Order Code RL30122
CRS Report for Congress
Received through the CRS Web
Pension Sponsorship and Participation:
Summary of Recent Trends
Updated September 10, 2004
Patrick J. Purcell
Specialist in Social Legislation
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress

Pension Sponsorship and Participation:
Summary of Recent Trends
Summary
According to the Census Bureau’s Current Population Survey (CPS), the
number of workers in the private sector whose employer sponsored a retirement plan
was essentially unchanged from 2002 to 2003. Among workers in the private sector
between the ages of 25 and 64, the number whose employer sponsored a retirement
plan was 53.3 million in 2003, compared to 53.2 million in 2002. The number of
workers who participated in an employer-sponsored retirement plan increased from
43.2 million in 2002 to 43.5 million in 2003. The percentage of 25 to 64-year-old,
employees in the private sector who participated in an employer-sponsored retirement
plan rose from 46.3% in 2002 to 46.7% in 2003.
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
:
! The percentage of workers whose employer sponsored a retirement plan was
62.0% in 2002 and 62.7% in 2003.
! The percentage of workers who participated in an employer-sponsored
retirement plan was 53.5% in 2002 and 54.1% in 2003.
! Only 27.2% of workers at firms with fewer than 25 employers participated
in an employer-sponsored retirement plan in 2003, compared to 49.9% of
workers at firms with 25 to 99 employees and 67.6% of workers at firms
with 100 or more employees.
! In 2003, there was relatively little difference in retirement plan participation
among men and women who were employed full-time: 53.9% of men and
54.3% of women participated in an employer-sponsored retirement plan.
! In 2003, only 45.7% of private-sector workers 25 to 34 years old who were
employed year-round, full-time participated in an employer-sponsored
retirement plan, versus 57.4% of workers over age 35 .
! Black, Hispanic, and other non-white workers were less likely to have
participated in an employer-sponsored retirement plan. Fifty-nine percent of
white workers participated in a company-sponsored retirement plan in 2003,
compared to 49.1% of black non-Hispanic workers, 32.6% of Hispanic
workers, and 49.1% of other non-white workers (mainly Asian-American
and Native American workers).
! Only 28.4% of workers whose earnings were in the lowest quartile in 2003
participated in a retirement plan at work, compared to 72.5% of workers
whose earnings were in the top quartile.
The percentage of part-year or part-time workers in the private sector whose
employer sponsored a retirement plan fell from 43.0% in 2002 to 41.6% in 2003.
The percentage of part-year or part-time workers in the private sector who
participated in an employer sponsored retirement plan fell from 25.7.0% in 2002 to
25.3% in 2003.

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
The number of defined benefit plans is declining . . . . . . . . . . . . . . . . . 5
Plan Participation by Full-Time vs. Part-Time Employment . . . . . . . . . 7
Retirement Plans and Employer Size . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Plan Participation Among Men and Women . . . . . . . . . . . . . . . . . . . . 11
Plan Participation by Employee Age . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Plan Participation by Employee Race . . . . . . . . . . . . . . . . . . . . . . . . . 14
Plan Participation by Employee Earnings . . . . . . . . . . . . . . . . . . . . . . 15
List of Tables
Table 1. Labor Force Participation Rates in 2003+ . . . . . . . . . . . . . . . . . . . . . . . 2
Table 2. Participation in Employer-Sponsored Retirement Plans
by Employees in the Private Sector, March 2003 . . . . . . . . . . . . . . . . . . . . . 6
Table 3. Participation in Retirement Plans
by Full-Time vs. Part-Time Employment
. . . . . . . . . . . . . . . . . . . . . . . . . . 8
Table 4. Participation in Retirement Plans by Size of Firm . . . . . . . . . . . . . . . . 10
Table 5. Employee Participation in Retirement Plans, by Sex . . . . . . . . . . . . . . 11
Table 6. Employee Participation in Retirement Plans, by Age . . . . . . . . . . . . . . 13
Table 7. Employee Participation in Retirement Plans, by Race . . . . . . . . . . . . . . 14
Table 8. Participation in Retirement Plans by Annual Earnings . . . . . . . . . . . . . 16

Pension Sponsorship and Participation:
Summary of Recent Trends
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 than 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 2001 will live for an average of 77.2 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 2001 could expect to live another 16.4 years, while a woman who turned 65 in
2001 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 2002, there were
35.6 million Americans age 65 or older, representing 12.3% of the population. By
2025, according to projections made by the Bureau of the Census, there will be 63.5
million people age 65 or older, comprising 18.2% 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 since that year
it has exceeded 70 births per 1,000 women only once.3 Social Security faces long-
term financial difficulties in part because of the declining ratio of workers to retirees.
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 1990, there were 71 live births per 1,000 women 15 to 44 years old. In 2001, there were
67 live births per 1,000 women 15 to 44 years old. (Vital Statistics of the United States.)

