What Are the Fastest Growing Retirement Plans?

A recent report has highlighted some of the fastest growing retirement plans and how the assets of the top 1000 retirement plans in the US are growing. The topper in the list is the popular TSP or Thrift Savings Plan. Other plans have also performed well recently, and according to the Pensions & Investments’ annual survey, corporate sponsored 401(k) plans outperformed the TSP during this most recent period. This information will come in handy to people who are planning to invest in a retirement fund or are considering switching from their existing plan.

Retirement Benefits

The Assets of The Fastest Growing Retirement Plans

The Pensions & Investments’ annual survey that was released recently stated that assets of all 1,000 largest retirement benefits plans of the US grew to USD 9.39 trillion as on September 30, 2016. It is 6.2 percent more than the figures of 12 months earlier. It is even the highest level in the history of the Pensions & Investments’ annual survey.

Defined Benefit Pension Plan Assets vs. Defined Contribution Plan Assets

During the survey period, of 12 months, the assets of defined benefit pension plans in the top 1000 grew by 4.9 percent to a total of $6.12 trillion. In contrast, the assets of defined contribution like the TSP or 401(k)s rose by 8.6 percent and reached the level of $3.28 trillion.

Expert Opinion

Jeff Boettcher, Principal of BWM Advisory, LLC of Scottsdale, Arizona stated that every year this survey illustrates how important these resources are to individuals as well as the economy in general.  Mr. Boettcher went on to say that these investments represent the largest pool of investable assets anywhere in the world.

Defined Contribution vs. Defined Benefit Plans

Among the 200 retirement plans listed as the largest, the worth of assets was USD 6.79 trillion on September 30, 2016. It is 6.2 percent higher than a year earlier. Of this, about USD 1.96 trillion belongs to the DC plans; it is up by around 8 percent. In contrast, approximately USD 4.83 trillion belonged to DB plans. It is up by about 5.5 percent.

The Gap

The survey revealed that there was a gap between the number of public and corporate funds reporting a double-digit asset growth. About 25 of the top 100 corporations in the top 200 saw the assets grow by 10 percent or more. In contrast, only four of 77 public plans saw the assets grow by 10 percent or more.

Key Reason

Consultants think that the reason behind the gap mentioned above is the longer duration of corporate pension funds’ propensity to invest in fixed-income assets.

Top 5 Largest Retirement Benefits Plans

The survey results stated that all five of the largest retirement plans in the country are public plans and their rankings have been the same as last year. As expected, the federal retirement thrift savings plan that is based in Washington DC is the largest retirement plan of the country and had $485.58 billion in assets on September 30, 2016. It has increased by about 9.5 percent a year before.

The second position, the California Public Employees’ Retirement System, in Sacramento, had $306.63 billion in assets and saw an increase of 7.3 percent from the last year. Three others in the top 5 ranking were California State Teachers’ Retirement System, West Sacramento, New York State Common Retirement Fund, Albany and New York City Retirement Systems. They were worth $193.87 billion, $184.46 billion and $171.57 billion respectively. They saw an increase of 6.6 percent, 6.3 percent, and 10.6 percent in that order.

Corporate vs. Union Plans

Chicago-based, The Boeing Co, was the largest corporate retirement plan. It has assets worth $107.38 billion, and it has increased by 5.3 percent. Western Conference of Teamsters Pension Trust, Seattle is the largest union plan with $37.24 billion in assets. It has been holding steady from its $36.91 billion in assets a year before. Its overall rank is 45.

Survey Details

Pensions & Investments has compiled a survey of 1,000 largest retirement benefits plans since the year 1979. The process of the survey includes reporting, data gathering and verification that is done by the entire U.S. editorial team of the news organization.

The questionnaires are sent to over 1,300 fund sponsors available in the organization’s database. Then the largest 1000 were identified based on the completed surveys, database searches, and follow-up phone calls & emails.

Conclusion:

Based on the asset growth of the Defined Contribution plans listed, it is clear that people continue to trust the value of their retirement plans. The survey also suggests that althought the Thrift Savings Plan is the largest in terms of assets, it is not the plan that is increasing in size the fastest. Whether the comparison is because Federal Employees are aggressively seeking alternatives to their TSP or because the performance of the underlying funds has been impacted for one reason or another is difficult to ascertain but worth considering if you are faced with the question about what to do with your retirement funds.

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