Order Code RL30122
CRS Report for Congress
Received through the CRS Web
Pensions and Retirement Savings Plans:
Sponsorship and Participation
Updated October 22, 2003
Patrick J. Purcell
Specialist in Social Legislation
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress ˜ Washington DC, 20540

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Pensions and Retirement Savings Plans:
Sponsorship and Participation
Summary
According to the Census Bureau’s Current Population Survey (CPS), both the
number of workers in the private sector whose employer sponsored a retirement plan
and the number of workers who participated in such plans fell in 2002. The CPS data
show that among workers in the private sector between the ages of 25 and 64 who
were employed full-time, the number whose employer sponsored a retirement plan
fell from 45.1 million in 2001 to 42.8 million in 2002. The number of these workers
who participated in an employer-sponsored retirement plan fell from 38.7 million in
2001 to 37.0 million in 2002. The percentage of 25 to 64-year-old, full-time
employees in the private sector who participated in an employer-sponsored retirement
plan fell from 55.8% in 2001 to 53.5% in 2002.
A CRS analysis of the Current Population Survey indicates that, among workers
25 to 64 years old who were employed in the private sector and worked year-round,
full-time:
! Retirement plan participation has fallen for three consecutive years, declining
from 58% in 1999 to 53.5% in 2000.
! Only 27.3% of workers at firms with fewer than 25 employers participated
in an employer-sponsored retirement plan in 2002, compared to 47.8% of
workers at firms with 25 to 99 employees and 66.6% of workers at firms
with more than 100 employees.
! In 2002, there was relatively little difference in retirement plan participation
among men and women in the private sector between the ages of 25 and 64
who worked year-round, full-time; 53.9% of men and 52.9% of women
participated in a company-sponsored retirement plan.
! In 2002, only 45% of private-sector workers 25 to 34 years old who were
employed year-round, full-time participated in an employer-sponsored
retirement plan, versus 57% of workers 35 or older.
! Black, Hispanic, and other non-white workers were less likely to have
worked for an employer that sponsored a retirement plan, and therefore were
less likely to have participated in a plan. Fifty-nine percent of white workers
in the private sector who were employed year-round, full-time in 2002 were
included in a company-sponsored retirement plan, compared to 47.5% of
black non-Hispanic workers, 31.1% of Hispanic workers, and 49.2% of other
non-white workers.
! Workers who earned less than $20,000 in 2002 were just one-third as likely
as those who earned $60,000 or more to have participated in a retirement
plan at work.
! Part-year or part-time workers in the private sector were half as likely as
workers employed year-round, full-time to have participated in an employer-
sponsored retirement plan in 2002 (25.7% vs. 53.5%).

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Contents
Background: Demographic Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Congress and Retirement Income Policies . . . . . . . . . . . . . . . . . . . . . . . 2
Two Kinds of Retirement Plans:
Defined Benefit and Defined Contribution . . . . . . . . . . . . . . . . . . 3
Recent Trends in Retirement Plan Sponsorship and Participation . . . . . . . . 5
Surveys of Employer-Provided Benefits . . . . . . . . . . . . . . . . . . . . . . . . 6
Surveys of Households . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Retirement Plans and Employer Size . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Plan Participation Among Men and Women . . . . . . . . . . . . . . . . . . . . 10
Plan Participation by Employee Age . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Plan Participation by Employee Race . . . . . . . . . . . . . . . . . . . . . . . . . 13
Plan Participation by Employee Earnings . . . . . . . . . . . . . . . . . . . . . . 13
Plan Participation by Full-Time vs. Part-Time Employment . . . . . . . . 16
List of Tables
Table 1. Labor Force Participation Rates in 2002 . . . . . . . . . . . . . . . . . . . . . . . . . 2
Table 2. Participation in Employer-Sponsored Retirement Plans
by Employees in the Private Sector, 1999 and 2000 . . . . . . . . . . . . . . . 7
Table 3. Participation in Retirement Plans by Size of Firm . . . . . . . . . . . . . . . . . 9
Table 4. Employee Participation in Retirement Plans, by Sex . . . . . . . . . . . . . . 10
Table 5. Employee Participation in Retirement Plans, by Age . . . . . . . . . . . . . . 12
Table 6. Employee Participation in Retirement Plans, by Race . . . . . . . . . . . . . . 13
Table 7. Participation in Retirement Plans by Annual Earnings . . . . . . . . . . . . . 15
Table 8. Participation in Retirement Plans,
by Full-Time vs. Part-Time Employment . . . . . . . . . . . . . . . . . . . . . . 17

