Employment-Based Retirement Plan Participation: Geographic Differences and Trends, 2004

October 2005
EBRI Issue Brief #286
Paperback, 36 pp.
PDF, 1,078 kb
Employee Benefit Research Institute, 2005

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Executive Summary

• This Issue Brief examines the level of participation by workers in public- and private-sector employment-based pension and retirement plans, based on the U.S. Census Bureau’s March 2005 Current Population Survey (CPS), the most recent data currently available.

Retirement plan participation unchanged: After two straight years of significant declines in the number of employment-based retirement plan participants during 2001 and 2002—by far the largest two-year decline—participation slightly increased in 2003 and 2004. However, the percentage of all workers participating in an employment-based retirement plan remained essentially unchanged, from 41.8 percent in 2002 to 41.9 percent in 2004, while the percentage of full-time, full-year wage and salary workers ages 21–64 (those most likely to be offered a retirement plan at work) also was virtually unchanged from 56.7 percent in 2002 to 56.6 percent in 2004.

Participation up in small firms, down in big firms: In 2004, the changes in participation were almost the opposite of those in 2003, as full-time, full-year workers had a significant decline in their percentage participating, while the other work forces examined were unchanged or increasing. Furthermore, the percentage of participating workers at firms with 10–999 employees increased, compared with the almost 1-percentage-point decline among workers at the largest firms (1,000 or more employees). The shift of larger firms to defined contribution plans has resulted in some workers choosing not to participate, while smaller firms have increasingly offered retirement plans and more of their workers are participating.

Demographic factors in retirement plans: Being nonwhite, younger, female, never married; having lower educational attainment, lower earnings, poorer health status, no health insurance through own employer; and not working full time, full year were all associated with a lower level of participation in a retirement plan. In addition, workers at smaller firms, private-sector firms, or firms in the personal services industry were also less likely to participate in a retirement plan. Geographic location of workers also is a factor, with those in the South and West (Southwest in particular) less likely to participate in a plan than workers in other regions of the country.

Importance of accounting for other factors (work status, age): While the overall percentage of females participating in a retirement plan was lower than that of males, when controlling for work status or earnings the female participation level surpassed that of males. Furthermore, black and native-born Hispanic workers had participation levels much closer to those of white workers within each age group. Nonnative-born Hispanics had substantially lower participation levels than native-born Hispanics, even when controlling for age and earnings.