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In 1960, there were 5.7 people 20 to 64 years old for every person age 65 or older.
By 2002, this ratio had fallen to 4.8. According to the U.S. Bureau of the Census, by
2025 the ratio of people ages 20 to 64 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 after 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 2003+
Total number of
Number in the
Labor force
Age
people (000s)
labor force (000s) participation rate
Men
Age 25 to 54
60,594
54,881
90.6%
Age 45 to 54
19,784
17,352
87.7%
Age 55 to 64
13,305
9,144
68.7%
Age 65 and up
14,496
2,692
18.6%
Women
Age 25 to 54
62,695
47,428
75.6%
Age 45 to 54
20,738
15,919
76.8%
Age 55 to 64
14,423
8,168
56.6%
Age 65 and up
19,758
2,099
10.6%
Source: U.S. Department of Labor, Bureau of Labor Statistics, Employment and
Earnings
(January 2004)
Congress and Retirement Income Policies. The Internal Revenue Code
was first amended to provide favorable tax treatment for qualified 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
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,
4 Defined benefit pensions are taxed when the employee receives benefits during retirement.

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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 pensions 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 fallen.
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.
Who bears the investment risk? In a defined benefit plan, it is the
employer who bears the investment risk of the plan, while in a defined contribution
plan it is the employee who bears the investment 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
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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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. 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 2003, for example, almost 36 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 defined contribution plan
called the Simplified Employee Pension (SEP).7 More recently, the Small Business
6 Full-time and part-time wage and salary workers. (Source: Current Population Survey.)
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
(continued...)

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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 Nevertheless, rates of retirement plan sponsorship and participation in
small firms continue to lag behind the rates achieved in larger firms.
Recent Trends in Retirement Plan Sponsorship and
Participation

The number of defined benefit plans is declining. According to the
Employee Benefits Security Administration (EBSA) of the U.S. Department of
Labor, the number of defined benefit plans declined from 175,000 to 49,900 between
1983 and 1999.9 The decline in the number of DB plans resulted mainly from the
termination of a large number of small plans. Between 1983 and 1999, the number
of defined benefit pension plans with fewer than 100 participants fell from 149,164
to 35,696, a decline of 76.1%. The number of large DB plans fell, too, declining
form 25,979 in 1983 to 14,199, or 45.3%. 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 1,774,000 in 1983 to 515,000 in 1999.10 At the same time, the number of active
participants in large DB plans fell from 28,104,000 to 22,115,000.
Retirement Plan Financial Trends. Financial information reported by
employers to the U.S. Department of Labor 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 1999, pension plans held total assets of $4.4 trillion, but the share
held by DB plans had fallen to 47% ($2.1 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, $24 billion (65%)
was contributed to DB plans. In 1999, employers and employees contributed $216
billion to pension plans, but 86% of the total ($186 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 private-
sector pension plans ($13 billion out of $19 billion) were paid by defined benefit
pensions. In 1999, 62% of the $315 billion in benefit payments were disbursed from
7 (...continued)
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 U.S. Department of Labor, Employee Benefits Security Administration, Private Pension
Plan Bulletin
, no. 12, Summer 2004
10 EBSA, Private Pension Plan Bulletin, no. 12, Summer 2004. 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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DC plans. In that year, DC plans paid $195 billion in benefits, while DB plans paid
out $119 billion in benefits.
Surveys of Employers. 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 2003. (See Table 2.) Participation in company-sponsored retirement plans
was substantially lower in small businesses. In 2003, only 35% 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, 58% of full-time employees participated in an employer-sponsored
retirement plan in 2003, compared to just 18% of part-time workers.
Table 2. Participation in Employer-Sponsored Retirement Plans
by Employees in the Private Sector, March 2003
Type of retirement plan
All types
Defined benefit Defined contribution
Establishment Size
1-99 workers
35%
8%
31%
100 or more workers
65%
33%
51%
Work Schedule
Full-time workers
58%
24%
48%
Part-time workers
18%
8%
14%
All workers
49%
20%
40%
Note: Data represent 103 million workers employed in the private sector.
Source: National Compensation Survey, U.S. Department of Labor.
11 In the Census Bureau’s Current Population Survey, employer characteristics are reported
at the level of the firm, which may include more than one establishment.