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Pensions and Retirement Savings Plans:
Sponsorship and Participation
Background: Demographic Trends
The aging of the American population has made retirement income an issue of
increasing concern to the Congress and the public. Although Americans are living
longer than ever before, most retire before age 65. Moreover, while the nation’s
population continues to grow, the decline in birth rates that followed the post-World
War II “baby boom” and the continued lengthening of life spans will result in fewer
workers relative to the number of retirees. These trends will affect the economic
well-being of future retirees because pensions and Social Security benefits will be
paid over longer periods of time; savings will have to be stretched over longer
retirements; and Social Security benefits will have to be financed by a working
population that is shrinking relative to the number of retirees.
Americans are living longer then ever before. The average life
expectancy of Americans born in 1960 was 69.7 years. It has been estimated that
those who were born in 2000 will live for an average of 76.4 years.1 A man who
reached age 65 in 1960 could expect to live another 13 years, while a woman who
turned 65 had a remaining life expectancy of 16 years. A man who reached age 65
in 2000 could expect to live another 15.6 years, while a woman who turned 65 in
2000 had a remaining life expectancy of 19.4 years. As more people live into old
age, the age-profile of the population will shift. In 1960, 16.7 million people in the
United States — 9.2% of the population — were age 65 or older. In 2000, there were
35.0 million Americans age 65 or older, representing 12.4% of the population. By
2025, according to projections made by the Bureau of the Census, there will be 62
million people age 65 or older, comprising 18.5% of the U.S. population.
Families are smaller than they were in the 1950s and 1960s. The
decline in birth rates that followed the post-World War II “baby boom” may have an
impact on the income of retirees in the first decades of the 21st century.2 Birth rates
fell sharply between 1960 and 1975 and have remained low since then. In 1960,
there were 118 births per 1,000 women between the ages of 15 and 44. By 1975, the
birth rate had fallen to 66 per 1,000 women of child-bearing age, and from that year
through 2000 it never exceeded 70 births per 1,000 women.3 Social Security faces
long-term financial difficulties in part because of the declining ratio of workers to
1 U.S. National Center for Health Statistics, Vital Statistics of the United States.
2 The Census Bureau defines the baby boom to include the years from 1946 to 1964.
3 In 2000, there were 68 live births per 1,000 women 15 to 44 years old. U.S. National
Center for Health Statistics, Vital Statistics of the United States.

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CRS-2
retirees. In 1960, there were 5.7 working-age people (20-64) for every person age 65
or older. By 2000, the ratio of working-age people to those age 65 or older had fallen
to 4.8. According to the U.S. Bureau of the Census, by 2025 the ratio of working-age
people to people age 65 or older will have fallen to 3.0. As Social Security is
currently financed, fewer workers paying taxes will mean that tax rates must be
increased or benefits must be reduced.
Labor force participation begins to drop at age 55. The proportion of
the population that is either working or looking for work is called the “labor force
participation rate.” As indicated by the data in Table 1, the labor force participation
rate starts to drop significantly at about age 55. When income is no longer derived
from earnings, individuals depend more on pensions, interest and dividends,
withdrawals from their savings, and – when they become eligible through age or
disability – Social Security. The aging of the U.S. population will place strains on
the components of the traditional “three-legged stool” of retirement income: Social
Security, pensions, and personal saving.
Table 1. Labor Force Participation Rates in 2002
Total number of
Number in the
Labor force
Age
people (000s)
labor force (000s) participation rate
Men
Age 25 to 54
58,736
53,439
91.0%
Age 45 to 54
19,058
16,858
88.5%
Age 55 to 64
12,267
8,486
69.2%
Age 65 and up
14,124
2,509
17.8%
Women
Age 25 to 54
61,110
46,426
76.0%
Age 45 to 54
19,977
15,178
76.0%
Age 55 to 64
13,394
7,377
55.1%
Age 65 and up
18,887
1,872
9.9%
Source: U.S . Dep artme nt of La bor , Bur eau o f Labo r Statistics, Employment and Earnings,
Janua ry 2003.)
Congress and Retirement Income Policies. The Internal Revenue Code
was first amended to provide favorable tax treatment for qualifying pension and
retirement plans in the 1920s. These provisions have been expanded and modified
many times since then. Among the tax exemptions that apply to traditional “defined
benefit” pension plans are the deduction of pension contributions from employer
income, exclusion of employer contributions to pension plans from employee

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CRS-3
income, and tax exemption of the earnings of pension trusts.4 In “defined
contribution” plans such as those authorized under section 401(k) of the tax code,
income taxes are deferred until retirement on employer and employee contributions
to the plan and on the investment earnings of the plan.
By establishing the tax-favored status of pension programs and defining the
terms under which tax exemptions and deductions are granted, federal tax law has
both encouraged the growth of retirement plan coverage among workers and shaped
the development of pension and retirement savings plans. Congress also has sought
to protect the pension benefits earned by workers through direct regulation of pension
plans, most notably through the Employee Retirement Income Security Act of 1974
(P.L. 93-406). ERISA, too, may have influenced the development of employer-
sponsored retirement plans. Since its enactment, defined contribution (DC) plans
have proliferated while the number of defined benefit (DB) plans has been falling.
Two Kinds of Retirement Plans: Defined Benefit and Defined
Contribution.
Retirement programs are legally classified as either defined
benefit plans or defined contribution plans. In defined benefit or “DB” plans, the
retirement benefit usually is based on an employee’s salary and number of years of
service. With each year of service, a worker accrues a benefit equal to either a fixed
dollar amount per month or year of service or a percentage of his or her final pay or
average pay.
A defined contribution or “DC” plan is much like a savings account maintained
by the employer on behalf of each participating employee. The employer contributes
a specific dollar amount or percentage of pay into the account, which is usually
invested in stocks and bonds. In some plans, the size of the employer’s contribution
depends on the amount the employee contributes to the plan. When the worker
retires, the amount of retirement benefits that he or she receives will depend on the
balance in the account, which is the sum of all the contributions that have been made
plus interest, dividends, and capital gains (or losses). The worker usually has the
choice of receiving these funds in the form of a life-long annuity,5 as a series of fixed
payments over a period of years, or as a lump sum.
In recent years, many employers have converted their traditional pensions to
hybrid plans that have characteristics of both DB and DC plans. The most popular
of these hybrids has been the cash balance plan. A cash balance plan looks like a
DC plan in that the accrued benefit is defined in terms of an account balance. The
employer makes contributions to the plan and pays interest on the accumulated
balance. However, in a cash balance plan, the account balances are merely
bookkeeping devices. They are not individual accounts that are owned by the
participants. Legally, therefore, a cash balance plan is a defined benefit plan.
4 Defined benefit pensions are taxed when the employee receives benefits during retirement.
5 Retirees can also choose a joint and survivor annuity in which a surviving spouse
continues to receive an annuity after the retired worker’s death.

