U.S. Retirement Assets Up 6% Year Over Year

Defined Benefit Plans

Assets in government defined benefit plans, which include federal, state and local government plans, increased 1.9% quarter-over-quarter to $5.2 trillion in assets as of the end of December. Private-sector DB plans held $3.2 trillion in assets at the end of the fourth quarter, and annuity reserves outside of retirement accounts accounted for another $2 trillion.

Within DB plans are retirement entitlements, which include both retirement assets and the unfunded liabilities of DB plans.

"Under a DB plan, employees accrue benefits to which they are legally entitled and which represent assets to U.S. households and liabilities to plans," according to ICI. "To the extent that pension plan assets are insufficient to cover accrued benefit entitlements, a DB pension plan has a claim on the plan sponsor."

U.S. total retirement entitlements were $27.8 trillion as of Dec. 31 — of that, $24.7 trillion were retirement assets, and another $3.1 trillion were unfunded liabilities. Retirement entitlements — including both retirement assets and unfunded liabilities — accounted for 41% of the financial assets of all U.S. households at the end of December.

"Unfunded liabilities are a larger issue for government DB plans than for private-sector DB plans," ICI states.

As of the end of Q4, unfunded liabilities were 1% of private-sector DB plan entitlements, 25% of state and local government DB plan entitlements, and 56 % of federal DB plan entitlements.

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