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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. These data allow
us to tabulate the number and percentage of workers who reported whether their
employer offered a retirement plan and whether they participated in the plan. These
responses can then be categorized by certain demographic and economic
characteristics, such as the worker’s age, race, sex, income, and the size of firm at
which they worked. Unfortunately, however, because the CPS asks only two
pension-related questions — if the worker’s employer offers a retirement plan and
if the worker participates — we cannot ascertain whether the plan is a defined benefit
plan or a defined contribution plan.
Plan Participation by Full-Time vs. Part-Time Employment. Table 3
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.
The proportion of year-round, full-time workers employed at firms that
sponsored a retirement plan was 62.0% in 2002 and 62.7% in 2003. The participation
rate among year-round, full-time workers whose employer sponsored a retirement
plan was 53.5% in 2002 and 54.1% in 2003. Plan participation peaked among full-
time workers in 1999 at 58.0%. Between 2002 and 2003, the proportion of part-time
or part-year workers employed by firms that sponsored a retirement plan fell from
43.0% to 41.6%. The rate of participation among part-year and part-time workers
whose employer sponsored a retirement plan fell from 25.7% to 25.3%.
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. There is little difference in retirement plan
participation between men and women who work year-round, full-time. (See Table
5
.) Women, however, are more likely than men to work part-year or part-time. Data
from the Current Population Survey show that in 2003, 81.5% of working men
between the ages of 25 and 64 were employed year-round, full-time compared to
66.2% of working women in this age-group. Consequently, while women who
worked full-time in 2003 were as likely as their male counterparts to have
participated in a retirement plan (54% of both groups), the retirement plan
participation rate among all working women 25 to 64 years old in the private sector
in 2003 was lower than the participation rate among all working men in that age
group (44% vs. 49%).12
12 CRS estimates based on the March 2004 CPS (not shown in accompanying tables).

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Table 3. Participation in Retirement Plans
by Full-Time vs. Part-Time Employment
(Private-sector wage and salary workers, ages 25 to 64)
Workers
Employer sponsors plan
Employees participating
(thousands)
Workers
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
2003
69,306
43,450
62.7
37,464
54.1
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
2003
23,714
9,868
41.6
5,991
25.3
All workers
1994
80,996
46,427
57.3
37,304
46.1
1995
84,477
47,692
56.5
38,806
45.9
1996
87,166
50,822
58.3
40,941
47.0
1997
87,510
51,629
59.0
41,649
47.6
1998
87,868
53,774
61.2
43,707
49.7
1999
88,880
53,960
60.7
44,463
50.0
2000
91,597
56,207
61.4
46,060
50.3
2001
92,714
55,632
60.0
45,122
48.7
2002
93,197
53,158
57.0
43,165
46.3
2003
93,020
53,318
57.3
43,455
46.7
Source: CRS analysis of the Current Population Survey, various years.

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Retirement Plans and Employer Size. The data from the CPS show that
retirement plan participation in small firms rose in the late 1990s, but has recently
declined. The CPS data also indicate that access to a company-sponsored retirement
plan remains substantially lower in small firms than in firms with 100 or more
employees. The data displayed in Table 4 show that from 1994 to 2003, 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 57.2 million to 69.3 million. At the
same time, the number of such workers whose employer offered a retirement plan
increased from 37.1 million to 43.5 million. The proportion of year-round, full-time
workers 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 62.7%.
Since 1994, the proportion of workers in larger firms whose employer sponsors
a retirement plan has fallen. Among employees at businesses with 100 or more
workers, 78.4% worked at firms that sponsored a retirement plan in 2003, 3.4
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. In 2003, 31.4% 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, 58.2%
were employed at firms that sponsored a retirement plan in 2003, compared to 53.4%
in 1994.
Table 4 also shows the percentage of year-round, full-time employees in the
private sector who participated in an employer-sponsored retirement plan.13 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 rose slightly from 53.5% in 2002 to 54.1% in 2003. This was
lower than the participation rate of 56.1% in 1994. In firms with fewer than 25
employees, 27.2% of full-time employees between the ages of 25 and 64 participated
in a retirement plan in 2003, 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 rose from 47.8% in 2002 to 49.9% in 2003. This was
higher than the 1994 participation rate of 44.9%. Participation in retirement plans
among workers in firms with 100 or more employees also rose slightly between 2002
and 2003, increasing from 66.6% to 67.6%. This was 3.4 percentage points lower
than the participation rate of 71.0% in 1994.
13 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.