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CRS-4
The Locus of Risk in DB and DC Plans. In a defined benefit plan, it is
the employer who bears the financial risk of the plan, while in a defined contribution
plan it is the employee who bears the financial risk. In a defined benefit plan, the
employer promises to provide retirement benefits equal to a certain dollar amount or
a specific percentage of the employee’s pay. The employer contributes money to a
pension trust that is invested in stocks, bonds, real estate, or other assets. Retirement
benefits are paid from this trust fund. The employer is at risk for the amount of
retirement benefits that have been promised to employees and their survivors. If there
are insufficient funds in the pension trust to pay the accrued benefits, the firm that
sponsors the pension plan is legally obligated to make up the difference by paying
more money into the pension fund.
In a defined contribution plan, the employer bears no risk beyond its obligation
to make contributions to each employee’s retirement account from the firm’s current
revenue. In these plans, it is the employee who bears the risk that his or her
retirement account will increase in value by an amount sufficient to provide adequate
income during retirement. If the contributions made to the account by the employer
and the employee are insufficient, or if the securities in which the account is invested
lose value or increase in value too slowly, the employee risks having an income in
retirement that is not sufficient to maintain his or her desired standard of living. If
this situation occurs, the worker might choose to delay retirement.
Many factors affect a firm’s decision to sponsor a retirement plan and a
worker’s decision to participate in the plan. In any given year, changes in the
business climate — inflation, interest rates, wage increases, the cost of other benefits
(such as health insurance), trends in business revenues and profits — could weigh
more heavily in a firm’s decision to sponsor an employee retirement plan than the
potential tax advantages it could gain by establishing a plan. Likewise, an
employee’s decision to participate or not to participate in a retirement plan may be
affected by such variables as the rate of growth of wages, the rising cost of employee
health insurance premiums, his or her confidence in the financial status of Social
Security, and whether another family member already participates in a retirement
plan.
Encouraging sponsorship of retirement plans by small firms is an important
issue to the Congress in part because of the large number of people employed by
small businesses. In 2002, for example, more than 34 million people worked for
firms with fewer than 25 employees.6 The relatively low rates of employer
sponsorship and employee participation in retirement plans at small businesses have
prompted Congress to look for ways to make it easier for small employers to
establish and maintain retirement plans for their employees. Because small
employers may be reluctant to take on the financial risk and administrative burden
of establishing a defined-benefit pension plan, Congress has sought to encourage
greater retirement plan sponsorship among small businesses mainly by easing the
financial and reporting requirements associated with certain types of defined
contribution pension plans. The Revenue Act of 1978 (P.L. 95-600) authorized a
6 Full-time and part-time wage and salary workers. (Source: Current Population Survey.)

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CRS-5
defined contribution plan called the Simplified Employee Pension (SEP).7 More
recently, the Small Business Job Protection Act of 1996 (P.L. 104-188) authorized
another type of defined contribution plan called the Savings Incentive Match Plan
for Employees (SIMPLE).8
Recent Trends in Retirement Plan Sponsorship and
Participation
The number of defined benefit plans is declining. According to the
Pension and Welfare Benefits Administration (PWBA) of the U.S. Department of
Labor, the number of defined benefit plans declined from 175,000 to 56,400 between
1983 and 1998.9 The decline in the number of DB plans resulted mainly from the
termination of a large number of small plans. Between 1983 and 1998, the number
of defined benefit pension plans with fewer than 100 participants fell from 149,164
to 41,264, a decline of 72.3%. The number of large DB plans fell, too, declining
form 25,979 in 1983 to 15,141, or 41.7%. However, while the decline in the number
of plans was larger among small plans, the decline in the number of participants was
greater among large plans. The number of active participants in small DB plans fell
from 1,861,000 in 1983 to 648,000 in 1998.10 At the same time, the number of active
participants in large DB plans fell from 28,104,000 to 22,345,000.
Retirement Plan Financial Trends. Financial information reported by
employers to the U.S. Department of Labor also shows the extent to which
sponsorship of retirement plans has shifted from DB plans to DC plans. In 1975,
pension plans held total assets of $260 billion, of which 72% ($186 billion) was held
by defined benefit plans. By 1998, pension plans held total assets of $4.0 trillion, but
the share held by DB plans had fallen to 48% ($1.9 trillion). Contributions to
pension plans shifted even more dramatically during this period. In 1975, employer
and employee contributions to pension plans totaled $37 billion. Of this amount,
65% ($24 billion) was contributed to DB plans. In 1998, employers and employees
contributed $202 billion to pension plans, but 83% of the total ($167 billion) was
contributed to defined contribution plans. Benefit payments, too, reflected the impact
of the increasing prevalence of DC plans. In 1975, 68% of all benefits paid by
7 P.L. 95-600 authorized tax exemption only for employer contributions to a SEP. The Tax
Reform Act of 1986 (P.L. 99-514) allowed workers in firms with fewer than 25 employees
to contribute to a SEP on a tax-deferred basis through salary reduction (SARSEP). P.L. 104-
188 authorized SIMPLE plans to replace SARSEPs. Firms may continue to establish SEPs
funded exclusively by employer contributions, but new SARSEPs were prohibited after
December 31, 1996. Previously existing SARSEPs may continue as before.
8 For more information about SEP and SIMPLE, see CRS Report 96-243, Simplified
Employee Pensions: A Fact Sheet and CRS Report 96-758, Pension Reform: SIMPLE Plans
for Small Employers.
9 Private Pension Plan Bulletin, U.S. Department of Labor, Pension and Welfare Benefits
Administration, (Number 11, Winter 2001-2002).
10 BLS, Private Pension Plan Bulletin, (Number 11, Winter 2001-2002). The number of
active participants is the total number of participants minus those who have retired or who
have separated from the employer with a vested benefit but are not retired.

