Public R Public R Public R Public R Public R Public R Public R Public R Public R Public R Public R Public Retirement R etirement R etirement R etirement R etirement R etirement R etirement R etirement R etirement R etirement R etirement R etirement Researc esearc esearc esearc esearc esearc esearc esearc esearc esearc esearc esearch Lab h Lab h Lab h Lab h Lab h Lab h Lab h Lab h Lab h Lab h Lab h Lab A collaborativ A collaborativ A collaborativ A collaborativ A collaborativ A collaborativ A collaborativ A collaborativ A collaborativ A collaborativ A collaborativ A collaborative ef e ef e ef e ef e ef e ef e ef e ef e ef e ef e ef e efffffffffffffor or or or or or or or or or or ort of EBRI and NA t of EBRI and NA t of EBRI and NA t of EBRI and NA t of EBRI and NA t of EBRI and NA t of EBRI and NA t of EBRI and NA t of EBRI and NA t of EBRI and NA t of EBRI and NA t of EBRI and NAGDC GDC GDC GDC GDC GDC GDC GDC GDC GDC GDC GDCA A A A A A A A A A A A Research Study•No. 2 THE STATE OF PUBLIC SECTOR DC PLANS: INTRODUCTION T TA A L A C METHODOL C h hO e findings ar e ag ONTRIBUTIONS ONCLUSION S S CSET SET AN Ce distribution of public sect OUNT USE ALL ALL e fur OC OC BAL OGY ther br A ATION TION ANCE ok B en do Y B PL B or em wn in F YY AN DC PL plo igur y T AN PL ees described in YPE e 6 t AN To sh YPE T oYPE w av erage Figure 6 Figure 3 February 25, 2021 Averag Pare Account Balance b ticipants and Assets b y Ag y Plan T e and T ype enure account balance b Figure 3 further illuminat y both ag es th e and t e underlying c enure. Tenur hare calculations ar acteristics of e A FIRST LOOK AT THE PRRL DATABASE Public sect T F T T A T To demonstr h h h h igur sset allocation is a critical com e data in F e use of loans in public DC plans is sh e f e stat es 1 our ma e of public sect 2 and 1 or retirement researc jor asset cat atigur e th 3 sh es 8– e com ow th 1plexit or DC plans is e egories in th 1 sh e dollar amounts contribut oy of public DC plan syst w th ponent in understanding th h h e av as larg e dataset (eq erag ovwn in F olving. As DB pension ref e account balances f ely focused on t igur uities, bonds, mone es 1 em str ed b6– y em e uctur h 1e defined benefit (DB) pension plan as t 8. Of plo or par es, this initial assessment of th yees t fering loans is optional f orm continues, t ticipants in eac y/stable v o their plans b alue, tar h plan t hy ag e im get dat e. Ag por or plan sponsors, and man ype b tance of public sect ain, th e PRRL Database consists of f e funds) ar y tenur ese data ar he q e sole source of retirement income f e br uar Figure 1 ok tile (q en out b e agg or DC plans will only increase. uar y ar 9r eg tiles ar y plan t e cautious about allo ated t our distinct cat e defined as <3, 3-7 o sh ype in F ow total contribu igur egories of es 22–25. wing or stat ,- e 35% eac inher h plan t ently dif ype. 40 ficult t 1(a) plans, and t o represent accuro a lesser ex ately. For this study tent IRA, t s, ar enur e e $180,000 Asset Weighted Allocations by Age THE STATE OF PUBLIC SECTOR DC PL 30% ANS: and local go th tions acr rP 7- T DC plan use (account balances, contributions, loans, and asset allocation) filt etir h ar eir par 1 is inaugural analysis using t ticipants in 40 7ement r , and >1 oss all DC plans, per par ticipants early access t eadiness of plan par v7 y ernment em ears). While eac 1(a) plans allocat ployees. Public sect o th ticipants. A hh plan t ticipant. A e PRRL Database pro eir r ed significantly f etir ype h ement funds. Ho s expect s stat or defined contribution (DC) plans, consisting of IRS code 45 as distinct c ed pr ed, contributions incr eweer assets t viously vides a baseline f hw areact ,v ereristics, accumulat , man o stocy also r ks and bonds th ease as em or trac er ecognize th ed thr king public sect ed assets rise with ag plo ough th yan par ees appr at unusual cir e lens of t ticipants in oth oac or DC plan e h retir cumstances arise, and so of we and t o dif ement ag er plan t fv7(b), 40 er olution. Going f enur ent t e. T e as expect ypes, and mor ypes of data analysis. h1(a), 40 e data in F ed. T or 1(k), and 403(b) w igur fe t er loans as a sour ard, t he av o stable v e 1er 3 r he PRRL will ag epr e account esents alue ce $160,000 becoming