Data and Research February 5, 2018

U.S. Retirement Market One of Two Dominated by DC Plans

Willis Towers Watson’s Thinking Ahead Institute’s 2018 Global Pension Assets Study also found the U.S. retirement market has a greater propensity towards home bias in investing than other countries.

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The U.S. is the largest retirement plan—defined contribution (DC) and defined benefit (DB)—market among 22 countries analyzed in Willis Towers Watson’s Thinking Ahead Institute’s 2018 Global Pension Assets Study.

Total U.S. retirement assets are more than $25 trillion, compared to more than $41 trillion total for the 22 countries, making up 61% of the global retirement plan market. U.S. pension fund assets grew by 12.7% in 2017.  Over the past decade, assets grew at an annual rate of 5.2%, the institute found. The ratio of U.S. pension fund assets to GDP now stands at 131%; up from 121% in 2016 and up from 106% in 2007.

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A deeper analysis was performed among what the firm calls the P7 markets—Australia, Canada, Japan, Netherlands, Switzerland, U.K. and U.S. Assets in DC plans now account for 60% of total assets in the U.S., compared with 54% in 2007. Australia is the only other country in the P7 in which assets in DC plans hold greater market share than DB plans (87% vs. 13%, respectively).

The U.S., Australia and the UK have higher allocations to equities than the rest of P7 markets. In the U.S., in 2017, 50% of retirement assets are in equities, 21% in bonds, 28% in “other” and 1% in cash. This compares to 60% in equities, 23% in bonds and 18% in “other” in 2007.

There is a clear sign of a reduced home bias in equities, as the weight of domestic equities has fallen, on average, from 68.7% in 1998 to 41.1% in 2017. However, during the past ten years, the U.S. has had the highest allocation to domestic equities, while Canada Switzerland and the UK have had the lowest allocation. The U.S. is also one of the markets with the highest concentration in domestic bonds.

In the next five to 10 years, the institute sees shifts in investment models for retirement plans in the P7, including a greater move to alternative assets and infrastructure finance, a greater use of factors and a mainstreamed sustainability model.
Products February 5, 2018

Steidle Announces 403(b) Plan Administration Fee

403(b) plan sponsors pay just $600 for full service administration and plan document services.

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Steidle Pension Solutions (SPS) has announced its 2018 403(b) plan administration schedule, which is only $600 for full service administration and plan document services.

Steidle’s services include calculations, plan valuations, document services, Form 5500 and other services.

“SPS is excited to expand our relationships with advisers and investment professionals in the 403(b) marketplace,” says Keith Steidle, SPS managing director. “Non-profit groups, churches and 501(c)(3) tax-exempt organizations prefer a transparent, straightforward fee structure. Our fee is all-inclusive, so the organization is never surprised by a separate bill for a service that the group didn’t even know was needed. Working with charitable foundations has taught us that eliminating expenses is so important, and if we can help an organization save money, more resources can be allocated to their cause.”

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