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CRS-6
private-sector pension plans ($13 billion out of $19 billion) were paid by defined
benefit pensions. In 1998, 59% of the $273 billion in benefit payments were
disbursed from DC plans. In that year, DC plans paid $162 billion in benefits, while
DB plans paid out $111 billion in benefits.
Surveys of Employer-Provided Benefits. The Bureau of Labor Statistics
collects data from employers about paid leave, health insurance, retirement plan
participation, flexible spending accounts, and other employee benefits as part of the
National Compensation Survey. The National Compensation Survey is conducted
among a nationally representative sample of business establishments. The term
establishment usually refers to a single place of business at a particular location or
all branches of a business in a particular metropolitan area or county. An
establishment might be a branch or small operating unit of a larger firm. In contrast,
a firm comprises all of the establishments that together form a corporation,
partnership, or other business entity.11
According to the data collected from employers through the National
Compensation Survey, 65% of employees in medium and large private
establishments participated in an employer-sponsored pension or retirement savings
plan in 2000. (See Table 2.) Access to a company-sponsored retirement plan was
substantially lower in small businesses. In 2000, only 33% of employees in
businesses with fewer than 100 employees participated in an employer-sponsored
pension or retirement savings plan. The data from the NCS also indicate that, among
firms of all sizes, 55% of full-time employees participated in an employer-sponsored
retirement plan in 2000, compared to just 18% of part-time workers.
11 In the Current Population Survey, employer characteristics are reported at the level of
the firm, which may include more than one establishment.

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CRS-7
Table 2. Participation in Employer-Sponsored Retirement Plans
by Employees in the Private Sector, 1999 and 2000
Type of retirement plan
All types
Defined benefit Defined contribution
Establishment Size
1-99 workers
1999
34%
8%
27%
2000
33%
8%
27%
100 or more workers
1999
64%
37%
46%
2000
65%
33%
46%

Full-time workers
1999
56%
25%
42%
2000
55%
22%
42%
Part-time workers
1999
21%
9%
14%
2000
18%
6%
12%
All workers
1999
48%
21%
36%
2000
48%
19%
36%
Note:
Data represent 107 million workers employed in the private sector.
Source:
National Compe nsation Survey, U.S. Department of Labo r.
Surveys of Households. The Current Population Survey (CPS) is
conducted each month by the Bureau of the Census among a nationally representative
sample of 60,000 to 100,000 households, primarily for the purpose of estimating the
rates of employment and unemployment. Each March, supplemental questions are
asked about employment, income, health insurance, retirement plan participation, and
receipt of government benefits during the previous calendar year. The data from the
CPS show that retirement plan participation in small firms rose steadily throughout
the 1990s, but has recently declined. The CPS data also indicate that access to a
company-sponsored retirement plan remains lower in small firms than in firms with
100 or more employees.
Retirement Plans and Employer Size. The data displayed in Table 3
show that from 1994 to 2002, the number of workers between the ages of 25 and 64
who were employed in the private sector and worked year-round, full-time increased
from 57 million to 69 million. At the same time, the number of such workers whose

