Administration September 11, 2008

IRA Assets Reach $4.75T

September 11, 2008 (PLANSPONSOR.com) - Total assets in individual retirement accounts (IRAs) grew 12.5% in 2007, reaching a record $4.75 trillion, according to a study released today by the Employee Benefit Research Institute (EBRI).
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According to EBRI, while the percentage growth was lower than the 15.6% recorded in 2006, it was the fifth consecutive year of double-digit IRA growth. Total IRA assets in 2007 were larger than those in other retirement plan types – private-sector defined contribution (401(k)-type) plans held $3.49 trillion, and private-sector defined benefit plans held $2.33 trillion in 2007.

The EBRI analysis notes that, while IRAs are likely to be the largest non-Social Security asset in retirement for many Americans in the next generation of retirees (baby boomers and beyond), only 10% of taxpayers eligible to contribute to an IRA actually do so. Rollovers from other types of retirement plans, not new contributions, primarily fuel IRA growth.

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The majority of assets (about 90%) are held by traditional IRAs, but most new contributions are going into Roth and other types of IRAs.

In addition, EBRI found that mutual funds and brokerage accounts now dominate the IRA market, holding 47% and 38% of assets, respectively. Life insurance companies and banks/thrifts hold 8% and 7% of assets, respectively.

The study is found in the September 2008 EBRI Notes, available at  www.ebri.org .

Administration September 10, 2008

Higher Ed Cost Increases Up Slightly in 2008

September 10, 2008 (PLANSPONSOR.com) - New data shows higher education costs were up 3.6% in the fiscal year ending June 30, 2008, a 20-basis point rise above the 3.4% hike seen a year earlier.
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ACommonfund Institute news release about its   Higher Education Price Index (HEPI)said the latest figure compares with an annualized Consumer Price Index (CPI) of 3.7% for the same period.

Eight cost factors contribute to the HEPI regression calculation: Faculty Salaries, Administrative Salaries, Clerical, Service Employees, Fringe Benefits, Miscellaneous Services, Supplies & Materials and Utilities.  

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Components most heavily weighted are Faculty and Clerical Salaries and Fringe Benefits. Supplies & Materials and Utilities represent the second-lowest and third-lowest weightings, respectively. Taken together, these two cost factors have a weighting of 12.3% in the regression equation that determines the final figure.

Among the other cost factors, while the inflation rate of Faculty Salaries stayed constant at 3.8%, Administrative Salaries’ inflation rate increased from 4% to 5%. The inflation rates of the other four factors showed a decline.

Clerical salaries increased by 3.1% versus 3.6% last year, Service Employee costs increased by 3.2% versus 4%, Fringe Benefit inflation slowed to 3.7% from 5%, and inflation for Miscellaneous Services declined to 3.4% from 4.2%.

More information is at  http://www.commonfund.org/Commonfund/CF+Institute/CI_About_HEPI.htm .

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