Order Code RL30122
CRS Report for Congress
Pension Sponsorship and Participation:
Summary of Recent Trends

Updated September 8, 2008
Patrick Purcell
Specialist in Income Security
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress ˜ Washington, DC 20540


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 rose from 51.2 million in 2006 to 53.5 million in 2007. The number of private-sector
workers who participated in employer-sponsored retirement plans rose from 42.0 million in
2006 to 44.1 million in 2007. The proportion of 25 to 64 year-old workers in the private
sector who participated in employer-sponsored retirement plans increased from 43.2% in
2006 to 45.1% in 2007. Between 2000 and 2007, the number of private-sector workers
between the ages of 25 and 64 who participated in employer-sponsored retirement plans fell
from 46 million to 44 million. The percentage of workers who participated in an employer-
sponsored plan fell from 50.3% in 2000 to 45.1% in 2007.
A CRS analysis of the Current Population Survey indicates that, among private-sector
workers aged 25 to 64 who were employed year-round, full-time:
!
The percentage of workers whose employer sponsored a retirement plan rose
from 57.2% in 2006 to 59.9% in 2007.
!
The percentage of workers who participated in employer-sponsored
retirement plans rose from 49.2% in 2006 to 52.0% in 2007.
!
Only 25.5% of workers at firms with fewer than 25 employees participated
in an employer-sponsored retirement plan in 2007, compared to 45.5% of
workers at firms with 25 to 99 employees and 65.4% of workers at firms
with 100 or more employees.
!
Among men and women who were employed year-round, full-time, 51.6%
of men and 52.6% of women participated in an employer-sponsored
retirement plan in 2007.
!
Only 43.0% of private-sector workers aged 25 to 34 and employed year-
round, full-time participated in an employer-sponsored retirement plan in
2007, compared to 51.8% of workers aged 35 to 44, 57.4% of those aged 45
to 54, and 57.6% of those aged 55 to 64.
!
Black, Hispanic, and other non-white workers were less likely to have
participated in an employer-sponsored retirement plan. Fifty-eight percent
of white workers participated in a company-sponsored retirement plan in
2007, compared to 47.1% of black non-Hispanic workers, 30.6% of
Hispanic workers, and 48.5% of other non-white workers (mainly Asian-
American and Native American workers).
!
Only 27.7% of workers whose earnings were in the lowest quartile in 2007
(under $27,000) participated in a retirement plan at work, compared to
69.2% of workers whose earnings were in the top quartile (above $63,000).
!
The percentage of part-time workers in the private sector whose employer
sponsored a retirement plan rose from 37.8% in 2006 to 38.3% in 2007.
Twenty-three percent of part-year or part-time workers in the private sector
participated in an employer sponsored retirement plan in 2007, essentially
unchanged from 2006.

Contents
Background: Employment and an Aging Workforce . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Life Expectancy Continues to Increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Labor Force Participation Begins to Drop After Age 55 . . . . . . . . . . . . . . . . . . . . . . 1
Congress and Retirement Income Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Two Kinds of Retirement Plans: Defined Benefit and Defined Contribution . . . . . 3
Who Bears the Investment Risk? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The Number of Defined Benefit Plans Is Declining . . . . . . . . . . . . . . . . . . . . . . . . . 4
Recent Trends in Retirement Plan Sponsorship and Participation . . . . . . . . . . . . . . . . . . 5
Plan Participation by Full-Time vs. Part-Time Employment . . . . . . . . . . . . . . . . . . . 5
Retirement Plans and Employer Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Plan Participation Among Men and Women . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Plan Participation by Employee Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Plan Participation by Employee Race . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Plan Participation by Employee Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Another Measure of Retirement Plan Participation:
The National Compensation Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
List of Tables
Table 1. Labor Force Participation Rates in 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Table 2. Participation in Retirement Plans
by Full-Time vs. Part-Time Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Table 3. Participation in Retirement Plans by Size of Firm . . . . . . . . . . . . . . . . . . . . . . . 8
Table 4. Employee Participation in Retirement Plans, by Sex . . . . . . . . . . . . . . . . . . . . . 9
Table 5. Employee Participation in Retirement Plans, by Age . . . . . . . . . . . . . . . . . . . . 11
Table 6. Employee Participation in Retirement Plans, by Race . . . . . . . . . . . . . . . . . . . . 13
Table 7. Participation in Retirement Plans by Annual Earnings . . . . . . . . . . . . . . . . . . . 15
Table 8. Percentage of Private-Sector Employees Participating in
Employer-Sponsored Retirement Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17