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CRS-8
employer offered a retirement plan increased from 37.1 million to 42.8 million. The
proportion of year-round, full-time workers in this age group who were employed at
firms that offered a retirement plan rose from 64.9% in 1994 to 66.9% in 1998, it has
since fallen to 62.0%. Among firms with fewer than 25 employees, retirement plan
sponsorship rose steadily until 2000, but has fallen since then. In 2002, 31.7% of
full-time workers in businesses with fewer than 25 employees were employed at
firms that sponsored a retirement plan, down from a high of 34.2% in 2000. This was
still higher than the 26.5% level of 1994. Among workers in firms with 25 to 99
employees, 56.3% were employed at firms that sponsored a retirement plan in 2002,
compared to 59.0% in 1999 and 53.4% in 1994.
There has been a significant decline since 1994 in the proportion of workers in
larger firms whose employer sponsors a retirement plan. Among employees at
businesses with 100 or more workers, 76.8% worked at firms that sponsored a
retirement plan in 2002, which was five percentage points lower than the 81.8% of
workers who were employed by large firms that sponsored a retirement plan in 1994.
Nevertheless, workers at large firms remain substantially more likely than employees
of small businesses to work for an employer that sponsors a retirement plan.
Table 3 also shows the percentage of year-round, full-time employees in the
private sector who participated in an employer-sponsored retirement plan.12 This
statistic takes into account the impact of employers that do not sponsor a plan on
overall retirement plan participation rates. Among firms of all sizes, the proportion
of year-round, full-time employees between the ages of 25 and 64 who participated
in a retirement plan fell from 55.8% in 2001 to 53.5% in 2002. This was lower than
the participation rate of 56.1% in 1994. In firms with fewer than 25 employees,
27.3% of full-time employees between the ages of 25 and 64 participated in a
retirement plan in 2002, down from a peak of 29.3% in 2000, but higher than the
22.8% who participated in a plan in 1994. In firms with 25 to 99 employees,
retirement plan participation fell from 48.4% in 2001 to 47.8% in 2002. This was
still higher than the 1994 participation rate of 44.9%. Participation in retirement
plans among workers in firms with 100 or more employees also fell between 2001
and 2002, dropping from 68.6% to 66.6%. This was 4.5 percentage points lower
than the participation rate of 71.0% in 1994.
12 Not all employees whose employer sponsors a retirement plan are eligible to participate.
For example, employees who have been employed for less than one year or who work fewer
than 1,000 hours per year can be excluded.

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CRS-9
Table 3. Participation in Retirement Plans by Size of Firm
(Private-sector wage and salary workers, ages 25 to 64, employed year-round, full-time)
Size of firm
Workers
Employer sponsors plan
Employees participating
(Employees)
(thousands)
Wo rkers
Percent
Participants
Percent
All firms
1994
57,156
37,080
64.9%
32,043
56.1%
1995
60,687
38,348
63.2
33,298
54.9
1996
63,145
41,149
65.2
35,535
56.3
1997
64,001
41,855
65.4
36,184
56.5
1998
65,931
44,095
66.9
38,092
57.8
1999
67,065
44,794
66.8
38,901
58.0
2000
70,177
46,499
66.3
39,728
57.4
2001
69,266
45,097
65.1
38,678
55.8
2002
69,093
42,805
62.0
36,973
53.5
Under 25
1994
13,120
3,479
26.5%
2,996
22.8%
1995
14,627
3,715
25.4
3,109
21.3
1996
15,343
4,365
28.5
3,713
24.2
1997
14,732
4,356
29.6
3,722
25.3
1998
15,101
4,789
31.7
4,072
27.0
1999
15,582
5,259
33.4
4,522
29.0
2000
16,591
5,575
34.2
4,857
29.3
2001
17,061
5,788
33.9
4,965
29.1
2002
17,878
5,658
31.7
4,880
27.3
25 to 99
1994
8,476
4,526
53.4%
3,805
44.9%
1995
9,108
4,923
54.1
4,188
46.0
1996
9,421
5,378
57.1
4,531
48.1
1997
9,691
5,416
55.9
4,602
47.5
1998
9,940
5,794
58.3
4,838
48.7
1999
9,974
5,881
59.0
4,933
49.5
2000
10,492
6,139
58.5
5,186
49.4
2001
10,466
6,086
58.2
5,067
48.4
2002
10,719
6,030
56.3
5,126
47.8
100 or more
1994
35,560
29,075
81.8%
25,242
71.0%
1995
36,951
29,706
80.4
26,000
70.4
1996
38,381
31,407
81.8
27,291
71.1
1997
39,578
32,083
81.1
27,860
70.4
1998
40,890
33,513
82.0
29,182
71.4
1999
41,509
33,654
81.1
29,447
70.9
2000
43,094
34,692
80.5
30,262
70.2
2002
41,739
33,223
79.6
28,645
68.6
2002
40,496
31,116
76.8
26,967
66.6
Source: CRS analysis of the Current Population Survey, various years.