incr is defined as th easing e time an em ly common in ne ployee spends in th wer pension tiers and sh eir current job. ow Table of Contents $140,000 25% plans, h balances f pr th a significantly smaller number of par of emer lev oducts and tar e prior inabilit erage t av genc e traditionally garnered less at or 403(b) plans appear t he PRRL Database t y funds. g y t et dat o agg e funds o regate public sect o identif vero be significantly dif all. Muc ticipants due t y trends in plan design as w or DC data at th tention and are, as a result, less under h of this dif o the dear ffer erence could pot e ent fr th of salar om thell as utilization. F ose of oth y data sh entially be explained b er plans, whic ared bet stood.ur ween go ther h could be th y th , tv her e PRRL Database will inf e natur nments and th e of th e result of th e dif eir DC plan r fere limit ent plan t orm PRRL analysis on t ed sam ecord k ypes. F ple size f eepers. Man or exam or th ple, yese he $120,000 70.0% A FIRST LOOK AT THE PRRL DATABASE A pot a skeential sh wed distribution t ortcoming of th oward y ese calculations is tr ounger workers, as w acould be ex king an em-- One method of analysis, consistent with NAGDCA’s past efforts through its Annual Benchmarking Survey, is a description of the four categories by plan Introduction ---------------------------------------------------------------------------------------------------------------------- $1 2000,0 % 00 ------------------------- 3 60.0% par retirement income adeq plans in th rman ecord k ticipant le y 40eepers sim 1(a) plans ar e PRRL Database. vel has pr ply do not h e mandat evuacy gaps faced b ent ed th av ore salar e de y retir velopment of a com ement v y infy v ormation, making calculations of contribution r arious public plan coh ehicles with default inv plete or estments of eith ts, as well as t er stable v he pot ates im ential im alue pr possible. F pact on t oducts or tar uture datasets w hose gaps of pot get date funds. T ould be g ential policy his explains th reatly aided b , plan ey $80,000 pect ployee as th ed. Conveersely y chang , plan t e jobs. F ypes mor or exe hist ample, if a t orically used in th eacher leave public es one 15% Tthype. While this meth ere are two primarod pr y reasons f ovides an incom or this lac plet k of at e pictur tention. Fir e of retirst, stat ement re and local go eadiness at the par vernments h ticipant le avve maintained DB plans in far g el, as it does not include participant use of multi reater percentage - $60,000 The percentag The Public R e of par etirticipants wh ement Resear o h ch Lab Database ----------------------------------------------------------------------------------------------------------- 3 ave an outstanding loan balance associated with any of their plans is shown in Figure 16, which reveals a peak 50.0% By Matt Petersen, National Association of Government Defined Contribution Administrators, and Jack VanDerhei, Ph.D., Employee Benefit Research design, and product initiativ th asset allocation pictur high e inclusion of additional salar er use of these asset classes in suc e for public sect es.y inf oror em mation. h plans. ployees. Figure 19 $40,000 10% district f sector (e.g., 45 or anoth 7(b), 403(b), 40 er in the same stat 1(k)) all sk e, but continues t ew in the opposit o participat e e 40.0% tple plan t han their priv ypes, it r ate sect emains an essential contribution t or peers, making it understandable t o administr hat t ators’ understanding of public DC plan use. he bulk of public sect $20,000 or research has not sh ifted toward DC plans as it has in of more than 7% for the 40s age cohort. While the percentage of participants with outstanding loan balances then begins to decrease, the average Methodology ---------------------------------------------------------------------------------------------------------------------------------------------- 4 Institute, on behalf of the Public Retirement Research Lab provides this aggregated view of public sector DC data for those 5% $0 30.0% 20 30 40 50 60 in th direction, with th e state 457(b) plan, PRRL analysis w e most frequent use by thould sh e 50s ag ow a br e coheak in ort. the private sector. However, public sector DB