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.
Life Expectancy Continues to Increase
The average life expectancy of Americans born in 1960 was 69.7 years. It has
been estimated that those who were 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 13.0 years,
while a woman who turned 65 in 1960 had a remaining life expectancy of 15.8 years.
A man who reached age 65 in 2005 could expect to live another 16.8 years, while a
woman who turned 65 in 2005 had a remaining life expectancy of 19.8 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 2005, there were 36.7 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 after 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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Table 1. Labor Force Participation Rates in 2007
Total Number
Number in the
Labor Force
Age
of People
Labor Force
Participation Rate
(thousands)
(thousands)
(percent)
Men
Age 25 to 54
62,081
56,408
90.9
Age 45 to 54
21,313
18,801
88.2
Age 55 to 64
15,658
10,904
69.6
Age 65 and up
15,525
3,188
20.5
Women
Age 25 to 54
63,615
47,945
75.4
Age 45 to 54
22,231
16,896
76.0
Age 55 to 64
16,876
9,846
58.3
Age 65 and up
20,703
2,615
12.6
Source: U.S. Department of Labor, Bureau of Labor Statistics, Employment and Earnings
(January 2008).
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.
2 Defined benefit pensions are taxed when the employee receives benefits during retirement.

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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 the retirement benefit 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 as a lump sum, a series of fixed payments over a
period of years, or in the form of a life annuity.
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. At retirement, the employee must receive a benefit that is equal to the
amount contributed to the plan plus the interest that has been credited to those
contributions. 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 the
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. This can be done over a period of years.
In a defined contribution plan, the employer bears no risk beyond an 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

CRS-4
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 establish or continue 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 2007, for example, more than 36 million wage and salary
workers were employed by firms with fewer than 25 employees.3 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).4 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.
The Number of Defined Benefit Plans Is Declining
According to the Pension Benefit Guaranty Corporation (PBGC), the number
of PBGC-insured defined benefit plans fell from 114,396 in 1985 to 30,328 in 2006.5
The decline in the number of DB plans resulted mainly from the termination of a
large number of small plans. Between 1985 and 2006, the number of single-
employer defined benefit pension plans with fewer than 100 participants fell from
90,061 to 18,199, a decline of 80%. The number of large DB plans fell from 22,147
3 Full-time and part-time wage and salary workers. (Source: Current Population Survey.)
4 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.
5 Pension Benefit Guaranty Corporation, Pension Insurance Data Book 2006.

CRS-5
to 10,585, a decline of 52.2%. In recent years, however, several large pension plans
have been terminated, and others have been “frozen” so that participants no longer
accrue pension benefits.
Recent Trends in Retirement Plan Sponsorship
and Participation
Every month, the Bureau of the Census conducts the Current Population Survey
(CPS) among a nationally representative sample of approximately 100,000
households, primarily for the purpose of estimating the rates of employment and
unemployment. During March of each year, the survey includes supplemental
questions about employment, income, health insurance, retirement plan participation,
and receipt of government benefits during the previous calendar year. This
information allows analysts and researchers to calculate the number and percentage
of workers who reported whether their employer offered a retirement plan and
whether they participated in the plan. Responses can then be categorized by
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 offered
a retirement plan and if the worker was included in the plan — 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 2 compares retirement plan participation among year-round, full-time
wage and salary workers in the private sector with participation among workers 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 increased from 57.2% in 2006 to 59.9% in 2007. The
participation rate among these workers rose from 49.2% in 2006 to 52.0% in 2007.
Between 1990 and 2000, plan participation among full-time workers increased from
54.6% to 57.4%. It has since fallen by about five percentage points. Between 2006
and 2007, the proportion of part-time or part-year workers employed by firms that
sponsored a retirement plan rose from 37.8% to 38.3%. The participation rate among
part-year and part-time workers whose employer sponsored a retirement plan was
essentially unchanged from 2006 to 2007, at approximately 23% in both years..
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
4
.) Women, however, are more likely than men to work part-year or part-time. In
2007, 82.7% of working men between the ages of 25 and 64 were employed year-
round, full-time compared to 68.7% of working women in this age-group.
Consequently, while women who worked full-time in 2007 were as likely as their

