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Investment managers, institutional consultants, plan sponsors and distributors need to identify opportunities, determine growth potential and evaluate trends within the U.S. retirement marketplace. Today we recap how the public and private Defined Contribution (DC),
Defined Benefit (DB), and individual retirement account (IRA) markets changed between 2000 and 2009.

Research and Insight:

Based on data from the Cerulli Quantitative Update, Retirement Markets 2009, we gain an appreciation of the massive changes that occurred in the past decade in the DB and DC investment markets. Key findings of the Cerulli research include:

Retirement assets dropped 21% in 2008 to $13 trillion but will recover to $20.4 trillion by 2014.



Asset managers with LDI (liability-driven investing) or alternative capabilities will be best poised to take advantage of changing asset allocation in private DB plans.

IRAs continues to be the fastest growing retirement segment—assets will grow at 8.1% over the next five years.

Cerulli projects that $177.5 billion in DC plan assets will change hands in 2010, primarily from the micro and small market segments (plans with less than $10 million).

While the investment management industry as a whole as been well aware of the strong growth in Defined Contribution, looking back over the last decade enables us to validate the trends which clearly favored new DC participants and assets.

Of particular interest is the 40% growth rate in DC plan participants versus a 2% growth rate for DB plan participants. Additionally, as a result of the strong growth rate in DC plan participants, the assets in DC plans grew by 37.8%, well outpacing the 5.9% asset growth in DB plans.

What the research does not indicate is the level of underfunding that exists in the typical US Defined Benefit pension plan. Be sure to check out a recent article where we explored what it means for the investment management industry when the typical pension plan is underfunded by almost 15% at the conclusion of 2009.