research is often framed around pension system health, usually expressed in terms of plan funded Muc amount of th Contribution amounts and r h work remains in under e remaining loans in F ates detailed in F standing h igure 1 ow public em 7 incr igureases up t es 14 and 1 ployo tr ees use t 5 include an aditional r heir DC plans. F etir y em ement ag ployer contribution. Distinct t e. In a pot or example, t entially w his repor oro th rying tr t does not address t e public sect end, the av or, em eragplo he loan amount as e dif yers may h ferences av e 0-2 Participant Demographics and Assets by Plan ------------------------------------------------------------------------------------------------------------ 4 $2,238 $5,331 $8,979 $17,174 $25,387 0% 20.0% plans par The second meth ticipating in th od of analysis combines all par e PRRL. ticipant-level data across record keepers and plan types. This aggregation of total DC assets at the Figure 8 401a 457b 40 Figure 9 1k 403b IRA 2 2-5 $6,013 $11,464 $21,827 $40,365 $54,875 tenure. However, as shown in previous PRRL research , public status, and often neglects the topic of retirement readiness of public sector em 20 plo 17y .1% ees. 14.5% 7.6% 13.2% 10.8% a per bet eithw er mandat een plans wit centage of account balance in F ory contributions, v h mandatory DC pensions, v oluntar igury contributions, or both. In h e 18 continues t oluntary supplemental retirement v o increase as w ybrid pension str ell. Only 3% of th 5-10 uctur eh $9icles, or a combination of t ,207es a mandat e 60s age coh $16,91 ory contribution is common, t or 8 t have a loan, but f $2h 7,61 e t 8wo. A nuanced approac or th $43,44 ose wh ypically int 0 o do, th o an em $5h is 7,23 e 5 - 10.0% Total Assets ------------------------------------------------------------------------------------------------------------------------------------------------ 5 Average Account Balance by Age and Tenure Quartile - 457(b) Plans Average Account Balance by Age and Tenure Quartile - 401(k) Plans 30 25.3% 21.0% 17.3% 21.3% 32.1% participant level is an important innovation, exclusive to the PRRL, that provides an unprecedented opportunity to understand public sector employees’ 10-20 $28,833 $53,284 $68,664 $83,793 Figure 22 Figure 23 sector workers tend to stay in their jobs longer than their private 0.0 40 % 23.1% 21.8% 25.2% 25.4% 24.0% 20-30 $91,640 $122,438 $122,675 F balance, on av necessar plo igur yee’ e 1 s 40 9 also r y t1(a) plan. Since em o par ereag vse t eals allocations in line with beh e, eq he rele uals nearly a fif vant inf ployers of ormation needed t th of th ten haveir DC assets acr e mandat aviors demon o accurat ory contributions f -oss all accounts. ely inform t or th he w e DB plan, v ork of plan practitioner oluntary emplos, service pro yer contributions ar viders, and policy mak e far less common th ers.an Money and Stable Key Findings Account Balance by Plan Type --------------------------------------------------------------------------------------------------------------------------- 50 22 Equ .1% ity Bond 24.7% 29.4% Target Date 26.2% Balanced 20 O.th 6% er - 7 Second, public sect retirement readiness. or DC data is difficult to aggregate. Unlike private sector plans, public DC plans are packaged in an incredibly diverse variety Asset Weighted Allocations to Equity by Age and Plan Type >30 Asset Weighted Allocations to Bonds by Ag $134,1e and Plan T 88 $155,9 ype 97 $180,000 $120,000 Value sector counterparts, mitigating some of the potential shortcom- 60 12.4% 18.0% 20.5% 13.9% 12.5% 20s in th str The PRRL is dedicat ated b e priv y priv ate sect ate sect or. Wh ed t or plan par o em en voluntar ploying suc ticipants sh y emplo h an approac yoer contributions ar wn in Figur h, and future w e e offered, of ork will address eac ten in the f 26.5% orm of an em h of t 2.0h %ese dif ployer mat ferent aspects specifically 5.6% ch, they ar 63e t .2%ypically t. Additionally 0. o eith 5% er 401(k) or 1.5, in % $160,000 Contributions by Plan Type -------------------------------------------------------------------------------------------------------------------------------- 8 of structures. A single government can have any or all of the IRS codes identified here available for their employees. Public plans also have a 30s $100, 42 000 .7% 3.6% 8.7% 41.1% 1.2% 1.8% 90.0% 18.0% ings associated with tenure-based calculations. $140,000 ACCOUNT BALANCES 40s 57.9% 5.9% 10.4% 21.6% 1.8% 1.7% 20. Eq 45 202 7(b) plans. 