In this study, public-sector defined-contribution (DC) plan participant savings behaviors are analyzed. Specifically, balances, contributions, loan usage, and asset allocation by participants’ age and tenure are examined. Some of the key findings include:
Account Balances
- The average account balance for public-sector DC plan participants increased with age and tenure. For instance, the average account balance for participants in their 40s with zero to two years of tenure was $6,185, compared with $69,623 among those with 11 to 20 years of tenure in the same age group.
- The median account balance ranged from $1,938 for those in their 20s to $31,730 for those in their 60s.
Contributions
- The average and median employee contribution amounts increased with age. For instance, the average employee contribution was $1,806 for participants in their 20s, compared with $4,184 and $5,559 for those in their 40s and 60s, respectively.
- The average and median employee contribution rates (employee contributions divided by salary) were 6.4 percent and 3.7 percent. This rate increased with age, from 3.5 percent for those in their 20s to 8.4 percent for participants in their 60s.
Loan Usage
- Among participants with access to plan loans, the percentage of those who take loans from their plans by age was hump-shaped, going from 2.9 percent of participants in their 20s to 12.9 percent of participants in their 40s and decreasing to 6.1 percent of participants in their 60s.
- Participants in their 50s had the highest average outstanding loan balance of $11,386, but their loan balance also amounted to 22 percent of their total account balance, the second lowest percentage across the age groups.
Asset Allocation
- Participants in their 20s had the largest allocations to target-date funds (71.3 percent).
- Allocations to bond funds, balanced funds, and money market/stable-value funds increased with age. For instance, participants in their 60s allocated 23.3 percent to stable-value funds, compared with 1.9 percent for those in their 20s.
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Figure 14, Mean and Median Total Contributions, by Age ...................................................................... 12
inf frolm ue • 457( nce Alld o b by cati ) pl lo a arg ns t ns. e ac 45 o bo 7( count nd fu b) plb ans ar nds alance , be ty al s. The m ance pical d fund lyed used ian s, and m in acc the pub ount oney bal l m ic ance se arket/ ctor s ostab f P as v RRL partic lo el-untar valuey fund sup ipants p s increas lemental in their e5 d0s
Research Study • No. 8
CO IN AP END TPENDIX N RODU N COTE LUSI CTIO S ON N
FiFi gu gre ure 8 14 FiFi gu gre ure 9 15
Figur Figur Figur e e e 11 A 272 Figur Figur Figur Figur Figur Figur e e 1 e e e e 1 92 1 6 7 32 1 Figur Figure e 1283
Figure 1B
N and 60s sav ov ing em s v wiwe th b ehic e ag re rl es 20 e $. 2 in Fo 5,531 , 2 r co instance, 0 n2 j uncti and 5 $3 o n p 1,730 artic with ip a DB , ants resp pe ec in th tivel nsiei or n, y. 60s th o al ug lo h cate this is n d 23. o3 pe t alway rcent s th to e c stable ase. -value funds,
Figure 15, Mean and Median Total Contribution Rate, by Age .............................................................. 12
Mean and Median Total Contributions, by Age Mean and Median Total Contribution Rate, by Age
Mean Account Balance, by Age and Tenure — 457(b) Plans Mean Account Balance, by Age and Tenure — 401(k) Plans
Asset-Weigh Mean tedO P Al utstand RlR ocations L Data ingbase to Loan E q Un uity Mean Am iver ,oun by se Acc P t,Age er by ou cen n a M Age t tage of nean d Pla BalAss an a Ass n nce, et d M P et Type P a - -a Weigh rbWeigh ticipa red yticipa Ag iane n ted ted n ts Ean t m Wi Ages, Al d ploy Al lth ocations, Ten locations, ee Con au by rLe oan P — la tr by n M O by ibution Pean utstand Type Ass rAge iva Ten et te Lur -s, by oan Weigh e 4 ing 01 Am ,Age (k by ted oun ) Age P Al lt aln a ocations s s 2 P0 er2cen 2 to tage Bon ofds, Accou by Age nt Bal anad Pla nce, nby Type Age
