Rankings of the five largest retirement plans were unchanged from a year earlier: The Federal Retirement Thrift Savings Plan, Washington, with $375.09 billion, all defined contribution assets, is first. That plan has been top-ranked since 2009, when it overtook the California Public Employees' Retirement System.
Sacramento-based CalPERS ranks second overall in the latest survey, at $273.07 billion, and at the top of the defined benefit plan ranking, with $271.45 billion in DB assets, as of Sept. 30.
Rounding out the top five: the California State Teachers' Retirement System, West Sacramento, with $172.42 billion; New York State Common Retirement Fund, Albany, $164.01 billion; and Tallahassee-based Florida State Board of Administration, $146.27 billion.
The largest corporate plan in the survey was Boeing Co., Chicago, ranking eighth overall with $98.92 billion in retirement assets as of Sept. 30. Of that amount, Boeing had about $56.6 billion in defined benefit assets and about $42.3 billion in defined contribution assets.
The largest union plan, the $35.52 billion Western Conference of Teamsters Pension Trust, Seattle, ranked 43rd.
DC plans are continuing to see a healthy increase in assets in part because more corporate plan sponsors are freezing or terminating their DB plans and becoming more proactive in getting participants into DC programs through increased auto enrollment and auto escalation.
“We saw a bigger push historically to DC as a primary retirement vehicle as plan sponsors have made a move away from DB,” said Sue Walton, senior investment consultant at Towers Watson & Co., Chicago.
Equities helped boost assets across the board, with the Russell 3000 gaining 21.61% in the survey period, and despite the trend of portfolio derisking and liability-driven investment, domestic fixed-income assets by P&I survey respondents were down.
The survey shows DB plans in the top 200 had an aggregate weighting of 22.6% to U.S. fixed income, down from 24.7% as of Sept. 30, 2012, and 26.6% as of Sept. 30, 2011.
The divergence in the domestic fixed-income holdings between corporate and public DB plans continued. As of Sept. 30, corporate plans in the top 200 reported 32.4% in domestic fixed income, down from 33.7% a year earlier and 36.5% as of Sept. 30, 2011. Public funds also decreased in the most recent survey, dropping to 20.8% from 22.6% and 24.1% in the previous two surveys, respectively.
Because of improved funding ratios, many corporate plans are generally looking at LDI, which is up 10% to $73.7 billion, while active domestic bonds are down nearly 6% to $565.7 billion. Meanwhile, “public plans don't have the same high hurdles to funding and therefore don't have the same incentives to derisk that corporate plans do,” said Mark Ruloff, director of asset allocation at Towers Watson in Washington.
As a means of diversifying their portfolios and reducing risk, a number of corporate DB plans are moving into alternatives and smarter beta, which has a lower volatility than their current equity portfolio, Mr. Ruloff said. This not only helps the plans diversify, but also enables them to pay less in fees, he noted.
Some corporate plans that are not following an LDI approach and are going more into alternatives, but that's more of a tactical decision, he said.
The remainder of the DB plan asset mix among the top 200 was 28.1% U.S. equities, 19.3% international equities, 8.9% private equity, 7.3% real estate, 5.2% alternatives, 3.3% global equities, 2.1% global/international fixed income, 1.7% cash and 1.5% other strategies.
For DC plans among the top 200, the aggregate asset mix was 39.6% U.S. equities, 17.1% cash, 13.7% target-date funds, 11.5% stable value, 7% fixed income, 7% international equities, 3.5% other strategies, 0.4% inflation protection and 0.2% in annuities.
“Those in equities have enjoyed good returns in 2013. Target-date funds have also done well,” said Martha Tejera, president of consultant Tejera & Associates LLC, Seattle.