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CRS-10
Plan Participation Among Men and Women. Table 4 shows the rates
of participation in employer-sponsored retirement plans by men and women between
the ages 25 and 64 who were employed in the private sector and worked year-round,
full-time. Between 1994 and 1999, the proportion of men whose employer sponsored
a retirement plan rose from 64.9% to 66.9%. Since then, it has dropped to 61.4%.
The proportion of women who worked at firms that sponsored a retirement plan
increased from 64.9% in 1994 to a high of 67.2% in 1998, and then fell to 62.7% in
2007. Thus in 2002, men and women who were employed year-round, full-time were
just about equally likely to work for an employer that sponsored a retirement plan of
some kind. Men and women also were almost equally likely to participate in an
employer-sponsored retirement plan. In 2002, 53.9% of men who were employed
year-round, full-time participated in a company-sponsored retirement plan, compared
to 52.9% of women who worked year-round, full-time. Both of these participation
rates were lower than in 2001; however, the participation rate for men fell by more
than 5 percentage points between 1999 and 2002. The participation rate for women
fell by 3 percentage points during the same period.
Table 4. Employee Participation in Retirement Plans, by Sex
(Private-sector wage and salary workers, ages 25 to 64, employed year-round, full-time)
Workers
Employer sponsors plan
Employees participating
(thousands)
Workers
Percent
Participants
Percent
Men
1994
34,329
22,265
64.9%
19,617
57.1%
1995
36,504
23,008
63.0
20,359
55.8
1996
37,912
24,541
64.7
21,577
56.9
1997
38,207
24,796
64.9
21,887
57.3
1998
39,399
26,270
66.7
23,160
58.8
1999
39,757
26,596
66.9
23,553
59.2
2000
41,516
27,463
66.2
24,220
58.3
2001
40,976
26,539
64.8
23,164
56.5
2002
40,851
25,100
61.4
22,033
53.9
Women
1994
22,827
14,815
64.9%
12,426
54.4%
1995
24,182
15,336
63.4
12,939
53.5
1996
25,232
16,609
65.8
13,958
55.3
1997
25,795
17,060
66.1
14,297
55.4
1998
26,532
17,825
67.2
14,932
56.3
1999
27,308
18,198
66.6
15,349
56.2
2000
28,661
19,036
66.4
16,083
56.1
2001
28,290
18,558
65.6
15,513
54.8
2002
28,242
17,704
62.7
14,939
52.9
Source: CRS analysis of the Current Population Survey, various years.

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CRS-11
Plan Participation by Employee Age. Table 5 displays rates of
participation in employer-sponsored retirement plans among workers who were
employed in the private sector and worked year-round, full-time, according to their
age. Young workers — ages 25 to 34 — are less likely than middle-aged and older
workers to be employed at a firm that sponsors a retirement plan. They also are less
likely to participate in retirement plans than are older workers. In 2002, 57.2% of
workers 25 to 34 years old worked for an employer that sponsored a retirement plan,
and 44.6% participated in a company-sponsored plan. Thus, 78% of those who
worked for a firm that sponsored a plan participated in the plan (0.446/0.572 = 0.78).
In contrast, among workers 35 to 64 years old, 63.8% worked at firms that sponsored
a retirement plan, and 57.0% participated in a company-sponsored plan. Thus, of
those who worked for an employer that sponsored a retirement plan, 89.3%
participated in the plan (0.570/0.638 = 0.893)13
13 Some of the difference in participation rates is because workers under 35 are somewhat
more likely to be in their first year with an employer and can be excluded from participating
in the plan. Part-time or part-year workers and those under 21 also can be excluded, but
none of these groups are represented in the table.

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CRS-12
Table 5. Employee Participation in Retirement Plans, by Age
(Private-sector wage and salary workers, ages 25 to 64, employed year-round, full-time)
Employee
Workers
Employer sponsors plan
Employees participating
age
(thousands)
Workers
Percent
Participants
Percent
25 to 34
1994
19,488
12,038
61.8%
9,460
48.5%
1995
19,759
11,673
59.1
9,337
47.3
1996
19,744
12,389
62.8
9,865
50.0
1997
19,829
12,508
63.1
9,832
49.6
1998
19,737
12,455
63.1
9,896
50.1
1999
19,535
12,513
64.1
9,903
50.7
2000
20,398
12,803
62.8
10,173
49.9
2001
19,542
11,908
60.9
9,330
47.7
2002
19,389
11,090
57.2
8,638
44.6
35 to 44
1994
18,924
12,492
66.0%
11,082
58.6%
1995
20,439
13,235
64.8
11,742
57.5
1996
21,360
14,161
66.3
12,337
57.8
1997
21,528
14,120
65.6
12,377
57.5
1998
22,287
15,125
67.9
13,211
59.3
1999
22,812
15,387
67.5
13,440
58.9
2000
23,362
15,479
66.3
13,559
58.0
2001
22,445
14,841
66.1
12,882
57.4
2002
21,826
13,681
62.7
11,879
54.4
45 to 54
1994
12,973
8,839
68.1%
8,117
62.6%
1995
14,042
9,240
65.8
8,381
59.7
1996
15,278
10,259
67.2
9,290
60.8
1997
15,576
10,638
68.3
9,760
62.7
1998
16,547
11,615
70.2
10,519
63.6
1999
17,238
12,053
69.9
11,089
64.3
2000
18,489
12,951
70.1
11,787
63.8
2001
18,625
12,650
67.9
11,324
60.8
2002
18,796
12,308
65.5
11,204
59.6
55 to 64
1994
5,771
3,711
64.3%
3,384
58.7%
1995
6,446
4,196
65.1
3,838
59.5
1996
6,763
4,340
64.2
4,043
59.8
1997
7,069
4,588
64.9
4,215
59.6
1998
7,359
4,900
66.6
4,466
60.7
1999
7,479
4,841
64.7
4,470
59.8
2000
7,929
5,267
66.4
4,785
60.3
2001
8,653
5,698
65.9
5,141
59.4
2002
9,082
5,725
63.0
5,252
57.8
Source: CRS analysis of the Current Population Survey, various years.

