For the first time, there is more than $4 trillion in public sector retirement plan assets, according to Spectrem’s Retirement Market Insights report.
Spectrem’s Market Insights is published annually to examine the affluent investor market size in the United States as well as the retirement market and the public and private retirement accounts investors use to place funds for their retirement.
According to the report, the total assets held in employer-sponsored retirement plans were $11.3 trillion at the end of 2014, an increase of 11.5 percent from the $10.1 trillion one year earlier. Individual retirement accounts (IRAs) hold another $5.4 trillion of retirement savings. Total assets, including public, private, 403(B) plans and IRAs is $21.5 trillion.
According to the report, more than $3.5 trillion ($3.537 trillion) is in defined benefit accounts among the public sector, while there is $458 billion in defined contribution accounts and $241 billion in 457 Plans, according to the report.
In the last five years, the defined benefit amount has grown by almost $1 trillion, and both the defined contribution and 457 Plans have grown by more than $100 billion.
Public sector defined benefit plan assets have almost fully recovered from the losses suffered in the 2008 financial crisis, while defined contribution plans, including the 457 plans which are employee funded, have grown beyond the pre-recession amounts.
Among corporate sector retirement assets, defined contribution plans accounts for two-thirds of the total amount, to the tune of $8.53 trillion. Almost three-quarters of union assets are held in defined benefit plans ($458 billion). Private sector defined benefit assets have been slow to recover from the 2008 financial crisis, and are at $2.6 trillion in 2014.
Among Individual Retirement Account assets, over 80 percent are held in either mutual fund (($3.47 trillion) or self-direction accounts ($3.14 trillion). IRA assets have grown at an average annual rate of 2.5 percent over the past five years, with the growth driven primarily by rollovers from qualified plans.
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