Defined Contribution Participants Leave Assets Alone
Pensions & Investments (10/01) Vol. 29, No. 21 p.3; Jacobius, Arleen

Defined contribution plan participants are not touching their plan assets, in what industry experts are describing as both good and bad news. Observers say plan participants are either reacting to current market conditions or not reacting at all. Recent statistics show three emerging trends: A small percentage of participant defined contribution assets are moving out of equities and into fixed income; participants are allocating a smaller portion of their contributions overall to equities; and participants are not rebalancing on a regular basis. Meanwhile, research provided by Hewitt 401(k) Index shows that a little over 1 percent of 401(k) plan participants moved their money among investment options during the week of Sept. 17. Though the results indicate slightly heavier activity among defined contribution plan participants in the down market, market analysts say most participants are doing nothing, which could cause problems down the road. Hewitt Associates consultant Lori Lucas warns that by choosing this path, most participants "are allowing the markets to dictate their asset allocation because they are not rebalancing."


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