HIGHLIGHTS FROM THE 1996 FORM 5500 REPORTS
Assets held by private pension plans in 1996 totaled $3.1
trillion, a 15% increase from the $2.7 trillion reported in 1995. Defined
contribution (DC) plan assets increased 17% in 1996 to $1.6 trillion while
defined benefit (DB) plan assets increased 13% to $1.6 trillion.
Among plans with 100 or more participants, DC plans achieved a
15.0% aggregate rate of return (investment earnings and appreciation) in 1996,
with additional asset growth arising from a positive cash flow of $16.2 billion
(contributions minus benefit payout and administrative expenses). Defined
benefit plans had a 14.8% aggregate rate of return in 1996, but achieved a
lower overall rate of increase in total assets because of a negative cash flow
of -$61.9 billion.
Aided by a large positive cash flow, assets held by 401(k) type
plans continued to increase at a more rapid rate (23%) than other types of
pension plans. The aggregate rate of return for medium and large 401(k) type
plans, 80% of which permit participants to choose among investment options for
their individual accounts, was 14.8% in 1996. This was about the same as the
14.9% average for all pension plans in 1996.
With the number of 401(k) type plans and active participants
also increasing at a strong rate in 1996, 401(k) type plans now make up
one-third of the pension plan universe, cover 45% of all active participants,
and hold 34% of all plan assets.
Other findings from the Form 5500 series reports filed for 1996
plan years are summarized below:
The number of private pension plans increased from 693,400
in 1995 to 696,200 in 1996, a continuation of the gradual increase in the
pension plan universe.
The 10 year downward trend in the number of DB plans
continued in 1996, with an 8% decrease from 69,500 in 1995 to 63,700 in
Offsetting the decrease in DB plans, the number of DC plans
increased 1% from 623,900 in 1995 to 632,600 in 1996. 401(k) type plans
increased by 15% to 230,800, while non-401(k) DC plans decreased 5% to
Part of the decrease in the number of non-401(k) DC plans
from 1995 to 1996 resulted from conversions of existing non-401(k) DC plans to
401(k) status. Among plans with 100 or more participants, 905, or 2%, indicated
that they had a 401(k) plan feature (containing a cash or deferred arrangement)
in 1996 but not in 1995.
Total active participants in private pension plans increased
by 3% in 1996 to 67.9 million in 1996. The long term patterns of decreases in
DB plan active participants and increases in DC plan active participants
continued in 1996, with the number of DB plan active participants decreasing by
1% to 23.3 million and the number of DC plan active participants increasing by
5% to 44.6 million.
Since 1980, the percentage of the private sector labor force
with DB plan coverage has declined by an average of one percentage point per
year. In 1996, an estimated 22% of the workforce received coverage under a DB
plan, compared to about 38% under either a primary or supplemental DC plan.
Among pension covered workers, participation in a DB plan
fell to 49% in 1996. The number participating in a DC plan in 1996 is estimated
at 83%, with 51% covered only under one or more DC plans, and 32% covered under
both a DB and a DC plan.
An estimated 65% of all pension covered workers (and about
30% of all private wage and salary workers) were in 401(k) type plans in 1996.
For about half of all workers with 401(k) plan coverage, the 401(k) plan is
their only plan. Among 401(k) participants with duel coverage, over four-fifths
also participate in a DB plan.
The number of workers participating in 401(k) type plans
increased by 2.8 million in 1996, including a 2.3 million increase among plans
covering 100 or more participants. Among these larger plans, about 43% of the
increase was due to conversions of existing DC plans to 401(k) type plans, 37%
was due to the establishment of new 401(k) type plans, and the remaining 20%
was due to increases in the number of workers covered by existing 401(k) type
Benefit payments from plans to retirees, survivors, and
terminating employees increased by 17% in 1996 to $213.4 billion. Benefits paid
out by DB plans increased by 14% to $96.9 billion and benefit payments from DC
plans increased 19% to $116.5 billion.
Total plan contributions increased 7% from $158.8 billion in
1995 to $169.5 billion in 1996.
Contributions to DB plans decreased by 14% from $41.4
billion in 1995 to $35.8 billion in 1996. Defined contribution plans received
$133.7 billion in contributions during 1996, a 14% increase over the $117.4
billion received in 1995.
The percentage of total DC contributions made by plan
participants has been steadily increasing over the last decade and in 1996 was
16% higher than employer contributions to DC plans.
Of total employer and employee contributions made to 401(k)
plans, 66% were made by employees. For workers participating only in a 401(k),
61% of contributions were made by employees compared to 69% for workers
participating in both a 401(k) plan and another plan sponsored by their
Among plans with 100 or more participants the aggregate rate
of return on ESOPs was 18.4% in 1996, compared with an aggregate rate of return
of 14.9% for all plans.