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.”