It seems to defy investment logic, but defined contribution plans, haphazardly run by amateurs, actually lost less money in the recession than professionally managed defined benefit plans, according to a new paper from the Urban Institute, a Washington, D.C.based social and economic policy think tank.
Not only that, but defined contribution plans are also doing better during the recovery, according to the paper.
Senior researcher Barbara Butrica found that traditional private sector pension plans lost 37 percent of their assets, or $1 trillion, from mid-2007 to 2009. Even after regaining some of those losses in the following three years, they remain about $4 billion below their $2.7 trillion peak.
By contrast, 401(k)s, individual retirement accounts, and other defined-contribution-style vehicles lost only 31 percent and have since bounced back so nicely that they are now about $8 billion above their 2007 peak to a total $9.5 trillion.....