CRS-6
male counterparts to have participated in a retirement plan (52.6% of women vs.
51.6% of men), the retirement plan participation rate among all women 25 to 64
years old in the private sector in 2007 was lower than the participation rate among
all working men in that age group.6 (43% of women participated vs. 47% of men.)
Table 2. 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
1990
53,026
33,323
62.8
28,955
54.6
1995
60,687
38,344
63.2
33,298
54.9
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
2005
72,331
43,195
59.7
37,347
51.6
2006
74,542
42,601
57.2
36,676
49.2
2007
74,588
44,645
59.9
38,756
52.0
Part-time
1990
23,608
8,838
37.4
5,273
22.3
1995
23,790
9,348
39.3
5,508
23.2
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
2005
23,394
9,337
39.9
5,707
24.4
2006
22,660
8,566
37.8
5,287
23.3
2007
23,187
8,891
38.3
5,322
23.0
All workers
1990
76,633
42,161
55.0
34,228
44.7
1995
84,477
47,692
56.5
38,806
45.9
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
2005
95,725
52,532
54.9
43,053
45.0
2006
97,201
51,167
52.6
41,963
43.2
2007
97,775
53,536
54.8
44,078
45.1
Source: Congressional Research Service analysis of the Current Population Survey, various years.
6 CRS estimates based on the March 2008 CPS (not shown in accompanying tables).

CRS-7
Retirement Plans and Employer Size
Data from the CPS show that retirement plan participation in small firms rose
between 1990 and 2000, 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 3 show
that from 1990 to 2007, the number of workers between the ages of 25 and 64 who
were employed in the private sector and worked year-round, full-time at firms of all
sizes increased from 53.0 million to 74.6 million. At the same time, the number of
such workers whose employer offered a retirement plan increased from 33.3 million
to 44.6 million. The proportion of year-round, full-time workers who were employed
at firms that offered a retirement plan rose from 62.8% in 1990 to 66.3% in 2000.
It has since fallen to 59.9%.
The data displayed in Table 3 show that since 2000, the proportion of workers
in firms with 100 or more workers whose employer sponsors a retirement plan has
fallen from 80.5% to 75.2%. 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 2007, 29.3% of full-time workers in businesses
with fewer than 25 employees were employed at firms that sponsored a retirement
plan, down from 34.2% in 2000. This was still higher than the 25.4% of workers at
small firms whose employer sponsored a retirement plan in 1995. Among workers
in firms with 25 to 99 employees, 53.1% were employed at firms that sponsored a
retirement plan in 2007, compared to 58.5% in 2000 and 54.1% in 1995.
Table 3 also shows the percentage of year-round, full-time employees in the
private sector who participated in an employer-sponsored retirement plan.7 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 from 49.2% in 2006 to 52.0% in 2007. This was lower than
the participation rates of 57.4% in 2000 and 54.9% in 1995. In firms with fewer than
25 employees, just 25.5% of full-time employees between the ages of 25 and 64
participated in a retirement plan in 2007, down from 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 rose from 42.6% in 2006 to 45.5% in 2007. This was
lower than the participation rates of 49.4% in 2000 and 46.0% in 1995. Participation
in retirement plans among workers in firms with 100 or more employees also rose
between 2006 and 2007, increasing from 62.7% to 65.4%. This was about five
percentage points lower than the participation rates of 70.2% in 2000 and 70.4% in
1995.
7 Not all employees whose employer sponsors a retirement plan are eligible to participate.
For example, employees under age 21, those who have been employed for less than one
year, and those who work fewer than 1,000 hours in a year can be excluded from the plan.

