Privatization of Social Security Seen as Far Off

As they gear up for retirement, Baby Boomers may have to wait until the end of the decade to see Social Security privatized, a recent Delphi study by Diversified Investment Advisors concludes. But regardless of if and when Social Security is privatized, the study's panel of experts predicts significant changes in the way the retirement plan business will be run in the second half of the decade.

Among them, retirement plan assets will grow to anywhere between $15 trillion and $19 trillion in 2010 from the present $11 trillion, experts say. They also expect defined benefit plan assets to decline to 25% of total retirement assets from the 40% today.

The experts also forecast substantial growth for institutional funds tailored specifically towards retirement plans. Institutional funds generally have lower operating costs and higher minimum investments than retail funds. By 2010, experts say institutional funds would comprise 21% of 401(k) assets, surpassing retail mutual funds, which would represent 20% of those assets. Assets in defined contribution plans and IRAs would also increase to occupy a larger share of total retirement assets.

An overwhelming majority of experts says that at least 75% of all plan sponsors will outsource administrative tasks by 2010. They also agree that retirement plan advisors may be hard hit in five years as they cease to remain the only option for providing sales advice to retirees.