Retirement assets plummeted in '08, ICI says

U.S. retirement assets were down 22% at the end of 2008, compared with yearend 2007, according to a report released yesterday by the Washington-based Investment Company Institute. As of Dec. 31, the assets totaled $14 trillion, down from $17.9 trillion in 2007, the ICI found. The market downturn had an impact on most aspects of the market, as individual retirement accounts assets fell 24%, defined contribution plan assets were down 22%, private-sector defined benefit plan assets dropped 27%, and state and local pension plan assets declined 27%, the ICI reported. The only category that posted an increase was federal-government-pension assets, which gained 2% last year. These assets are invested primarily in non-marketable government securities, the report said. The majority of the nation’s retirement assets are held in employer-sponsored retirement plans, offered by private-sector or government employers. A full 65% of the total assets, or $9 trillion, were held in employer-sponsored retirement plans, the organization found. Employer-sponsored defined contribution plans had the largest share, with $3.5 trillion in assets. Another $2 trillion was held in private-sector defined benefit plans. State and local government plans held $2.3 trillion, and federal pension plans had $1.2 trillion at the end of 2008, the report said. About 25% of total retirement assets, or $3.6 trillion, were held in individual retirement accounts, and most of those investments, or 89%, were held in traditional IRAs, the ICI found. “IRAs represent the single-largest component of the U.S. retirement market,” Sarah Holden, the ICI’s senior director of retirement and investor research, said in the statement. The report also found that during last year’s market downturn, account assets held in mutual funds fell to $3.1 trillion, from $4.6 trillion in 2007, representing a 32% decline. At the end of 2008, mutual funds managed 44% of IRA assets and 44% of assets in employer-sponsored defined contribution plans, the ICI said.