which Aon Hewitt is record keeper and which have $130.6 billion in assets.
The news release said the net transfer in January, unlike a majority of the months last year, favored equities. A net $192 million was transferred in January to diversified equities — excluding company stock — from fixed-income investments.
“The outflows for company stock were the largest among all asset classes during January, with $200 million of transfers moving out of this asset class,” the news release said. “Stable value funds also lost $74 million, while money market funds lost $16 million. International funds, although they experienced significant market gains, still had $29 million of outflows.”
The asset classes with the biggest inflows in January were large-cap U.S. equity, $110 million; balanced funds featuring 60% equities and 40% fixed income, $98 million; and bond funds, $51 million.
Equities now represent 59.4% of total assets, the news release said.
