Order Code RL30122
CRS Report for Congress
Received through the CRS Web
Pension Sponsorship and Participation:
Summary of Recent Trends
Updated September 8, 2005
Patrick Purcell
Specialist in Social Legislation
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress

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Pension Sponsorship and Participation:
Summary of Recent Trends
Summary
According to the Census Bureau’s Current Population Survey (CPS), the
number of private-sector workers between the ages of 25 and 64 whose employer
sponsored a retirement plan fell from 53.3 million in 2003 to 53.1 million in 2004.
The number of workers who participated in an employer-sponsored retirement plan
fell from 43.5 million in 2003 to 43.3 million in 2004. The percentage of 25 to 64-
year-old workers in the private sector who participated in an employer-sponsored
retirement plan declined from 46.7% in 2003 to 46.3% in 2004.
A CRS analysis of the Current Population Survey indicates that, among private-
sector workers 25 to 64 years old employed year-round, full-time:
! The percentage of workers whose employer sponsored a retirement
plan fell from 62.7% in 2003 to 61.8% in 2004.
! The percentage of workers employed year-round, full-time who
participated in an employer-sponsored retirement plan declined from
54.1% in 2003 53.4% in 2004.
! Only 26.5% of workers at firms with fewer than 25 employers
participated in an employer-sponsored retirement plan in 2004,
compared to 48.6% of workers at firms with 25 to 99 employees and
67.0% of workers at firms with 100 or more employees.
! In 2004, there was relatively little difference in retirement plan
participation among men and women who were employed full-time:
52.9% of men and 54.1% of women participated in an employer-
sponsored retirement plan.
! In 2004, only 44.9% of private-sector workers 25 to 34 years old
who were employed year-round, full-time participated in an
employer-sponsored retirement plan, versus 56.6% 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 2004, compared to 49.7% of black non-Hispanic
workers, 31.0% of Hispanic workers, and 50.8% of other non-white
workers (mainly Asian-American and Native American workers).
! Only 29.9% of workers whose earnings were in the lowest quartile
in 2004 (those with earnings under $25,000) participated in a
retirement plan at work, compared to 71.4% of workers whose
earnings were in the top quartile (those with earnings above
$58,000).
The percentage of part-year or part-time workers in the private sector whose
employer sponsored a retirement plan was 41.5% in 2004, unchanged from 2003.
The percentage of part-year or part-time workers in the private sector who
participated in an employer sponsored retirement plan fell from 25.3% in 2003 to
24.8% in 2004.

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Contents
Background: Employment and an Aging Workforce . . . . . . . . . . . . . . . . . . 1
Congress and Retirement Income Policies . . . . . . . . . . . . . . . . . . . . . . . 2
Two Kinds of Retirement Plans: Defined Benefit and Defined
Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Recent Trends in Retirement Plan Sponsorship and Participation . . . . . . . . 4
The Number of Defined Benefit Plans Is Declining . . . . . . . . . . . . . . . 4
Plan Participation by Full-Time vs. Part-Time Employment . . . . . . . . . 6
Retirement Plans and Employer Size . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Plan Participation Among Men and Women . . . . . . . . . . . . . . . . . . . . 10
Plan Participation by Employee Age . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Plan Participation by Employee Race . . . . . . . . . . . . . . . . . . . . . . . . . 13
Plan Participation by Employee Earnings . . . . . . . . . . . . . . . . . . . . . . 14
List of Tables
Table 1. Labor Force Participation Rates in 2004 . . . . . . . . . . . . . . . . . . . . . . . . . 2
Table 2. Percentage of Private-sector Employees Participating in
Employer-Sponsored Retirement Plans, March 2003 . . . . . . . . . . . . . . . . . . 5
Table 3. Participation in Retirement Plans by Full-Time vs. Part-Time
Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Table 4. Participation in Retirement Plans by Size of Firm . . . . . . . . . . . . . . . . . 9
Table 5. Employee Participation in Retirement Plans, by Sex . . . . . . . . . . . . . . 10
Table 6. Employee Participation in Retirement Plans, by Age . . . . . . . . . . . . . . 12
Table 7. Employee Participation in Retirement Plans, by Race . . . . . . . . . . . . . . 13
Table 8. Participation in Retirement Plans by Annual Earnings . . . . . . . . . . . . . 15

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Pension Sponsorship and Participation:
Summary of Recent Trends
Background: Employment and an Aging Workforce
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 are born in 2005 will live for an average of 77.8 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 2003, there were
35.9 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 63.5
million people age 65 or older, comprising 18.2% of the U.S. population.
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.
1 U.S. National Center for Health Statistics, Vital Statistics of the United States.