1 tuit he PRRL will collect data on bot y assets increase until the 40s ag h standard loans and t e cohort, at which hose associated with the CARES Act, to provide insight into public sector employees’ 80.0% 16.0% far highLoan Use ---------------------------------------------------------------------------------------------------------------------- er prevalence of the use of multiple record keepers for their plans, which leads to a fragmented picture of the t ---------------------------- 9 otal retirement assets $120,000 50s $80,0 55.00 3% 7.3% 17.5% 15.7% 2.6% 1.6% 60s 45.1% 8.4% 29.0% 12.8% 3.7% 1.4% Figure 16 Figure 17 use of DC assets f time allocations t 70.0% o saf or purposes ot er assets, suc her t h as bonds, mone han retirement. y market 14.0% P $1ARTICIP 00,000 ANT DEMOGRAPHICS AND ASSETS BY PLAN fUltimat or any sing ely, th le par e abilit ticipant. y to aggregate public sector DC data enables Asset Allocation --------------------------------------------------------------------------------------------------------------- $60,000 --------------------------- 10 • Mean account balances f or public plan participants in their 60s reach just over $96,000; median account balances 60.0% 12.0% $80,000 Percent of Participants with a Loan Outstanding by Age Average Amount of Loans by Age TOTAL ASSETS accounts, and stable value products, increase in cohorts approach- Figure 7 50.0% 10.0% the closest comparison with the private sector data available to $60,000 top out at nearly $32,000. $40,000 Figure 2 sh Asset Allocation b ows the representation of dif y DC Plan Type ------------------------------------------------------------------------------------------------------------------------ 1 ferent plan types by both number of Figure 2 1 As the PRRL Database expands, it will create an even more comprehensive picture of various plan types, governments, and regional differences. The Public Retirement Research Lab (PRRL) was created specifically to address t Averag he significant lac e Account Balance b k of aty Ag tention t Figure 20 e and T o and under enure - Priv standing of t ate 401(k) Plans he role 40.0% Figure 12 8.0% Figure 13 ing traditional retirement age. The use of target date funds is $40,000 8% $9,000 Participants and Assets by Plan Type date (Figure 7). The accumulated DC savings for public employ- $20,000 While knowledge of the use of different DC plan types in the Figure 4 participants and plan assets. The most common plan in the PRRL Database Conclusion ------------------------------------------------------------------------------------------------------------------------------------------------ 12 T 30 he ultimat .0% e goal of the PRRL is to enable a financially secure retirement for th6.e nation’ 0% s public sector employees. The key to achieving this Asset Weighted Allocations by Age – Private 401(k) Plans $20,000 Mean and Median Employee Contributions by Age Mean and Median Employee Contribution Rate by Age of public sector DC plans in helping public sector employees adequately prepare for a secure retirement. concentrated in younger cohorts, not because the products are $8,000 7% CONTRIBUTIONS 20.0% Mean and Median Account Balance b 4.0% y Age for All Plan Types Combined ees in F $- igure 6 clearly lags the comparable data from 2016 for $- public sector is critical to plan administrators, looking at each by both measures is the 457(b) plan. 457(b) plans are typically used in the $350,000 goal is the de 20v selopment of unbiased, actionable findings suc 30s 40s 50s h as t 60s hose contained in this repor 20s t. 30s 40s 50s 60s $7,000 Participants 10.0% 2.0% not used b 6% y older employees, but because they represent a higher $360 00,0 %00 Lowest $1,671 $4,544 $8,273 $16,552 $29,951 Lowest $4,290 $8,753 $14,489 $21,379 $24,354 $4,500 9.0% Tpriv his need is more urg ate employees in Fent no igure 7 in nearly e w than at an ver y time in t y category of ag he past. According t e o our colleagues at the National Association of State Retirement