Defined contribution net flows in 2023 return to pre-pandemic levels
ISS Market Intelligence has released the latest edition in the Windows into Defined Contribution series. Drawing on the ISS MI BrightScope DC Plan database, this research covers the 763,000 DC plans in the US. The Q4 2024 edition examines the recovery in assets experienced by defined contribution (DC) plans across 2023.
The DC market’s rebound follows an exceptionally sharp decline from 2022. Returns fell across asset classes as the Federal Reserve engaged in the fastest rate-raising campaign in decades. Within DC plans, market losses in 2022 contributed to a $1 trillion decline in assets, pulling assets below where they had ended in 2020. Fortunately, recovering markets, supported by strong labor market activity, pushed 2023 assets to just below the market’s peak in 2021.
Plans ride market recovery
Assets in DC retirement plans stood at $8.4 trillion at the end of 2023, according to Form 5500 data released by the U.S. Department of Labor (DOL) and captured within the ISS MI BrightScope Defined Contribution plan database. This was a $1.1 trillion boost over 2022’s $7.3 trillion—itself a severe drop from 2021’s $8.6 trillion. Assets under management in the long-term mutual fund and ETF market recorded a similar trajectory, shrinking from $27.5 trillion in 2021 to $22.4 trillion in 2022 before bouncing back to slightly short of their previous record at $26.2 trillion in 2023.
By: Alan Hess, Vice President, U.S. Fund Research, ISS Market Intelligence
