Summary
The Public Retirement Research Lab (PRRL) was established to provide reliable data on public-sector defined contribution (DC) retirement plan participants. The PRRL Database is the repository for the data collected by the PRRL. To fully understand the impact of ongoing plan participation, it is crucial to analyze a consistent group of participants (a longitudinal sample) who have been part of the database for an extended period. This paper presents the first longitudinal study that analyzes public retirement plan participants who were present every year from 2019 through 2021. The study tracks balances, contributions, asset allocations, and loan activity of 1.1 million plan participants who held positive defined contribution account balances in the years 2019 through 2021 in the PRRL Database, covering a three-year period.
A few key insights from the 1.1 million consistent participants over the period from year-end 2019 to year-end 2021:
- Account balances grew steadily from 2019 through 2021. DC plan balances for consistent participants rose each year from year-end 2019 through year-end 2021. Overall, the average plan balance rose from $43,839 in 2019 to $61,886 at year-end 2021 while the median balance rose from $10,365 to $16,864. This growth was widespread across participants; the median year-over-year change in balances from 2019 to 2020 was $3,045, and the median change in balances from 2020 to 2021 was $1,941. Similarly, the average year-over-year change in balances from 2019 to 2020 was $11,323, and the average change in balance from 2020 to 2021 was $6,724.
- Dollar contributions increased among those participants who continued saving. Among the participants who contributed each year, the average employee contribution increased from $2,405 in 2019 to $2,778 in 2020 and $3,012 in 2021. Median employee contributions ranged from $1,222 to $1,392 and $1,520 in 2019, 2020, and 2021, respectively. The fraction of plan participants in the sample who made a contribution to their DC accounts fell from 79 percent in 2019 to 76 percent in 2020 and 72 percent in 2021. However, the active status for all three years is only known for 6 percent of the participants, so a potentially large share of those who stopped contributing could have been no longer eligible to contribute (see “Contribution Analysis of Participants Flagged as Active” on page 13).
- Participants tend to concentrate their accounts in equities. At year-end 2019, the average allocation to equity funds was approximately 67 percent of consistent participants’ assets. This includes allocations directly to equity funds and the equity portion of target-date funds or the equity portion of non-target-date balanced funds. Younger participants tended to have higher concentrations in equities than older participants. Participants’ exposure to equities and the other asset classes remained relatively constant over the 2019–2021 timeframe.
- Younger participants tend to allocate a higher percentage of their funds to target-date funds compared to older participants. In 2021, participants in their 20s allocated an average of 67 percent to target-date funds, while participants in their 60s had an average allocation of 29 percent. Additionally, the utilization rate of target-date funds remained steady, with 36.6 percent of the consistent sample participants allocating their entire portfolio to target-date funds every year from 2019 to 2021.