Assets of the 100 largest corporate U.S. defined contribution plans rose 5.1% to $1.12 trillion in 2014 from the prior year, data analysis by Pensions & Investments shows.
The gain in DC plan assets was aided by a solid showing for equities — the S&P 500 index rose 11.39% in 2014. The results might not be so robust for the 2015 plan year, because the S&P 500 slipped just less than 1% last year. These results exclude reinvestment of dividends.
Data for this report were obtained from companies' filings with the Securities and Exchange Commission and Department of Labor, primarily for 2014 plan years. The P&I analysis covers U.S.-based companies, both public and private but excludes mutual companies. The data exclude companies' separate DC plans in Puerto Rico.
One of the biggest gainers was target-date funds, which surged 21.4% in 2014, to $106.59 billion in participants' investments, from the previous year. Target-date funds account for 9.5% of total assets in the P&I analysis.
“That's no surprise,” said Liana Magner, Boston-based partner and national defined contribution investment segment leader for Mercer LLC. Target-date funds have benefited from being the dominant qualified default investment alternative, Ms. Magner said.
Automatic enrollment has steered more money into the QDIAs, and target-date funds — even many designed for people near or at retirement age — have a healthy equity component, Ms. Magner added.