DC Participant Withdrawal Activity Down in 2015

Americans continue saving for retirement through defined contribution (DC) plans, according to the Investment Company Institute’s (ICI’s) latest study of retirement plan savers’ actions.

The vast majority of DC plan participants continued contributing to their plans. Only 2.5% of DC plan participants stopped contributing in the first three quarters of 2015, compared with 2.7% in the first three quarters of 2014.

Most DC plan participants stayed the course in their asset allocations, as stock values declined over the first nine months of the year, according to ICI. In the first three quarters of 2015, 8.3% of DC plan participants changed the asset allocation of their account balances and 6.8% changed the asset allocation of their contributions. These levels of reallocation activity were slightly higher than the reallocation activity observed in the first three quarters of 2014.

DC plan withdrawal activity remained low and was in line with the activity in the first three quarters of 2014. Only 2.9% of DC plan participants took withdrawals in the first three quarters of 2015, compared with 3.1% during the first three quarters of 2014. Only 1.3% of DC plan participants took hardship withdrawals during the first three quarters of the year, similar to the pace observed in the same time frame a year earlier.

Loan activity was slightly lower than a year earlier, though still elevated compared with seven years ago. At the end of September 2015, 17.6% of DC plan participants had loans outstanding, compared with 18% at the end of September 2014. Loan activity continues to remain elevated compared with seven years ago (at the end of 2008, 15.3% of DC plan participants had loans outstanding).

According to ICI, assets in all DC plans represented more than one-quarter of assets in the total retirement market and accounted for nearly one-tenth of U.S. households’ aggregate financial assets at the end of the third quarter of 2015.

The study, “Defined Contribution Plan Participants’ Activities, First Three Quarters of 2015,” includes data from January through September 2015 and is based on DC plan recordkeeper data covering more than 26 million participant accounts at employer-based DC plans.