August 2000

Equity Holdings of Retirement Plans

As of year-end 1998, total assets in employment-based retirement plans in the United States, excluding Social Security, amounted to $7.2 trillion. Private trusteed plans accounted for the largest component of retirement plan assets, 55.3 percent, or $4.1 trillion. State and local government retirement plans accounted for 31.3 percent of retirement plan assets, or $2.3 trillion. Private insured pension plans accounted for 13.4 percent, or $800 billion.

Employment-based retirement plans held 27.3 percent of all equities in the United States in 1998, with a value of $3.5 trillion. Employment-based pensions have steadily increased their holdings of U.S. equities over the years. In 1950, these plans held 0.8 percent of all equities in the nation; this percentage increased to 4.0 percent in 1960, 9.4 percent in 1970, 18.6 percent in 1980, and 25.9 percent in 1990.

Private Trusteed Plans

In 1998, private trusteed plans (managed by a trustee appointed by the plan sponsor) held 14.6 percent of all equities in the United States, with a value of $1.9 trillion. Private trusteed plans have steadily increased their holdings of U.S. equities over the years. In 1950, private trusteed plans held 0.8 percent of all equities in the nation; this percentage increased to 3.8 percent in 1960, 7.8 percent in 1970, 14.6 percent in 1980, and 15.9 percent in 1990.

Defined Benefit Plans

Defined benefit plans held $2.2 trillion in assets as of year-end 1998, compared with $800 billion in 1985. Since 1985, defined benefit plan assets have increased at an average annual rate of 8.0 percent.

As a percentage of all defined benefit plan assets, equities declined from 41.3 percent in 1985 to 33.6 percent in 1990. However, since 1990, equities have steadily increased as a percentage of total defined benefit plan assets, reaching 53.1 percent in 1998.

Equity asset holdings of defined benefit plans amounted to $336 billion in 1988, $319 billion in 1990, and $1.18 trillion in 1998.

Defined Contribution Plans

Defined contribution plans held $1.8 trillion in assets as of year-end 1998, compared with $400 billion in 1985. Since 1985, defined contribution plan assets have increased at an average annual rate of 12.1 percent.

In 1986, equities accounted for 31.6 percent of all defined contribution plan assets. This percentage steadily increased to 47.6 percent in 1998.

Equity asset holdings of defined contribution plans amounted to $151 billion in 1986, and increased to $879 billion in 1998.

State and Local Government Plans

In 1998, state and local government plans held 10.2 percent of all equities in the United States, with a value of $1.3 trillion. State and local government plans have steadily increased their holdings of equities over the years. In 1950, state and local government plans held no equities; they held 0.1 percent of all equities in the nation in 1960, 1.2 percent in 1970, 2.9 percent in 1980, and 8.3 percent in 1990.

State and local government plans held $2.3 trillion in assets as of year-end 1998, compared with $400 billion in 1985. Since 1985, state and local government plan assets have increased at an average annual rate of 14.6 percent.

In 1985, equities accounted for 30.0 percent of all state and local government plan assets. This percentage steadily increased to 68.0 percent in 1998.

Equity asset holdings of state and local government plans amounted to $120.1 billion in 1985, and increased to $1.59 trillion in 1998.

Private Insured

In 1998, private insured plans (managed by life insurance companies) held 2.5 percent of all equities in the United States, with a value of $300 billion. Private insured plans have steadily increased their holdings of U.S. equities over the years. In 1960, private insured plans held no equities; they held 0.4 percent of all equities in the nation in 1970, 1.1 percent in 1980, and 1.7 percent in 1990.

Private insured plans held $800 billion in assets as of year-end 1998, compared with $300 billion in 1985. Since 1985, private insured plan assets have increased at an average annual rate of 7.1 percent.

In 1985, equities accounted for 9.1 percent of all private insured plan assets. This percentage steadily increased to 35.7 percent in 1998.

Equity asset holdings of state and local government plans amounted to $31.6 billion in 1985, and increased to $320.0 billion in 1998.

For more information, contact Ken McDonnell, (202) 775-6342.

Source: Employee Benefit Research Institute, EBRI Pension Investment Report (Washington, DC: Employee Benefit Research Institute, December 1999).

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