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CRS-13
Plan Participation by Employee Race. The March 2002 CPS incorporates
newly expanded categories of race and ethnicity, making comparisons with prior
years problematic. In Table 6, race and ethnicity are categorized as white non-
Hispanic, black non-Hispanic, Hispanic, and other. The “other”category includes
mainly persons whose heritage is Asian, Native American, Eskimo, or Pacific
Islander. In 2002, the likelihood of being employed at a firm that sponsored a
retirement plan was highest for white non-Hispanic workers and lowest for Hispanic
workers. Black non-Hispanic workers and “Asian/Other” workers were about
equally likely to work for an employer that sponsored a retirement plan. Among
white non-Hispanic workers, 67% worked for an employer that sponsored a
retirement plan, and 59% participated in an employer-sponsored plan. Among
Hispanic workers, just 40% worked for an employer that sponsored a retirement plan
and only 31% participated in an employer-sponsored retirement plan. Of workers
who classified their race and ethnicity as black non-Hispanic, 59% worked for an
employer that sponsored a plan and 47.5% participated in a plan, while among Asian-
American and other workers, 58% worked for an employer that sponsored a
retirement plan and 49% participated in a plan.
Table 6. Employee Participation in Retirement Plans, by Race
(Private sector wage and salary workers, ages 25 to 64, employed year-round, full-time)
Employee
Workers
Employer sponsors plan
Employees participating
Race
(thousands)
Workers
Percent
Participants
Percent
White, non-Hispanic
2002
49,012
32,711
66.7%
28,836
58.8%
Black, non-Hispanic
2002
7,078
4,156
58.7%
3,363
47.5%
Hispanic
2002
8,942
3,582
40.1%
2,777
31.1%
Other
2002
4,062
2,356
58.0%
1,996
49.2%
Source: CRS analysis of the Current Population Survey, various years.
Plan Participation by Employee Earnings. Table 7 shows the
relationship between earnings and participation in an employer-sponsored retirement
plan. All earnings in Table 7 have been indexed to 2002 dollars based on the annual
percentage change in the wage and salary component of the Employment Cost Index.
Between 1994 and 2002, wages and salaries rose at an average annual rate of 3.5%.
Between 2001 and 2002 the proportion of year-round, full-time workers in the
private sector with annual earnings of less than $20,000 who were employed by a

---

CRS-14
firm that sponsored a retirement plan fell from 39% to 36%. The percentage of
workers who earned between $20,000 and $40,000 who were employed at firms that
sponsored a retirement plan fell from 63% to 59%. Workers earning more than
$40,000 per year were more likely than those earning less than $40,000 to be
employed by firms that sponsored a retirement plan, although the percentage also fell
for these workers from 2001 to 2002. In 2002, 72.2% of workers with annual
earnings between $40,000 and $60,000 were employed at firms that sponsored a
retirement plan, a drop of 2.9 percentage points from 2001. Among workers with
earnings of more than $60,000, the percentage employed at firms that sponsored a
retirement plan fell from 78.1% in 2001 to 75.2% in 2002.
Across all firms (including those that did not sponsor any kind of retirement
plan), only 24% of full-time workers who earned less than $20,000 participated in an
employer-sponsored retirement plan in 2002. Although participation was
significantly higher among workers who earned between $20,000 and $40,000
(48.7%) than among those earning less than $20,000, it still lagged behind the
participation rates of higher-paid employees. Among those who earned between
$40,000 and 60,000, 65.3% participated in an employer-sponsored retirement plan
in 2002, as did 71.1% of those who earned more than $60,000. In all four earnings
categories, participation in company-sponsored retirement plans fell between 2001
and 2002.
Some of the lower participation rate among low-wage workers can be explained
by the lower rate of plan sponsorship among the firms at which they are employed.
For example, in 2002 72.2% percent of workers with annual earnings of $40,000 to
$60,000 were employed at firms that sponsored a retirement plan and 65.3% of
employees with earnings in this range participated in such plans. Thus, among
employees whose employer sponsored a plan, the participation rate was 90%.
(0.653/0.722 = 0.904). Likewise, among employees whose earnings in 2002
exceeded $60,000, 75.2% worked for an employer that sponsored a retirement plan
and 71.1% participated in a retirement plan. Therefore, the participation rate among
employees who earned $60,000 or more and whose employer sponsored a retirement
plan was 94.5% (0.711/0.752 = 0.945). Participation rates were significantly lower
among low-wage workers. Among workers whose 2002 earnings were less than
$20,000, only 36% worked for an employer that sponsored a retirement plan and just
24% participated in a retirement plan. Thus, the participation rate among low-wage
employees whose employer sponsored a retirement plan was 66.7% (0.24/0.36 =
0.667). Among those who earned $20,000 to $40,000, 59.0% worked for an
employer that sponsored a retirement plan and 48.7% participated in such a plan,
yielding a participation rate of 82.5% among those whose employer sponsored a
retirement plan (0.487/0.590 = 0.825).

