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Retirement Planning > Retirement Investing

Cerulli Sees Fast IRA Growth

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Individual retirement accounts will see a compound annual growth rate of 8.5% over the next 5 years, a research firm predicts.

Cerulli Associates, Boston, projects IRA growth to outpace other retirement segments, such as private defined benefit and defined contribution plans as well as the public retirement plans.

The expected growth in IRAs will continue a trend seen in the past 5 years in the retirement marketplace, Cerulli observes.

Private DB plans will grow at an annual rate of 3.6% through 2013, while public DB plans will grow at a rate of 5.3% in that period, the company predicts. Private DC plans will grow 5.9% annually in that time, down from previous Cerulli forecasts. The firm attributes the slower growth to worsening net flow in the weak economy.

“As more DB plans freeze due to extreme financial pressure, plan sponsors will look to improve the DC plan to help their employees achieve retirement security,” stated D.J. Lucey, senior analyst in Cerulli’s institutional asset management practice and a coauthor of its report on retirement plan growth. “With the secular private sector shift to DC continuing, aggregate contributions will be stronger in the 401(k) industry than in DB.”

With the approval of lifecycle (aka target-date) funds by the U.S. Dept. of Labor, and their prevalent growth as qualified default investment alternatives, most future DC flows will be toward lifecycle funds, says Cerulli.

AIG To Sell Commodity Index Business To UBS

The equities business of UBS Investment Bank says it has entered into a binding agreement to acquire the commodity index business of AIG Financial Products Corp.

This commodity index business is comprised of a product platform of commodity index swaps and funded notes based on the benchmark Dow Jones-AIG Commodity Index.

The transaction is valued up to $150 million, according to UBS Investment Bank, part of UBS AG, Zurich. Of that, $15 million would be payable upon closing, and additional payments of up to $135 million would be made over the following 18 months, based upon future earnings of the purchased business, according to UBS. It expects the transaction to close by May.


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