Admin- plan separately does not advance the understanding of retirement public sector as voluntary supplemental savings vehicles in conjunction with a $120,000 0.0% $6 0.0 ,00 % 0 $250,000 2 • $5,073 Mean em $1plo 0,524yee contributions f $14,883 or par $22,940 ticipants in th $34,109 eir 60s reac 2 h nearly $3, $12,670 900 annually; median contributions just 403b $18,306 $28,324 $38,055 $4 6,631 Figures 20s 30s 40s 50s 60s 20s 30s 40s 50s 60s 5% por $4,00 tion of th 0 e assets for new employees. Other products are used 50% 8.0% IRA $200,000 3 $5,939 $19,300 $31,727 $44,758 $59,971 3 $17,688 $33,245 $49,826 $77,720 $99,602 1% istrat and t 401a or enur s (N e. T A 5.SR 1h %ese r A), “Since 2009 esults ar 18.1% e expect , ever ed f y stat 37or one primar .1% e has made meaningful c 38y r .5%eason: DB30 .6%hanges to their pension plan benefit structures, financing arrang $5 40 ,00 1a 0 0.3% 1.7% 3.3% 4.5%ements, or 5. 7% readiness for public sector employees. DB pension, though this is not always the case. 0% over $1,300 annually. $150,000 $3,50 High 0 est 7. High 0%est 4% $14,959 $31,793 $99,511 $148,909 $169,070 $100,0 $100 2,118 $44,422 $81,583 $97,622 $100,844 457b Figur 23e 1 .7%, PRRL Database U 42.6% niverse ------------------------------------------------------------------------------------------------------------------------- 58.4% 55.2% 43.8% 40% 457b 1.1% 2.4% 3.8% 4.9% 5.3 7% sparingly in the public sector, with company stock, obviously, not 1 $100,000 $4,000 bot plans r $3,00 40 h.” 1k 0 Ne emain th w 48 er pension tier .3%e primary r 56.etir 5% s are of ement v ten less g ehicle f 65.2% or most public sect enerous, and a substantial number of stat 61.4% or52 .9% 6. 40 0% 1k e and local go 4.5% vernment em 6.5% plo 10 y.ees are not co 1% 13.1% vered by 16.4% About PRRL 3% $50,000 30% Figure 2, Participants and Assets by Plan Type --------------------------------------------------------------------------------------------------------- 4 403b 403b 78.0% 76.9% 73.4% 67.2% 59.5% $3,000 6.3% 7.2% 10.7% 14.6% 14.4% a factor. $80,000 The data in Figure 4 represents a landmark shift in that under- 5.0% Conv $2,50 ersely 0 , 401(a) plans represent about one quarter of the total participants $0 401k 401a LOANS Social Securit employees. y. Both of these factors increase the importance of DC savings. 20 30 40 50 60 2% 20% The Public Retirement Research Lab is a retirement industry-sponsored collaborative effor $2t of th ,000 e National Association of Go 23% vernment Defined Contribution Ad- Figure 3, Age Distribution of Participants by Plan Type ------------------------------------------------------------------------------------------------ 5 4.0% $2,000 0-2 $5,135 $12,090 $19,913 26% $27,556 $36,339 standing. For the first time, these data are representative of total in the PRRL Database, but only about 13% of the total assets. One potential $60,000 2-5 $12,467 $25,147 $37,988 $46,852 $50,136 1% 3.0% ministr $1,500 ators (NAGDCA) and the Employee Benefit Research Institute (EBRI). The PRRL mines data fr 10% $1,000 om its Public Retirement Research Database, the first-ever • Loan use peaks at 7.3% for public plan participants in their 40s. The results in Figure 21, which are organized by tenure, provide Figure 4, Mean and Median Account Balance by Age for All Plan Types Combined ------------------------------------------------------------------ 5 5-10 $18,574 $45,444 $69,607 $80,679 $76,288 The creation of the PRRL and analysis of the data contained in the Public Retirement Research Database are the first steps in a long journey Figure 10 Figure 11 As such, to clearly show the retirement readiness of public sector DC assets for public employees in aggregate. Again, the distinct explanation for this difference is the increased use of 401(a) plans as a 2.0% $1,00 0% 0 10-20 $- $68,495 $122,903 $142,180 $118,856 database specific to public sector plan- and participant-level defined contribution data, to produce unbiased, actionable findings to better inform public plan 0% 20s 30s 40s 50s 60s $40,00 20 0s 30s 40s 50s 60s similar insights, alth Figure 5, Percent of P ough equit ary allocations do not decr ticipants with Multiple Plans b ease y Primary Plan Type -------------------------------------------------------------------------- 5 Money and Company 20-30 Average Account Balance by Age and Tenure Quartile - 401(a) Plans Average Account Balance by Ag $1e and T 66,953 enure Quar $237,825tile - 403(b) Plans $197,048 • The average loan as a percentage of account balance reac Eh qu 1.es 1 ity 0% 9% f Bondor those in th Targeir 60s. et Date Balanced Other Unknown toward overcoming this lack of necessary insight to effectively address public sector employee retirement preparedness. $500 emplo totay lees, DB pension assum 1.1% 4.1% ptions must be included. F 7.3% 6.3% urther, 3.0% all $1,680 $3,963 $6,184 $7,318 $8,428 method employed by the PRRL to acquire data and combine it at Stable Value Stock hdesign, manag ybrid vehicle in a DB/DC or cash balance pension in ne ement, innovation, and legislation. T Figure 24 he overw arer pension tiers, ching goal of th e PRRL is to enhance understanding of the design and utilization of public sect Figure 25 or >30 $296,667 $287,533 20s 28.0. 8% 0% 5.2% 2.3% 47.6% 7.6% 3.2% 3.9% 1.3% Figure 6, Average Account Balance by Age and Tenure ------------------------------------------------------------------------------------------------ 6 in a similar manner f $- or employees with longer tenure as they $20,000 20s 30s 40s 50s 60s Asset W defined contribution r eighted Allocations t 20s etirement plans as a means of h o Mone 30s y and S 40table V s alue b elping public sect 50y Ag s e and Plan T 60 or em s ype ployees acAsset W hieve a secur eighte r ed Allocations t etirement. To lear o Targ n mor et Dat e, visit e Funds b www.pr y Ag rl.or e and Plan T g. ype $1public sect 20,000 or employees from 14 states do not participate in 30s $9 410,0 .0%00 5.3% 4.0% 33.5% 5.9% 4.4% 5.1% 0.9% the participant level creates a picture previously unavailable to Note: Excludes those with no loans. possibly indicating that while more newly hired employees are enrolled in the Source: Jack VanDerhei, Sarah Holden, Luis Alonso, and Steven Bass. “401(k) Plan Asset Allocation, Account Mean 5.9% 5.0% 5.5% 6.6% 8.0% Mean $1,123 $1,899 $2,417 $3,253 $3,935 FAigur SSE e T7 ALL , Aver OC agA e TIONS Account Balance by Age and Tenure - Private 401(k) 40Plans s 48.2% ----------------------------------------------------------------------- 6.6% 5.6% 22.2% 5.9% 4.7% 5.8% 0.9%6 approach retirement age. Balances, and Loan Activit $80,000 y in 2016.” EBRI Issue Brief, no. 458, and ICI Research Perspective, $100, M 000 edian Median 3.9% 3.2% 3.2% 3.4% 3.7% Social Securit $4y 81 , which must also be account $874 $1,012ed for. Both it $1,220ems will $1,313 50s 44.7% 8.7%$0 9.3% 18.4% 6.2% 5.3% 6.4% 0.9% researchers and practitioners in public sector retirement. plans, they have yet to accumulate significant assets in them. Vol. 24, no. 6 (September 2018). THE 45.0% PUBLIC RETIREMENT RESEARCH LAB DATABASE100.0% $70,000 20s 30s 40s 50s 60s Figure 8, Average Account Balance by Age and Tenure Quartile - 457(b) Plans --------------------------------------------------------------------- 7 60s 38.1% 10.8% 14.2% 18.4% 6.3% 5.6% 5.6% 1.0% • The use of target-date funds is significantly higher by par90 ticipants in th .0% eir 20s (~63%). 40.0% $80,000 $60,000 Mean $3,952 $14,703 $39,174 $69,819 $96,393 be incorporated in future PRRL research to provide a compre- Source: Jack VanDerhei, Sarah Holden, Luis Alonso, and Steven Bass. “401(k) Plan Asset Allocation, Account Note: Excludes participants who did not make a contribution in 2019. Note: Excludes participants who did not mak 457b e a contribution in 2019 and those with salary < $10,000. Figure 9, Average Account Balance by Age and Tenure Quartile - 401(k) Plans --------------------------------------------------------------------- 7 80.0% Th 35e PRRL Database is th .0% e repository for the data collected by the PRRL. Plan-Balances, and Loan Activit y in 2016.” EBRI Issue Brief, no. 458, and ICI R Figure 1 esearch Perspective, Vol. 24, no. 6 Median $1,168 $4,877 $11,254 $21,459 $31,987 $50,000 50% The mean and median account balances in Figure 4 are combined Non-ERISA 401(k) plans also represent about one quarter of the PRRL $60,000 70.0% hensive understanding of r • T he use of stable v etirement readiness f alue products incr or the public eases st eadily as plan par (September 2018).ticipants approach retirement age, reaching 29% by Thanks to PRRL Partners: 30.0% Figure 18 $40,000 Figure 10, Average Account Balance by Age and Tenure Quartile - 401(a) Plans -------------------------------------------------------------------- 7 PRRL Database Universe and participant-level data is transferred from record keepers on behalf of plan 60.0% across all plan types and record keepers in the database. Nearly Database, and the measure is consistent across both participants and assets. 