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CRS-15
Table 7. Participation in Retirement Plans by Annual Earnings
(Private-sector wage and salary workers, ages 25 to 64, employed year-round, full-time)
Employee
Number
Employer sponsors plan Employees participating
Annual Earnings of workers
Workers
Percent
Participants
Percent
Under $20,000
1994
9,881
3,988
40.4
2,523
25.5
1995
10,616
3,954
37.3
2,681
25.3
1996
10,931
4,267
39.0
2,890
26.4
1997
10,434
4,009
38.4
2,676
25.6
1998
10,769
4,374
40.6
2,890
26.8
1999
11,709
4,815
41.1
3,231
27.6
2000
11,360
4,489
39.5
3,037
26.7
2001
11,031
4,296
39.0
2,825
25.6
2002
10,727
3,859
36.0
2,570
24.0
$20,000-$39,999
1994
22,888
14,293
62.5
12,012
52.5
1995
24,077
14,781
61.4
12,347
51.3
1996
25,194
15,920
63.2
13,140
52.2
1997
25,604
16,083
62.8
13,327
52.1
1998
25,502
16,763
65.7
13,871
54.4
1999
26,779
17,471
65.2
14,729
55.0
2000
28,340
18,092
63.8
15,085
53.2
2001
27,828
17,507
62.9
14,363
51.6
2002
27,712
16,340
59.0
13,489
48.7
$40,000-$59,999
1994
12,543
9,542
76.1
8,719
69.5
1995
13,238
9,734
73.5
8,900
67.2
1996
13,765
10,439
75.8
9,582
69.6
1997
15,395
11,737
76.2
10,702
69.5
1998
16,349
12,351
75.5
11,343
69.4
1999
14,242
11,001
77.3
10,011
70.3
2000
15,437
11,916
77.2
10,881
70.5
2001
15,191
11,415
75.1
10,363
68.2
2002
15,142
10,939
72.2
9,887
65.3
$60,000 or more
1994
11,844
9,257
78.2
8,788
74.2
1995
12,756
9,875
77.4
9,370
73.5
1996
13,255
10,523
79.4
9,922
74.9
1997
12,570
10,027
79.8
9,480
75.4
1998
13,310
10,607
79.7
9,988
75.0
1999
14,335
11,507
80.3
10,930
76.3
2000
15,040
12,002
79.8
11,301
75.1
2001
15,215
11,879
78.1
11,127
73.1
2002
15,512
11,667
75.2
11,027
71.1
Source: CRS analysis of the Current Population Survey, various years.
Note: Annual earnings have been adjusted to 2002 dollars based on the wage
component of the Employment Co st Index.

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CRS-16
Plan Participation by Full-Time vs. Part-Time Employment. Table 8
compares retirement plan participation for year-round, full-time workers in the
private sector to those who were employed part-year or part-time. Workers with
part-year or part-time employment are much less likely to be employed by a firm that
sponsors a retirement plan. Part-time and part-year workers also are less likely to
participate if their employer sponsors a plan.
Between 1994 and 2002, the proportion of part-time or part-year workers
employed by firms that sponsored a retirement plan rose from 39.2% to 43.0%. The
rate of participation among part-year and part-time workers whose employer
sponsored a retirement plan increased from 22.1% to 25.7%. The proportion of year-
round, full-time workers employed at firms that sponsored a retirement plan fell from
64.9% in 1994 to 62.0% in 2002. The participation rate among year-round, full-time
workers whose employer sponsored a retirement plan was 56.1% in 1994 and 53.5%
in 2002. Plan participation peaked in 1998 at 58.0%.
The lower rate of retirement plan participation among part-year and part-time
workers is one of the reasons that women are less likely than men to participate in a
company-sponsored retirement plan. As was shown in Table 4, there is little
difference in retirement plan participation between men and women who work year-
round, full-time. Women, however, are more likely than men to work part-year or
part-time. Data from the Current Population Survey show that in 2002, 81% of
working men between the ages of 25 and 64 were employed year-round, full-time
compared to 66% of working women in this age-group. Consequently, while women
who worked full-time in 2002 were almost as likely as their male counterparts to have
participated in a retirement plan (53% vs. 54%), the retirement plan participation rate
among all working women 25 to 64 years old in the private sector in 2002 was lower
than the participation rate among all working men in that age group(43% vs. 49%).14
14 CRS estimates based on the March 2003 CPS. (Not shown in accompanying tables).

---

CRS-17
Table 8. Participation in Retirement Plans
by Full-Tim e vs. Part-Time Em ployment
(Private-sector wage and salary workers, ages 25 to 64)
Workers
Employer sponsors plan
Employees participating
(thousands)
Wo rkers
Percent
Participants
Percent
Full-time
1994
57,156
37,080
64.9%
32,043
56.1%
1995
60,687
38,344
63.2
33,298
54.9
1996
63,144
41,149
65.2
35,535
56.3
1997
64,002
41,855
65.4
36,184
56.5
1998
65,931
44,095
66.9
38,092
57.8
1999
67,065
44,794
66.8
38,901
58.0
2000
70,177
46,499
66.3
40,304
57.4
2001
69,265
45,097
65.1
38,678
55.8
2002
69,093
42,805
62.0
36,973
53.5
Part-time
1994
23,840
9,347
39.2%
5,261
22.1%
1995
23,790
9,348
39.3
5,508
23.2
1996
24,022
9,673
40.3
5,406
22.5
1997
23,508
9,774
41.6
5,465
23.3
1998
21,937
9,679
44.1
5,615
25.6
1999
21,815
9,166
42.0
5,562
25.5
2000
21,420
9,708
45.3
5,756
26.9
2001
23,449
10,535
44.9
6,444
27.5
2002
24,104
10,353
43.0
6,192
25.7
Source: CRS analysis of the Current Population Survey, various years.

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