Despite a low interest-rate environment, 401(k) participants at New York Life Retirement Plan Services haven’t given up on stable value funds. In an analysis released Wednesday of its client base, the firm found half of all participants across its retirement platform have some of their 401(k) savings in a stable value investment.
“Gen Y has not experienced a positive market cycle during their professional careers, and Baby Boomers just watched a good portion of their retirement erode in rough market conditions,” Steven Dorval, managing director of retirement and investment strategy at New York Life Retirement Plan Services, said in a statement. “All participants require an investment option that will preserve principal and, at a minimum, keep up with inflation. These are among the reasons stable value continues to be a core savings option.”
The firm also found that since 2008, over 20% of retirement assets have been invested in stable value funds.
Their popularity is not attributed to an aging population looking to protect hard-earned assets. Boomers are most likely to favor the products, but Gen X participants allocate an average 12% of their assets to stable value funds, and Gen Y has an average allocation of 10%.
Although the Pension Protection Act of 2006 didn’t allow stable value funds to be selected as a qualified default investment alternative, 58% of boomers have allocations to stable value funds in their defined-contribution plan. Nearly one-third of Gen Y investors and 46% of Gen X investors have some portion of their DC fund allocated to stable value funds.