Hewitt Index Shows January Activity Subdued

February 14, 2002 (PLANSPONSOR.com) - Transfer activity in 401(k) plans was muted in January 2002, though participants who did move their money generally did so in the direction of equities.

According to the Hewitt 401(k) Index, the average daily net activity in the nation’s 401(k) plans was 0.05% in a month where:

  • the S&P 500 lost -1.46%
  • the Russell 2000 dipped -1.04
  • the Lehman Aggregate Index inched up by 0.81%
  • the MSCI EAFE lost -5.31%.

Not only was the 0.05% result the lowest figure of any January data since the Index first began to measure activity in 1998, but there were also no days in the month where transfer activity was higher than normal.

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

A normal level of relative transfer activity is when the net daily movement of participants’ balances within the index is between 0.3 times and 1.5 times the average daily net activity of the previous 12 months.

On 12 of the month’s 21 trading days – including January 29, when the S&P 500 posted its weakest performance in January, participants transferred funds towards equities at the expense of money market funds and their company stock holdings – perhaps due to the Enron scare.

Of funds transferred, about 72% came out of these two asset classes on a net basis in January. In contrast, transfers generally flowed into small US equity, international, and bond investment options during the month, Hewitt reports.

Overall, participants’ allocation to equities edged up in January, with 68% of participant balances in equity asset classes as of January 31, compared to 67.4% at the end of December.

Slumping Economy Delays Retirement Dates

February 13, 2002 (PLANSPONSOR.com) - Workers expect to have to stay on the job longer than ever because of the nation's slumping economy, according to a new study.

“Retirement Revisited – 2002”, the latest version of an ongoing series of surveys by UBS AG and the Gallup Organization, found that workers’ expected retirement is now 63.8 years, up almost a year from the 62.9 registered in June 1998.

Further, one in five workers said they expected to retire later than originally planned due to the weak economy – an average of delay of 4.4 years.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

And many workers don’t expect things to be completely rosy in their golden years.

According to the study, nearly a quarter of the sample says the sluggish economy will mean a less comfortable time after they stop working – a view shared increasingly by older workers. For example, 32% of those ages 50 to 59, and 38% of those 60 and older share that perspective, according to the study.

Planning for Retirement

One positive note, 70% say they have a retirement savings plan, up from 61% in 1998.

Not surprisingly, the survey found that the greater the amount of investable assets respondents held, the more likely they were to have a savings plan. For example, 86% of those with more than a $500,000 portfolio had such a blueprint.

Of those with a retirement plan, 19% said they had changed their asset allocations. Of these,

  • some 38% say they’re out of financial markets,
  • more than 70% say they’ve moved into less risky investments,
  • while 27%, chose riskier investments


According to the 2002 survey, investors intend to maintain a productive lifestyle after reaching retirement age, confirming an important trend first identified in the 1998 report. Indeed, 83% say they will continue to work after retirement.

The latest study is based on a January 2002 poll with 1,001 non-retired American investors conducted by UBS and the Gallup Organization. “Retirement Revisited – 2002′ is a follow-up to UBS’s 1998 study “Retirement Revisited”.

Read more about UBS’s investor surveys .

«