US - 401(k) plans outearned professionally managed traditional pension plans in 1997 and 1998, reversing a seven-year trend according to an analysis by Watson Wyatt.
The median rate of return for 401(k) plans was 14.27% in 1998 versus 12.31% for DB plans. In 1997, the median return for 401(k)s was 17.32% versus 16.47% for DB plans.
Two factors are likely at play:
* Individual investors rode the wave of a booming stock market in 1997 and 1998, while DB investment advisers maintained a more diverse portfolio.
*Employer efforts to improve retirement education have helped participants gain a better understanding of the financial risks associated with the stock market, so participants have achieved higher returns in recent years.
The analysis is based on the most recently available data from Form 5500 filings. Future analysis will show if 401(k) plans continued to outpace DB plans during the market decline of the past two years.
By Luke Clancy
Existing master trusts will be forced to pay £41,000 when applying for authorisation under the upcoming regime, the government has confirmed.
UPDATE 2 - DWP publishes DB white paper: Stronger powers for TPR, DB chair statements to be introduced
The Pensions Regulator (TPR) will be given the power to fine company bosses who deliberately puts their defined benefit (DB) schemes at risk, the government has confirmed.
An independent expert panel will be commissioned to review how the £6.1bn funding deficit figure for the Universities Superannuation Scheme (USS) was reached, Universities UK (UUK) has announced.
Responses to the Professional Trustee Standards Working Group's consultation have flooded in. While the industry mostly welcome the proposals, there is disagreement on some areas, writes Kim Kaveh.