Aon: Leader in human resources, reinsurance & risk Human Resources
Thought Leadership

Leakage of Participants' DC Assets: How Loans, Withdrawals, and Cashouts Are Eroding Retirement Income

Many studies show the growing gap between retirement needs and resources. A number of factors contribute to the savings shortfall, including volatile investment markets, rapidly increasing health care costs and reduced pensions from defined benefit plans. Another, sometimes overlooked component is a premature erosion of plan assets from employees’ defined contribution accounts. Known as leakage, this erosion is the result of early withdrawal by participants of money from their retirement accounts for uses other than retirement.

Aon Hewitt has partnered with the Employee Benefit Research Institute (EBRI) to provide an in-depth look at leakage of assets from retirement accounts. Our report examines three main sources behind this trend:

  • Loans taken out and sometimes not repaid in full
  • Withdrawals taken during active employment
  • Cashing out retirement savings upon a job termination

The report aims to help employers discover the magnitude of the problems, their impact to participant savings, and ideas to curb these behaviors.


Leakage of Participants' DC Assets: How Loans, Withdrawals, and Cashouts Are Eroding Retirement Income