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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
Workers
Employer Sponsors Plan
Employees Participating
firm
(thousands)
Workers
Percent
Participants
Percent
Under 25 employees
1990
12,119
3,042
25.1
2,619
21.6
1995
14,627
3,715
25.4
3,109 21.3
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
2005
19,200
5,569
29.0
4,851
25.3
2006
19,406
5,160
26.6
4,434
22.9
2007
19,449
5,702
29.3
4,954
25.5
25 to 99 employees
1990
7,892
3,904
49.5
3,291
41.7
1995
9,108
4,923
54.1
4,188 46.0
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
2005
11,214
5,975
53.3
5,070
45.2
2006
11,489
5,829
50.7
4,889
42.6
2007
11,367
6,041
53.1
5,166
45.5
100 or more employees
1990
33,014
26,378
79.9
23,045
69.8
1995
36,951
29,706
80.4
26,000
70.4
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
2005
41,917
31,562
75.5
27,425
65.4
2006
43,646
31,612
72.4
27,353
62.7
2007
43,772
32,903
75.2
28,636
65.4
All firms
1990
53,026
33,323
62.8
28,955
54.6
1995
60,687
38,344
63.2
33,298
54.9
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
2005
72,331
43,195
59.7
37,347
51.6
2006
74,542
42,601
57.2
36,676
49.2
2007
74,588
44,645
59.9
38,756
52.0
Source: CRS analysis of the Current Population Survey, various years.

CRS-9
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 1990 and 2000, the proportion of
men whose employer sponsored a retirement plan rose from 63.3% to 66.2%. Since
then, it has dropped to 59.1%. The proportion of women who worked at firms that
sponsored a retirement plan increased from 62.1% in 1990 to 66.4% in 2000. In
2007, 61.0% of women who worked year-round, full-time were employed at firms
that sponsored a retirement plan. Thus, in 2007 women who were employed year-
round, full-time were more likely than men to have worked for an employer that
sponsored a retirement plan. Men and women, however, were almost equally likely
to have participated in an employer-sponsored retirement plan. In 2007, 51.6% of
men who were employed year-round, full-time participated in a company-sponsored
retirement plan, compared to 52.6% of women. Both of these participation rates
were lower than the 2000 participation rates of 58.3% for men and 56.1% for women.
The participation rate for men was 6.7 percentage points lower in 2007 than in 2000.
The participation rate for women was 3.5 percentage points lower in 2007 than in
2000.
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
1990
32,208
20,389
63.3
18,242
56.6
1995
36,504
23,008
63.0
20,359 55.8
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
2005
42,881
25,136
58.6
22,021
51.4
2006
44,210
24,898
56.3
21,616
48.9
2007
43,844
25,897
59.1
22,600
51.6
Women
1990
20,817
12,934
62.1
10,713
51.5
1995
24,182
15,336
63.4
12,939
53.5
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
2005
29,450
18,059
61.3
15,326
52.0
2006
30,332
17,703
58.4
15,060
49.7
2007
30.744
18,749
61.0
16,156
52.6
Source: Congressional Research Service analysis of the Current Population Survey, various years.

CRS-10
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 — were less
likely than middle-aged and older workers to be employed at a firm that sponsored
a retirement plan in 2007. They also were less likely to participate in retirement
plans than are older workers. In 2007, 54.3% of workers 25 to 34 years old worked
for an employer that sponsored a retirement plan, and 43.0% of workers in this age
group participated in a company-sponsored plan. Thus, 79.2% of those aged 25 to
34 who worked for a firm that sponsored a plan participated in the plan (0.430/0.543
= 0.792). In contrast, among workers 55 to 64 years old, 63.5% worked at firms that
sponsored a retirement plan, and 57.6% participated in a company-sponsored plan.
Thus, among workers aged 55 to 64 who worked for a firm that sponsored a
retirement plan, 90.7% participated in the plan (0.576/0.635 = 0.907).8
8 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. Employees who work fewer than 1,000 hours in a year and those under age 21
also can be excluded from participating, but neither group is represented in Table 5.

