DB Plans Outperform DC Plans

I recently read a great article at ebn.Benefitnews.com written by Kathleen Koster. Please see below.

Defined benefit plans fared slightly better than defined contribution plans as the economy began its decline two years ago, underscoring the importance of rebalancing 401(k) accounts.

According to new analysis by Towers Watson, DB plans outperformed 401(k) plans by roughly 1 percentage point in 2008, even though both types of plans lost value. In addition, some DB plans actually reported small positive returns in 2008, though most DB plans incurred losses.

On the other side of the spectrum, all DC plans in the study had losses of at least 10%, and a few had severe losses greater than 40%, more than any DB plan in the study.

The 2008 results are based on a survey of 79 employers that sponsor one DB plan and one 401(k) plan.

Also noted in the study, DB plans had median investment returns of -25.27% in 2008, while DC plans had median returns of -26.20%. A broader analysis of more than 2,000 plan sponsors shows that DB plans had a median return average of 7.71% while DC plans had a median return of 6.78% in 2007.

To read the rest of the article, please go to this Employee Benefit News link.

Integrity Financial Corporation’s flagship 401k client is the Association of Washington Business (AWB) in Olympia. AWB is Washington state’s premier advocate for the business community and is recognized as The State’s Chamber of Commerce. This plan has a BrightScope Rating of 76, placing it in the top 15% of all plans in its peer group. www.brightscope.com

Integrity Financial Corporation helps business owners and individuals build a financial legacy through well designed executive compensation and retirement plans. Our clients can expect to receive personalized service and expertise, built on a foundation of trust. Call us at 425-454-1254 for the Seattle or Bellevue area, or at 1-800-794-401k.

Please visit our website at www.ifclegacy.com to have an independent fiduciary 401k advisor at Integrity Financial Corporation analyze and evaluate your company's 401k plan.

Source: Kathleen Koster & ebn.benefitnews.com