#3: DC Asset Growth Stable

Plan assets appear stable and growing, steadily increasing most years over the past decade by an average of nearly $500 billion a year, rising from $3.76 trillion in 2011 to $8.25 trillion in 2020, albeit with some years in which assets declined relative to previous years.

In fact, plan assets actually shrink in years without strong investment returns. A few years of poor returns would reduce many plans’ assets, their market power, and thus their capacity to offer institutionally priced investment options.

The defined contribution system relies heavily on new contributions and strong returns to mask outflows of more than $400 billion a year since 2015, as reported by plans in their annual filings. Morningstar estimates that almost $4.61 trillion flowed out of retirement plans over this period in the form of rollovers out of the DC system to Individual Retirement Accounts and cashouts, including some benefit payments.

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