CRS-11
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
1990
19,344
11,489
59.4
9,135
47.2
1995
19,759
11,673
59.1
9,337
47.3
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
2005
19,677
10,577
53.8
8,268
42.0
2006
20,359
10,648
52.3
8,371
41.1
2007
20,053
10,895
54.3
8,625
43.0
35 to 44
1990
16,989
11,042
65.0
9,871
58.1
1995
20,439
13,235
64.8
11,742
57.5
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
2005
21,688
12,893
59.5
11,289
52.1
2006
21,875
12,313
56.3
10,781
49.3
2007
21,448
12,793
59.7
11,119
51.8
45 to 54
1990
10,922
7,148
65.5
6,586
60.3
1995
14,042
9,240
65.8
8,381
59.7
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
2005
20,466
12,995
63.5
11,686
57.1
2006
21,188
12,959
61.2
11,542
54.5
2007
21,265
13,449
63.2
12,200
57.4
55 to 64
1990
5,771
3,644
63.1
3,363
58.3
1995
6,446
4,196
65.1
3,838
59.5
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
2005
10,500
6,730
64.1
6,104
58.1
2006
11,120
6,681
60.1
5,981
53.8
2007
11,821
7,508
63.5
6,812
57.6
Source: CRS analysis of the Current Population Survey, various years.

CRS-12
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 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 2007, 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 have worked for an employer that sponsored a
retirement plan. Among white non-Hispanic workers, 65.4% worked for an
employer that sponsored a retirement plan, and 57.6% participated in an employer-
sponsored plan. Among Hispanic workers, just 37.5% worked for an employer that
sponsored a retirement plan and only 30.6% participated in an employer-sponsored
retirement plan. Of workers who classified their race and ethnicity as black non-
Hispanic, 57.6% worked for an employer that sponsored a plan and 47.1%
participated in a plan, while among Asian-American and other workers, 55.4%
worked for an employer that sponsored a retirement plan and 48.5% participated in
a plan.

CRS-13
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
2003
48,524
32,800
67.6
28,759
59.3
2004
48,618
32,427
66.7
28,522
58.7
2005
49,952
32,490
65.0
28,618
57.3
2006
50,627
31,740
62.7
27,817
55.0
2007
50,835
33,251
65.4
29,291
57.6
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
2005
7,511
4,295
57.2
3,491
46.5
2006
7,927
4,224
53.3
3,468
43.8
2007
7,805
4,499
57.6
3,675
47.1
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
2005
10,208
3,775
37.0
2,964
29.0
2006
10,982
3,843
35.0
3,032
27.6
2007
10,834
4,065
37.5
3,310
30.6
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
2005
4,660
2,636
56.6
2,274
48.8
2006
5,007
2,794
55.9
2,358
47.1
2007
5,114
2,830
55.4
2,481
48.5
Source: Congressional Research Service analysis of the Current Population Survey, various years.

CRS-14
Plan Participation by Employee Earnings
Table 7 shows the relationship between earnings and participation in an
employer-sponsored retirement plan. In Table 7, workers’ annual earnings from
wages and salaries — as reported on the Current Population Survey — are ranked by
quartile. In 2007, 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
$63,000. Another quarter had earnings between $40,000 and $63,000. The next
quarter had earnings between $27,000 and $40,000, and those in the lowest quartile
earned less than $27,000.
In 2007, 73.8% 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 69.2% of workers in the top earnings quartile participated in a
retirement plan. Both of these percentages were lower than the rates in 2000 and
1995. In 2000, 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 75.5% of workers in the top earnings quartile participated in a
retirement plan. The equivalent sponsorship and participation rates in 1995 were
77.1% and 73.0%, respectively.
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 2007, 38.4% were employed at firms that sponsored a retirement
plan, and 27.7% of workers in the bottom quartile participated in a retirement plan.
Both of these percentages were lower than the comparable rates in 2000 and 1995.
In 2000, 44.9% 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 32.1% of workers in the bottom earnings quartile participated in a
retirement plan. The equivalent sponsorship and participation rates in 1995 were
42.4% and 30.4%, respectively.
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 2007 were in the top quartile, 73.8% worked
for an employer that sponsored a retirement plan and 69.2% participated in a
retirement plan. Therefore, the participation rate among employees in the top
earnings quartile whose employer sponsored a retirement plan was 93.8%
(0.692/0.738 = 0.938). Among workers whose 2007 earnings were in the bottom
quartile, only 38.4% worked for an employer that sponsored a retirement plan and
just 27.7% participated in a retirement plan. Thus, the participation rate among low-
wage employees whose employer sponsored a retirement plan was 72.1%
(0.277/0.384 = 0.721).