CRS-10
Table 4. 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)
Workers
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
40,304
57.4
2001
69,266
45,097
65.1
38,678
55.8
2002
69,093
42,805
62.0
36,973
53.5
2003
69,306
43,450
62.7
37,464
54.1
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
2003
18,616
5,850
31.4
5,064
27.2
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
2003
10,540
6,133
58.2
5,254
49.9
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
2001
41,739
33,223
79.6
28,645
68.6
2002
40,496
31,116
76.8
26,967
66.6
2003
40,149
31,466
78.4
27,146
67.6
Source: CRS analysis of the Current Population Survey, various years.

CRS-11
Plan Participation Among Men and Women. Table 5 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 61.8%.
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. In 2003, 64.0% of women
who worked year-round, full-time were employed at firms that sponsored a
retirement plan. Thus, in 2003 women who were employed year-round, full-time
were slightly more likely than men to work for an employer that sponsored a
retirement plan. Men and women were almost equally likely to participate in an
employer-sponsored retirement plan. In 2003, 53.9% of men who were employed
year-round, full-time participated in a company-sponsored retirement plan, compared
to 54.3% of women. Both of these participation rates were lower than the peak
participation rates of 1998-1999. The participation rate for men was 5.3 percentage
points lower in 2003 than in 1999. The participation rate for women was 2.0
percentage points lower in 2003 than in 1998.
Table 5. 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
2003
40,963
25,306
61.8
22,083
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
2003
28,342
18,144
64.0
15,381
54.3
Source: CRS analysis of the Current Population Survey, various years.

CRS-12
Plan Participation by Employee Age. Table 6 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 2003, 58.2% of
workers 25 to 34 years old worked for an employer that sponsored a retirement plan,
and 45.7% participated in a company-sponsored plan. Thus, 78.5% of those who
worked for a firm that sponsored a plan participated in the plan (0.457/0.582 =
0.785). In contrast, among workers 35 to 64 years old, 64.4% worked at firms that
sponsored a retirement plan, and 57.4% participated in a company-sponsored plan.
Thus, among workers age 35 or older who worked for a firm that sponsored a
retirement plan, 89.1% participated in the plan (0.574/0.644 = 0.891)14
14 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
neither of these groups is represented in Table 6.

CRS-13
Table 6. 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
2003
19,288
11,221
58.2
8,822
45.7
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
2003
21,328
13,428
63.0
11,609
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
2003
19,227
12,752
66.3
11,521
59.9
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
2003
9,463
6,045
63.9
5,512
58.3
Source: CRS analysis of the Current Population Survey, various years.

CRS-14
Plan Participation by Employee Race. The March 2003 CPS introduced
newly expanded categories of race and ethnicity, making comparisons with prior
years problematic. In Table 7, 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 2003, 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, 67.6% worked for an employer that sponsored a
retirement plan, and 59.3% participated in an employer-sponsored plan. Among
Hispanic workers, just 41.3% worked for an employer that sponsored a retirement
plan and only 32.6% participated in an employer-sponsored retirement plan. Of
workers who classified their race and ethnicity as black non-Hispanic, 59.5% worked
for an employer that sponsored a plan and 49.1% 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 7. 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
2003
48,524
32,800
67.6
28,759
59.3
Black, non-Hispanic
2002
7,078
4,156
58.7
3,363
47.5
2003
7,241
4,311
59.5
3,555
49.1
Hispanic
2002
8,942
3,582
40.1
2,777
31.1
2003
9,073
3,750
41.3
2,956
32.6
Other
2002
4,062
2,356
58.0
1,996
49.2
2003
4,468
2,588
57.9
2,193
49.1
Source: CRS analysis of the Current Population Survey, various years.