E This mp ed loyiti ee os wo n of the S rking in tatthe pub e of Pub ll ic ic sec -Sec to to r r fac DC e Pl a co ans pro mplicated vides r a eti nrem Po art vicip er ent l v ants, by iew andsc o Entit f what pub ap y Typ e. eP ubllic ic- -se sector ctor DC p lan
1 compared with 1.9 percent for those in thei Appr en 20s. dix 1
The prior reports, “Th $6 e ,00 S0tate of Public Sector DC Plans: A First Look at the PRRL Database,” “The State of Public Sector
Figur $2e 00,01 006, P $7er ,00c 0 entage of Participa $11,386 nts With a Loan Outstan $120,di 000ng,12 by .0% Age .............................................. 13
28%
28%
$11,095
The State of Public-Sector DC Plans: 2023
Whil p emplo artic e o ip yants ee nls ar y 12 hav e l pike e in th erce lynt to ei o h r f the to av cue a de rrent em tal fi assets ned plo be yer’s in nef tp it (DB he PRRL Datab lans, )12 si pe .nce 9%nsion acc pl o ase unt an we a bnd al re ance be inv o es s ar ffted er e ag ed in m g 401( re ulg tip ated a) le pd l acro ans, efined ss 28
$1 14% 2,000 80% 35% $350, 80% 00 70% 0 30% 20%
$10,710
90%
82.6%
$180,000 Age Distribution of All Participants in PRRL, 2023
DC Plans: 2021,” and “The State of Public Sector DC Plans: 2022, ” can be found at htt 12.3% p://www.prrl.org/research.
70% Figure 5
30% 25%
70% $5,000
60%
$300,000 $6,000
$100,000 10.0%
Figure 17, Mean Outstanding Loan Amount, by Age............................................................................... 14
60%
percent of participants participated in them. Non-ERISA 401(k) plans represented around 22 percent of
p contr artic 25% ib iputi $ants’ 160,o 000n (m DC ul)tip pllan e p s. S lans, om as 44. e gov5 pe ernm rce ent nt emplo of the partic yers off ip er ants DC hav plans in e more th a “hy an brid one plan ” structu ty re, pe. consisti The ng
CONTENTS 80%
By Samita Thep 60% hasit, Employee Benefit Research Institute, 15% on behalf of the Public Retirement
50% 50%
$1 12% 0,000 $250,000 25%
2 Mean and Median Account Balance, by Age for All Plan Types Combined 22%
20%
$4,000
The combined percentage of participants by entity type exceeds 100 percent, as many individuals participated in21% multiple
$140,000
40% $5,000
50% 8.0%
40% $80,000
rese the to of march andator 15% tal assets highl y 401( igh in ts t the a)h pl at h Pans an RRL Datab alf od f the partic /or sup asep , wi leme ip th ants 28 ntal p in th 457( erce ei nt b r )60s pl of p a ns. — artic the The ipa ag nts Pub e at which m p lic artic Retirement ipating ost in ind Res them ivearc id. uals Ith 's wo La brth
Figur $200, e 001 08, Mean $7L ,94 oan 5 Amount as a Percenta 70ge % of Account Balance, by Age .................................... 14
24%
Rese 30% arch Lab
$140% 20,000 10%
Introduction ...................................................................................................................................................... 4
plans 10% that belong to different entity types. For instance, an employee may participate in a primary plan offered by a state
$3,000
20% 30%
$120,000
$150,000 $4,000
10% $8,000 20%
6.0%
8.6%
noting th 30% at 401(k) plans in the public sector dif6fe 0%r from their private-sector counterparts in that they
ty (Pp RRL) ical 5% l$y was c 10 0ex ,000it the wo reated sp rk for ecif ce icall —y 42% had a to add m ress the frag edian account mented balance l $6andsc 0,00 o 0 f les ap s th e and prese an $31,730 nt rel in th iabei le d r current ata on DC
10% 13%
15%
Figure 20% 19, Asset-Weighted Allocations, by Age ........................................................................................ 15
while also participating in a supplemental plan provided by their municipality.