25.0% $40,000 participants in their 60s. $30,000 employee. Average Loans as Percentage of Account Balance by Age 50.0% Figure 11, Average Account Balance by Age and Tenure Quartile - 403(b) Plans -------------------------------------------------------------------- 7 Founding P 20.0% artners: sponsors that positively affirm their interest in participating in the PRRL; no $20,000 21% of participants have money in mor Figure 1 e th 4an one t ype of plan, 40.0% Figure 15 401(k) plans in the public sector are dissimilar from their private sector Figure 5 $20,000 Assets Figure 21 15.0% Figure 12, Mean and Median Employee Contributions by Age ----------------------------------------------------------------------------------------- 8 Capital Group|American Funds $10,000 30.0% State data is transferrMean and Median T ed without their consent. otal C ontributions b 25% y Age Mean and Median Total Contribution Rate by Age IRA with breakdowns by plan type depicted in Figure 5. These combi- Percent of Participants wit 403b h Multiple Plans by Primary Plan Type count 10.0%erparts in that they are legacy accounts; only those established prior to $- 20.0% $- Asset Weighted Allocations by Tenure Invesco 17% Figure 13, Mean and Median Employee Contribution Rate by Age ------------------------------------------------------------------------------------ 8 0% 20s 30s 40s 50s 60s 20s 30s 40s 50s 60s 1% 5.0% 10.0% nations come in man Lowest $1,964 y differ $3ent v ,643 arieties, t $4,952 oo numerous t $7,106 o list for $9,066 Lowest $1,544 $5,183 $7,455 $12,298 $14,601 1986 continue to operate. Nationwide 20% 35.0% $4 0.,50 0%0 Figure 14, Mean and Median Total Contributions by Age ---------------------------------------------------------------------------------------------- 8 0.10 0% % The opening PRRL Database contains year-end 2019 data for 213 457(b), 2 $5,289 $8,985 $12,140 $15,129 $16,689 2 $4,123 $11,207 $16,909 $26,429 $43,215 20s 30s 40s 50s 60s 20s 30s 40s 50s 60s 401a 60.0% the purposes of this assessment. Ho 3 $7,427 $16,577 wever $28,74 , some par 3 ticipants in $32,241 $35,627 39% $4,254 $9,533 $21,006 $31,402 $52,058 $4,000 401a 1.0% 19.2% 24.2% 30.3% 41.4% 401a 93.5% 60.4% 35.0% 26.6% 22.0% Figure 15, Mean and Median Total Contribution Rate by Age ----------------------------------------------------------------------------------------- 8 13% 401(a), 403(b), 401(k), and other defined contribution plans; nearly 2.3 30.0% Highest $22,325 $34,542 $59,825 $81,826 $97,444 Highest $121 $11,079 $24,603 $42,302 $76,572 Supporting Partners: 15% 8% Finally 457b , a small number of 403(b) and IR 11.9% 8.5% 10.A plans ar 4% e r 19epr .4%esented in th 32.7%e initial 50 .0% 457b 61.9% 43.7% 23.2% 15.4% 11.9% $3,500 401k the database held assets in as many as four different DC plans. City 401k 1.1% 3.1% 5.2% 9.0% 15.1% 401k 39.3% 27.0% 14.2% 12.6% 12.3% Figure 16, Percent of Participants with a Loan Outstanding by Age ----------------------------------------------------------------------------------- 9 7% ICMA million stat $3,00-R 0 C e, county, city, and subdivision government employees; and $113 28% 40.0% 46% PRRL Database dataset. 