By 2018 more than a third of retirement assets will be parked in IRAs, accelerating a trend seen in recent years, Cerulli reported.
The movement of funds from employer-sponsored defined benefits plans is a natural result of aging baby boomers looking for ways to generate income needed as they live out their retirement years.
“The lack of widespread use of in-plan retirement income solutions means assets accumulating in a defined contribution plan will eventually shift to an IRA,” said Bing Waldert, director at Cerulli, in a statement.
There has been talk that defined contribution plans will start to offer investment vehicles, such as annuities, that are designed to generate income on a steady basis as plan participants leave work and move into retirement.
Cerulli’s 11th annual Retirement Markets 2013: Data & Dynamics of Employer-Sponsored Plans examined the size and allocation of public and private retirement funds, including DB and DC plans and IRAs.
The distribution of funds among the various channels available to savers will change markedly by 2018, Cerulli said.
IRA assets will rise from 31.2% at the end of 2013 to 35.4% of the total market in 2018; public DB plans will drop from 23.9% to 21.5%; private DC plans from 21.7% to 21.4%; private DB from 14.% to 13.4%; and public DC from 8.4% to 8.3%.
About half of all assets in DC plans are investment-only, with about 42% in proprietary vehicles. Investment-only plans are those overseen by an asset-management firm. Cerulli noted that larger plans with more than $1 billion likely skew the figures because they can easily include nonproprietary investments.
Not surprisingly, as corporations have shifted away from traditional pension plans, the number of DB plans has fallen since 2002 from 48,773 to an estimated 45,010 in 2012.
Of the 307,000 advisors in the U.S. in 2012, Cerulli said 24,440, or 7.9%, are specialists in retirement who receive more than 40% of their income from DC plans. Another 41,698, or 13.6%, get 20% to 40% of their business from that source.