CRS-15
Plan Participation by Employee Earnings. Table 8 shows the
relationship between earnings and participation in an employer-sponsored retirement
plan. In Table 8, workers’ annual earnings from wages and salaries — as reported
on the Current Population Survey — are ranked by quartile. In 2003, one-quarter of
private-sector wage and salary workers between the ages of 25 and 64 who were
employed year-round, full-time earned more than $56,590. Another quarter had
earnings between $36,360 and $56,590. The next quarter had earnings between
$24,400 and $36,360, and those in the lowest quartile earned less than $24,400.
In 2003, 77% of year-round, full-time workers in the private sector with annual
earnings in the top quartile were employed by firms that sponsored a retirement plan,
and 72.5% of workers in the top earnings quartile participated in a retirement plan.
Both of these percentages were lower than the rates in 1999, which was the peak year
of plan participation for this quartile during the ten-year period shown in the table.
In 1999, 80.2% of year-round, full-time workers in the private sector with annual
earnings in the top quartile were employed by firms that sponsored a retirement plan,
and 75.9% of workers in the top earnings quartile participated in a retirement plan.
The percentage of workers employed at firms that sponsored a retirement plan
and the percentage who participated in these plans were progressively lower in each
of three lowest earnings quartiles. For example, among workers in the lowest
earnings quartile in 2003, 41.2% were employed at firms that sponsored a retirement
plan, and 28.4% of workers in the bottom quartile participated in a retirement plan.
Both of these percentages were lower than the rates in 1998, which was the peak year
of plan participation for this quartile during the ten-year period shown in the table.
In 1998, 46.9% of year-round, full-time workers in the private sector with annual
earnings in the bottom quartile were employed by firms that sponsored a retirement
plan, and 33.1% of workers in the bottom earnings quartile participated in a
retirement plan.
Low-wage workers are not only less likely to work for an employer that
sponsors a retirement plan, they also are less likely to participate if a plan is offered.
Among employees whose earnings in 2003 were in the top quartile, 77.0% worked
for an employer that sponsored a retirement plan and 72.5% participated in a
retirement plan. Therefore, the participation rate among employees in the top
earnings quartile whose employer sponsored a retirement plan was 94.2%
(0.725/0.770 = 0.942). Among workers whose 2003 earnings were in the bottom
quartile, only 41.2% worked for an employer that sponsored a retirement plan and
just 28.5% participated in a retirement plan. Thus, the participation rate among low-
wage employees whose employer sponsored a retirement plan was 68.9%
(0.284/0.412 = 0.689).

CRS-16
Table 8. Participation in Retirement Plans by Annual Earnings
(Private-sector wage and salary workers, ages 25 to 64, employed year-round, full-time)
Employer sponsors plan
Employee participates
Worker's Annual
Earnings
Percentage of workers
Percentage of workers
Top Earnings Quartile
1994
78.3
74.1
1995
77.1
73.0
1996
79.7
75.2
1997
79.4
74.7
1998
79.6
75.0
1999
80.2
75.9
2000
80.2
75.5
2001
78.2
73.3
2002
75.3
71.0
2003
77.0
72.5
Third Earnings Quartile
1994
74.3
67.4
1995
72.4
65.1
1996
74.7
67.8
1997
75.1
67.6
1998
74.9
67.8
1999
75.7
68.0
2000
74.3
67.1
2001
74.2
66.7
2002
70.9
63.3
2003
71.0
63.6
Second Earnings Quartile
1994
63.4
53.4
1995
61.0
51.3
1996
65.3
55.0
1997
63.9
53.6
1998
67.1
56.3
1999
66.0
56.3
2000
66.0
55.5
2001
63.9
52.9
2002
61.3
51.6
2003
61.6
51.7
Bottom Earnings Quartile
1994
44.9
31.2
1995
42.4
30.4
1996
45.4
32.4
1997
44.5
31.7
1998
46.9
33.1
1999
45.5
32.3
2000
44.9
32.1
2001
44.9
31.5
2002
41.4
29.5
2003
41.2
28.4
Source: CRS analysis of the Current Population Survey, various years.