Data and Research March 18, 2015

Retirement Plan Assets Reach $21.5 Trillion

Public sector retirement plan assets have exceeded $4 trillion for the first time, according to a Spectrem market report.
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Assets held in employer-sponsored retirement plans increased 11.5% to reach $11.3 trillion at the close of 2014, according to Spectrem’s 2015 Market Insights Report.

Individual retirement accounts (IRAs) maintain an additional $5.4 trillion of savings, Spectrem says. According to the report, total retirement assets across public plans, private plans and IRAs stand around $21.5 trillion.

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Other findings reveal more than $3.5 trillion in defined benefit (DB) accounts is held by public sector workers, along with $458 billion in defined contribution (DC) accounts and $241 billion in 457 plans. Further, in the last five years the DB amount has grown by nearly $1 trillion, while both the DC and 457 plans have grown by more than $100 billion.

The report reveals a near complete recovery of public sector DB plan assets from the losses suffered in the financial crisis of 2008. Additionally, DC plans, including the 457 plans which are employee funded, have grown beyond pre-recession amounts.

Conversely, private sector DB assets have been slow to recover from the 2008 financial crisis, recording $2.6 trillion in net assets in 2014. At $8.53 trillion, DB plans account for two-thirds of the total amount of corporate sector retirement assets. Almost three-quarters of union retirement dollars, or $458 billion, is held in DB plans.

Spectrem’s research shows over 80% of IRA assets are held in either mutual fund or self-directed accounts, which maintain $3.47 trillion and $3.14 trillion, respectively. Driven primarily by rollovers from qualified plans, IRA assets have grown at an average annual rate of 2.5% over the past five years.

The Spectrum 2015 Market Insights Report is available for purchase here.

Products March 18, 2015

Vanguard Rolling Out Plan Sponsor Workstation

The workstation will deliver enhanced web-based management, analytics, and reporting tools.
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Vanguard has announced a new tool, My Plan Manager, designed to make retirement plan sponsors’ plan data more accessible and actionable so they can help participants reach retirement goals.

The first capabilities will include a deepened set of employee information, as well as a list builder and expanded reporting functions that let plan sponsors easily target employee segments based on selected criteria. Kathy Himsworth, a principal in recordkeeping services at Vanguard Institutional Investor Group in Valley Forge, Pennsylvania, explains to PLANSPONSOR that the platform will make all information about a client’s plans and participants available at their fingertips. With the list builder they can set parameters to get information about a subset of participants, she adds.

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Himsworth says the first capabilities will be available to clients by the end of April; all capabilities will be available to clients by the end of the year. By the middle of this year, Vanguard will add data insight and visualization capabilities, an administration center and new transaction functionality, and continued enhancements to the first release. According to Himsworth, the current plan sponsor web experience provides basic transaction capabilities, but My Plan Manager will offer an improved experience. Plan sponsors will have the ability to interact more easily with Vanguard, not just through emails and phone calls, but by initiating steps through the workstation, such as participant census data changes.

In 2016, the site will include investment data and a plan governance compliance center. Himsworth explains that the governance center is where annual financial reports are stored and plan documents are housed. It is a repository with shared access to documents, compliance testing results, etc.

My Plan Manager is designed to help plan sponsors:

  • Gain insight in order to answer important questions and make informed long-term decisions. For example, Himsworth says plan sponsors can get information about participation rates by employee age group, which could help inform the decision to implement automatic enrollment. Plan sponsors can also look at investment diversification by employee groups, which may inform investment lineup decisions.
  • Manage employees and provide guidance about their retirement journey. Himsworth says plan sponsors can isolate savings and withdrawal experience by participant populations to determine information that needs to be posted on the participant website or to inform targeted behavioral-based education campaigns.
  • Influence employee behavior and maximize plan value for cost. According to Himsworth, plan sponsors will be able to compare their plan information with like plans in their industry. Benchmarking against best practices will help them make a compelling case internally to influence changes.
  • Anticipate what is happening and the trends that lie ahead. For example, plan sponsors can see which participants are calculating loans on the website but haven’t yet initiated one yet, or they can track other participant web behaviors that indicate some communication or plan design change is needed. They may also preview highly compensated and non-highly compensated participant savings activity to anticipate testing results.
  • Maintain peace of mind by resolving issues, staying compliant, and ensuring accuracy.

“A lot of times when these tools are built, there’s only a business purpose to it, but we started first with observing clients, hearing from them and building it around how they would use it,” says Himsworth. “It is not a one-size-fits-all tool, and not just information for information sake. It can be customized for each user, and is designed to truly help plan sponsors achieve their goals and help Vanguard better work with them. We think this is what will differentiate the platform from others.”

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