403(b) plans are often used by public educational 403b 3.7% 4.7% 7.2% 12.2% 21.6% 403b 1.1% 25.0% 1.3% 0.9% 0.7% 1.0% 6% County 10% $2,500 Figure 17, Average Amount of Loans by Age ------------------------------------------------------------------------------------------------------------ 9 Prudential billion in assets. The overall composition of participating plans is shown 18% 5% 30.0% institutions (higher education or K-12) and hospitals. A large percentage of $2 As sh ,000own, there’s a considerable difference in the mean and median 20.0% Voya Financial 4% Figure 18, Average Loans as Percentage of Account Balance by Age --------------------------------------------------------------------------------- 9 in Figure 1. While the number of governments par 5% ticipating in the dataset 20.0% $1,500 measures. The mean is the arithmetic average of a distribution public DC assets are held in 403(b) plans, offering a significant area for 3% Figure 19, Asset Weighted Allocations by Age --------------------------------------------------------------------------------------------------------- 10 $1,000 15.0% (the sum of sampled values divided by the number of items in the 2% 10.0% appears small when measured against the thousands of state and local gov- Contributing Partners: potential growth of the PRRL Database. IRAs, also called Deemed IRAs, are 0% $500 1% Figure 20, Asset Weighted Allocations by Age – Private 401(k) Plans ----------------------------------------------------------------------------- 10 sample). It is a commonly used measure of central tendency, but 20s 30s 40s 50s 60s Ben Taylor, Callan - PRRL Co-Chair 0.0% ernment entities in the Unites States, it is important to note that many state 10.0% all 0% Money and Stable $- 10.9% 14.8% 16.1% 16.6% 19.2% separate, in-plan retirement accounts for employees that follow IRA guide- Equity Bond Target Date Balanced Other best suited for normal distributions, not those heavily influenced by Subdivision 20s 30s 40s 50s 60s 20s 30s 40s 50s 60s Figure 21, Asset Weighted Allocations by Tenure ------------------------------------------------------------------------------------------------------ 1 Value 0 Wendy Carter, Segal - PRRL Co-Chair 457b 0-5 19% plans ser Mean ve as th $1,568e primary DC v $2,356 ehicle for lo $2,833wer-level go $3,580 vernments within th $4,228 eir Me 36 a.n 3% 9.0%5.3% 6.14 7% .3% 41 6..7 0% % 1.37. %5% 1.3% 8.8% outliers. The median is a numeric value computed by listing all the Note: Excludes those with no loans. lines. They are less common than other plan structures and do not represent a 58% 5.0% Figure 22, Asset Weighted Allocations to Equity by Age and Plan Type ----------------------------------------------------------------------------- 1 5-10 41.4% 6.3% 13.1% 36.1% 1.7% 1.1% 1 Brenda Anderson, Nationwide - PRRL Vice Chair Median $722 $1,068 $1,200 $1,357 $1,453 Median 4.7% 3.3% 3.3% 3.5% 3.8% numbers in ascending order and locating the number in the center of 10-20 51.7% 8.7% 17.4% 18.8% 1.6% 1.5% respective states. The state plans in the PRRL Database represent as many as significant segment of the PRRL Database. Keith Overly - PRRL Plan Sponsor Advisory Council Figure 23, Asset Weighted Allocations to Bonds by Age and Plan Type ------------------------------------------------------------------------------ 1 >20 51.9% 7.3% 27.2% 9.3% 3.4% 1.0% 1 0.0% a distribution. It is better suited for deriving a more robust central Note: Excludes participants who did not make a contribution in 2019. Note: Excludes participants who did not make a contribution in 2019 and those with salary < $10,000. 401a 457b 401k 403b 1,800 participating employers, even though they are counted as a single plan. Figure 24, Asset Weighted Allocations to Money and Stable Value by Age and Plan Type --------------------------------------------------------- 11 tendency from skewed distributions such as this. Percent with Multiple Plans 30.2% 16.0% 21.8% 1.4% Figure 25, Asset Weighted Allocations to Target Date Funds by Age and Plan Type --------------------------------------------------------------------- 11 2 1 h htttps://www tps://www.ebri.or .nasra.or g/docs/default-source/prrl/study g/pensionreform -snapshots-t/01-sst_tenure_21may2020.pdf © 20 © 20 © 20 © 20 © 20 © 20 © 20 © 20 © 20 © 20 © 20 © 202 2 2 2 2 2 2 2 2 2 2 21 PRRL•F 1 PRRL•F 1 PRRL•F 1 PRRL•F 1 PRRL•F 1 PRRL•F 1 PRRL•F 1 PRRL•F 1 PRRL•F 1 PRRL•F 1 PRRL•F 1 PRRL•Febr ebr ebr ebr ebr ebr ebr ebr ebr ebr ebr ebruar uar uar uar uar uar uar uar uar uar uar uary 2 y 2 y 2 y 2 y 2 y 2 y 2 y 2 y 2 y 2 y 2 y 25 5 5 5 5 5 5 5 5 5 5 5, 20 , 20 , 20 , 20 , 20 , 20 , 20 , 20 , 20 , 20 , 20 , 202 2 2 2 2 2 2 2 2 2 2 21•No. 2 1•No. 2 1•No. 2 1•No. 2 1•No. 2 1•No. 2 1•No. 2 1•No. 2 1•No. 2 1•No. 2 1•No. 2 1•No. 2 10 12 11 2 3 1 5 8 4 6 7 9