Key Findings on 403(b), 457 and 401(a) Market
The Cerulli Report — U.S. Not-For-Profit & Governmental Defined Contribution Plans 2016: Addressing the 403(b), 457, and 401(a) Markets
- The not-for-profit (NFP)/governmental defined contribution (DC) market consists of the Federal Thrift Savings Plan (TSP), 403(b), 457, and 401(a) markets.
- This market represents approximately 8% of the total U.S. retirement market
- This market is expected to grow at a compound annual growth rate (CAGR) of 7% to reach $2.4 trillion by 2020.
- "Highly diverse"
- Consists of ERISA-covered 403(b) plans (private plans) and non-ERISA covered plans (public plans)
- Main sectors: healthcare, higher education, and K-12 schools
- Approximately two-thirds of plans "engage" an advisor or consultant
- The multi-vendor environment "introduces...complications"
- The "concept of choice and degree of choice...emerges as a divisive topic"
- Cerulli is "most bullish" on potential of healthcare and higher education sectors for asset growth
- Two main categories: governmental 457(b) plans and non-governmental 457(b) and 457(f) plans
- Government 457(b) market is largest of two categories
- Typically offered by governmental entities
- Can combine employer and employee contributions
- Generally offered as one of "mandatory" savings plans (choice between 401(a) or DB plan)
To learn more about this research, or to purchase a full report click here