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CRS-2
Table 1. Labor Force Participation Rates in 2004
Total Number
Number in the
Labor Force
Age
of People
Labor Force
Participation Rate
(thousands)
(thousands)
(percent)
Men
Age 25 to 54
60,773
54,972
90.5
Age 45 to 54
20,160
17,635
87.5
Age 55 to 64
13,894
9,547
68.7
Age 65 and up
14,684
2,787
19.0
Women
Age 25 to 54
62,636
47,150
75.3
Age 45 to 54
21,085
16,123
76.5
Age 55 to 64
15,025
8,466
56.3
Age 65 and up
19,925
2,211
11.1
Source: U.S. Department of Labor, Bureau of Labor Statistics, Employment and
Earnings (January 2005)
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.2 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 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
(ERISA, 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.
2 Defined benefit pensions are taxed when the employee receives benefits during retirement.

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CRS-3
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,3 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
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.
3 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
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 establish a retirement plan than the potential tax
advantages it could gain by sponsoring 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 2004, for example, 36 million people worked for firms with
fewer than 25 employees.4 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).5 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). 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
Pension Benefit Guaranty Corporation (PBGC), the number of insured defined
benefit plans fell from 114,396 in 1985 to 31,238 in 2004.6 The decline in the
number of DB plans resulted mainly from the termination of a large number of small
plans. Between 1985 and 2004, the number of defined benefit pension plans with
fewer than 100 participants fell from 90,911 to 18,835, a decline of 79.3%. The
number of large DB plans fell from 23,485 to 12,403, a decline of 47.2%.
4 Full-time and part-time wage and salary workers. (Source: Current Population Survey.)
5 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 Dec.
31, 1996. Previously existing SARSEPs may continue as before.
6 Pension Benefit Guaranty Corporation, Pension Insurance Data book 2004.

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CRS-5
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.7
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. Percentage of Private-sector Employees Participating
in Employer-Sponsored Retirement Plans, 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.
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
7 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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CRS-6
receipt of government benefits during the previous calendar year. These data allow
analysts 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 62.7% in 2003 and 61.8% in 2004. The
participation rate among year-round, full-time workers whose employer sponsored
a retirement plan was 54.1% in 2003 and 53.4% in 2004. Plan participation peaked
among full-time workers in 1999 at 58.0%. Between 2003 and 2004, the proportion
of part-time or part-year workers employed by firms that sponsored a retirement plan
remained unchanged at 41.5%. The rate of participation among part-year and part-
time workers whose employer sponsored a retirement plan fell from 25.3% to 24.8%.
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 2004, 82.3% of working men
between the ages of 25 and 64 were employed year-round, full-time compared to
66.9% of working women in this age-group. Consequently, while women who
worked full-time in 2004 were as likely as their male counterparts to have
participated in a retirement plan (54.1% of women vs. 52.9% of men), the retirement
plan participation rate among all working women 25 to 64 years old in the private
sector in 2004 was lower than the participation rate among all working men in that
age group (44% vs. 48%).8
8 CRS estimates based on the March 2005 CPS (not shown in accompanying tables).

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CRS-7
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
Participant
Percent
Full-time
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
2004
70,402
43,488
61.8
37,588
53.4
Part-time
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
2004
23,137
9,597
41.5
5,748
24.8
All workers
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
2004
93,539
53,085
56.8
43,337
46.3
Source: Congressional Research Service analysis of the Current Population Survey, various years.

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CRS-8
Retirement Plans and Employer Size. The data from the CPS show that
retirement plan participation in small firms rose from the mid- to 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 1995 to 2004, 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 60.7 million to 70.4 million.
At the same time, the number of such workers whose employer offered a retirement
plan increased from 38.3 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
63.2% in 1995 to 66.9% in 1998. It has since fallen to 61.8% .
Since 1995, the proportion of workers in large firms whose employer sponsors
a retirement plan has fallen. Among employees at businesses with 100 or more
workers, 77.4% worked at firms that sponsored a retirement plan in 2004, 3.0
percentage points lower than the 80.4% of workers who were employed by large
firms that sponsored a retirement plan in 1995. 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 2004, 30.7% 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
25.4% level of 1995. Among workers in firms with 25 to 99 employees, 56.7% were
employed at firms that sponsored a retirement plan in 2004, compared to 54.1% in
1995 and 59.0% in 1999.
Table 4 also shows the percentage of year-round, full-time employees in the
private sector who participated in an employer-sponsored retirement plan.9 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 slightly from 54.1% in 2003 to 53.4% in 2004. This was also
lower than the participation rate of 54.9% in 1995. In firms with fewer than 25
employees, just 26.5% of full-time employees between the ages of 25 and 64
participated in a retirement plan in 2004, down from a peak of 29.3% in 2000, but
higher than the 21.3% who participated in a plan in 1995. In firms with 25 to 99
employees, retirement plan participation fell from 49.9% in 2003 to 48.6% in 2004.
This was higher than the 1995 participation rate of 46.0%. Participation in retirement
plans among workers in firms with 100 or more employees also fell slightly between
2003 and 2004, declining from 67.6% to 67.0%. This was 3.4 percentage points
lower than the 1995 participation rate of 70.4% in 1995.
9 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 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
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
2004
70,402
43,488
61.8
37,588
53.4
Under 25
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
2004
18,906
5,795
30.7
5,016
26.5
25 to 99
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
2004
10,532
5,969
56.7
5,121
48.6
100 or more
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
2004
40,964
31,724
77.4
27,452
67.0
Source: CRS analysis of the Current Population Survey, various years.