$100,000
0%0% $2,000
Metho 20% dology ................................................................................................ 5% .................................................... 5
$1$080 0,,0 000 00
$3,000
10% 50% 4.0%
are legacy accounts; only those established prior to 1986 continue to operate.
retirement plans as of y plear ans co Equi- tyend 40 v1(a) 2023. ering pub Lo Bo an lnd ic-usage pe sector em 40 ak S1(k p tabl l ed )o e Vy a am lue ees. ong The d partic ata col Targetip Daants te40 lec 3(bted )in th by eir PRRL Ba40s at lanced are 12.9 contai 45 pe 7(b rce O)ned thernt, in whil the e
$50,000
8% 10% $40,000
$6,000 15%
3
SUMMA $60,0RY 00
Figure 2 $40, ,51 As 8 set-Weighted Allocations, by Age — Private 401(k) Plans .................................................. 15
Figures 2A and 2B, an $1,d 00 o 0ther figures that break down statistics by plan type, exclude a small number of plans and
0%
Participant Demographics and Assets by Plan ............................................................................................. 6.1% 5
0% $- $2,000 0%
$80,000 40%
tho PRRL Datab se in $4their 50s 0,000 ase. carried the highest average outstanding loan bal2.0% ance, which was $11,389.
20s 20s 22.5% 14 Equi .4% ty 3.5% Bond 13.7% 1.9% Stable Value 71.T 3% arget D 2.5% ate 0.5% Balanced 12.5% 0.3% Other
20s20% 30s 40s 50s 60s $20,000 20s 30s 40s 50s 60s
participants who have pub 20s lic-sector, employer- 30s provided IRAs. The c40s ombined percentage 50s of participants by plan 60stype
23%
$-
6%
Final $4F ,0i0gur l0y, a sm e 21,a As ll num set-W beight er of 403(b) ed Alloc p ati lans on swe , by re Ten rep ur rese e ................................ 10% nted in the PRRL Datab ................................ ase, making .................... up 1 percent 16
$20,000
30%
$1,000
Total Assets ....................................................................................................................................................... 7
In this stud $60,000 y, public-sector defined-contributi 24%on (DC) plan participant savings behaviors are analyzed.
20s 30s 40s 50s 60s
0.0%
30s 0-5 30s year 31.1% 27 26..4% 0% 3.5% 5.9% 23.6% 3.6% 5.3% 60.1% 59.8% 14.5% 1.2%1.2% 23.9% 0.6% 0.5%
exceeds 100 percent, as many individuals participated in more than one plan type.
401(a) 4.9% 11.2% 24.4% 31.6% 26.1% 401(a) 0.2% 0.5% 1.3% 2.3% 2.8%
0 –2 Years
$0 $5,780 $12,633 $20,966 $0 $30,575 $46,609
1
15% 20s 30s 40s 50s 60s
of total assets and having 1 percent of individuals participating in these plans. 403(b) plans are often
Whil This is th e pub e lfourth ic-sector ed wo ition rkers of the are m State o ore l f P ike ub lyl ic to - h 2S 0%ec avto e a de r DCfi Pl ned ans r beep nef oit p rt b ensi aseo dn op n lthe PRRL an relative to Datab thei ase r .
20s 30s 40s 50s 60s 20s 30s 40s 50s 60s
Figure 22, As $- set-Weighted Allocations to Equity, by Age and Plan Type ............................................... 17
Sp 4% ecifically, b2.9% alances, contributions, loan usage, and asset allocation by participants’ age and tenure
$2 Ac ,00c 0 ount Balance by Plan Type ................................................................ 5% ...................................................... 9
$4 m 0,000 ean employee contribution $1,806 $3,324 $4,184 $5,301 $5,559
40s 6-1 40s0 year
4 45.8% 34 23..8% 7% 5.6% 5.4% 24.8% 7.4% 5.3% 37.4% 51.3% 25.1% 2.8%2.4% 24.5% 0.9% 0.7%
401(k) 32.7% 39.2% 52.9% 55.7% 49.2% 401(k) 5.6% 7.7% 12.3% 15.4% 17.5%
7.1% 7.3%
3 –5 Years 20s 30s 40s 50s 60s
Total balances are net $1 of 3,424 any plan loans. $24,921 $37,959 $51,097 $59,616
mean total contribution
used by public educational institutions (higher 1 ed 0% ucation or K–12) and hospitals. A large percentage of
p The anal rivate-se