U.S. News

U.S. retirement plan assets fell 22 pct in 2008: ICI

BOSTON (Reuters) - The global financial crisis helped wipe away more than one fifth of assets held in retirement plans in the United States last year, illustrating how the crisis affected Main Street and Wall Street alike.

Assets held in retirement plans declined 22 percent to $14 trillion last year, from $17.9 trillion in 2007, according to data released by the Investment Company Institute, an industry trade group.

Individual retirement account assets fell 24 percent and defined contribution plan assets fell 22 percent. Assets in state and local pension plans fell 27 percent, as did assets in private-sector defined benefit plans. Total federal government

pension assets grew 2 percent last year.

The drop illustrates just how deeply the financial crisis affected U.S. savers who saw their balances drop as markets declined.

But for now they seem to be sticking with their retirement plans, hoping that markets will turn around.

“People do not seem to be panicking, moving assets around, jumping out of stocks or stopping their contributions,” said senior economist Peter Brady, who led the Investment Company Institute study.

The Standard & Poor’s 500 total return index fell 37 percent in 2008, while bonds experienced a 7 percent return.

Retirement assets declined less than the broader stock market because investors continued to add to their accounts and because a portion of investments were invested in fixed-income securities.

Investors placed about two thirds of their 401(k) investments in equities and the rest in fixed-income assets in 2007, the most recent year for which that data is available, according to the trade group.

Reporting by Erin Kutz; editing by Carol Bishopric