DC Plan Reallocation Activity Low in First Half of 2016

Most defined contribution (DC) plan participants stayed the course in their asset allocations, as stock values edged up during the first six months of the year, according to the Investment Company Institute’s (ICI)’s latest study of recordkeeper data.

According to the study report, “Defined Contribution Plan Participants’ Activities, First Half 2016,” in the first half of 2016, 6.5% of DC plan participants changed the asset allocation of their account balances, and 5.5% changed the asset allocation of their contributions. Account balance reallocation activity was little changed and contribution reallocation activity was slightly lower compared with the same time frame a year earlier.

The data indicates savers remain committed to DC plans, finding that nearly all plan participants continued contributing to their plans during the first half of 2016. Only 1.8% of DC plan participants stopped contributing in the first half of 2016, the same share as in 2015.

In addition, withdrawal activity for DC plans remained low in the first half of 2016, as in the first six months of 2015. Levels of hardship withdrawal activity also were low, with 0.8% of DC plan participants taking hardship withdrawals during the first half of 2016, compared with 0.9% in the first half of 2015. 

DC plan participants’ loan activity was little changed. At the end of June, 17.1% of DC plan participants had loans outstanding, compared with 17% at the end of March. The first quarter of the year tends to have lower percentages of DC plan participants with loans outstanding compared with later quarters.

ICI’s study is based on plan recordkeeper data covering about 28 million participant accounts in employer-based DC plans.