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CRS-10
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 1995 and 1999, the proportion of men whose employer sponsored
a retirement plan rose from 63.0% to 66.9%. Since then, it has dropped to 60.4%.
The proportion of women who worked at firms that sponsored a retirement plan
increased from 63.4% in 1995 to a high of 67.2% in 1998. In 2004, 63.8% of women
who worked year-round, full-time were employed at firms that sponsored a
retirement plan. Thus, in 2004 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 2004, 52.9% of men who were employed
year-round, full-time participated in a company-sponsored retirement plan, compared
to 54.1% of women. Both of these participation rates were lower than the peak
participation rates of 1998-1999. The participation rate for men was 6.3 percentage
points lower in 2004 than in 1999. The participation rate for women was 2.1
percentage points lower in 2004 than in 1999.
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
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
2004
41,732
25,190
60.4
22,079
52.9
Women
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
2004
28,670
18,298
63.8
15,509
54.1
Source: Congressional Research Service analysis of the Current Population Survey, various years.

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CRS-11
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 2004, 56.9% of
workers 25 to 34 years old worked for an employer that sponsored a retirement plan,
and 44.9% of workers in this age group participated in a company-sponsored plan.
Thus, 78.9% of those who worked for a firm that sponsored a plan participated in the
plan (0.449/0.569 = 0.789). In contrast, among workers 35 to 64 years old, 63.6%
worked at firms that sponsored a retirement plan, and 56.6% participated in a
company-sponsored plan. Thus, among workers age 35 or older who worked for a
firm that sponsored a retirement plan, 89.0% participated in the plan (0.566/0.636 =
0.891)10
10 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.

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CRS-12
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
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
2004
19,122
10,878
56.9 8,584
44.9
35 to 44
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
2004
21,587
13,314
61.7 11,564
53.6
45 to 54
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
2004
19,763
12,827
64.9 11,531
58.4
55 to 64
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
2004
9,930
6,470
65.2 5,910
59.5
Source: CRS analysis of the Current Population Survey, various years.

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CRS-13
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 2004, 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, 66.7% worked for an employer that sponsored a
retirement plan, and 58.7% participated in an employer-sponsored plan. Among
Hispanic workers, just 39.4% worked for an employer that sponsored a retirement
plan and only 31.0% participated in an employer-sponsored retirement plan. Of
workers who classified their race and ethnicity as black non-Hispanic, 60.5% worked
for an employer that sponsored a plan and 49.7% participated in a plan, while among
Asian-American and other workers, 58.7% worked for an employer that sponsored
a retirement plan and 51% 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
2004
48,618
32,427
66.7
28,522
58.7
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
2004
7,556
4,570
60.5
3,753
49.7
Hispanic
2002
8,942
3,582
40.1
2,777
31.1
2003
9,073
3,750
41.3
2,956
32.6
2004
9,651
3,802
39.4
2,987
31.0
Other
2002
4,062
2,356
58.0
1,996
49.2
2003
4,468
2,588
57.9
2,193
49.1
2004
4,578
2,689
58.7
2,326
50.8
Source: Congressional Research Service analysis of the Current Population Survey, various years.

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CRS-14
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 2004, 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 $58,000. Another quarter had
earnings between $37,000 and $58,000. The next quarter had earnings between
$25,000 and $37,000, and those in the lowest quartile earned less than $25,000.
In 2004, 75.8% 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 71.4% 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 2004, 41.6% were employed at firms that sponsored a retirement
plan, and 29.9% 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 10-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 2004 were in the top quartile, 75.8% worked
for an employer that sponsored a retirement plan and 71.4% 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%
(0.714/0.758 = 0.942). Among workers whose 2004 earnings were in the bottom
quartile, only 41.6% worked for an employer that sponsored a retirement plan and
just 29.9% participated in a retirement plan. Thus, the participation rate among low-
wage employees whose employer sponsored a retirement plan was 71.9%
(0.299/0.416 = 0.719).

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CRS-15
Table 8. Participation in Retirement Plans by Annual Earnings
(Private-sector wage and salary workers, ages 25 to 64, employed year-round, full-time)
Worker’s Annual
Employer Sponsors Plan
Employee Participates
Earnings
Percentage of Workers
Percentage of Workers
Highest Earnings Quartile
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
2004
75.8
71.4
Second-highest Earnings Quartile
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
2004
71.3
64.1
Third-highest Earnings Quartile
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
2004
60.9
51.0
Lowest Earnings Quartile
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
2004
41.6
29.9
Source: CRS analysis of the Current Population Survey, various years.

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