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)
Worker’s Annual
Employer Sponsors Plan
Employee Participates
Earnings
Percentage of Workers
Percentage of Workers
Highest Earnings Quartile
1990
77.9
73.7
1995
77.1
73.0
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
2005
74.4
70.3
2006
70.9
66.7
2007
73.8
69.2
Second-highest Earnings Quartile
1990
72.0
64.2
1995
72.4
65.1
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
2005
68.6
61.5
2006
66.8
59.9
2007
69.4
62.8
Third-highest Earnings Quartile
1990
61.3
51.4
1995
61.0
51.3
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
2005
59.0
49.8
2006
56.2
46.3
2007
59.1
49.7
Lowest Earnings Quartile
1990
41.2
30.3
1995
42.4
30.4
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
2005
39.0
27.5
2006
36.6
26.2
2007
38.4
27.7
Source: CRS analysis of the Current Population Survey, various years.

CRS-16
Another Measure of Retirement Plan Participation:
The National Compensation Survey

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 (NCS). This survey
is conducted among a nationally representative sample of private-sector business
establishments.9 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.10
According to the data collected from employers through the National
Compensation Survey, 51% of workers in the private sector participated in employer-
sponsored retirement plans in March 2007. (See Table 8.) Twenty percent of private-
sector workers participated in defined benefit plans and 43% participated in defined
contribution plans. Approximately 12% of private-sector workers participated in
both types of plan. The NCS indicates that 66% of employees in establishments with
100 or more workers participated in an employer-sponsored retirement plan in March
2007, while only 37% of employees at establishments with fewer than 100 employees
participated in an employer-sponsored retirement plan. The data from the NCS also
indicate that among full-time workers, 60% participated in an employer-sponsored
retirement plan in March 2007, compared to just 23% of part-time workers.
While it is not necessarily surprising that the results of the NCS differ from
those of the CPS, nor that the NCS shows higher rates of participation, it is important
to note that in recent years the difference in the results shown by the two surveys has
increased because the NCS has indicated a generally steady rate of retirement plan
participation whereas the CPS data indicate that retirement plan participation has
been falling. As recently as 2003, the NCS indicated that 49% of private-sector
workers participated in a retirement plan whereas the CPS data showed a
participation rate of 47%. This two percentage point difference was small enough
to be inconsequential for most analytical purposes. The slightly higher rate of
participation indicated by the NCS might partly be due to the fact that the business
owners and benefits specialists who are interviewed for the NCS could be expected
to have greater knowledge of employer-provided benefits than the household
members interviewed for the CPS. By March 2007, however, the NCS indicated that
the proportion of private-sector workers participating in employer-sponsored
retirement plans was 51%, whereas the March 2008 CPS (which asks about pension
participation in 2007) showed that participation in retirement plans among private
sector workers had fallen to 45%. The difference in the results shown by the two
9 For more information on the National Compensation Survey, see U.S. Department of
Labor, National Compensation Survey: Employee Benefits in Private Industry in the United
States, March 2007
, available online at [http://www.bls.gov/ncs/ebs/sp/ebsm0006.pdf].
10 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.

CRS-17
surveys can no longer be considered inconsequential, leaving analysts to question
whether one or both surveys have problems related to sample selection or survey
methodology.
Table 8. Percentage of Private-Sector Employees Participating
in Employer-Sponsored Retirement Plans
Type of Retirement Plan
All Types
Defined Benefit
Defined Contribution
Establishment Size
1-99 workers
March 2003
35
8
31
March 2004
37
9
32
March 2005
37
9
32
March 2006
37
9
33
March 2007
37
9
33
100 or more workers
March 2003
65
33
51
March 2004
67
34
53
March 2005
67
36
53
March 2006
67
33
54
March 2007
66
32
53
Work Schedule
Full-time workers
March 2003
58
24
48
March 2004
60
24
50
March 2005
60
25
50
March 2006
60
23
51
March 2007
60
23
50
Part-time workers
March 2003
18
8
14
March 2004
20
9
14
March 2005
19
9
14
March 2006
21
8
16
March 2007
23
9
18
All workers
March 2003
49
20
40
March 2004
50
21
42
March 2005
50
21
42
March 2006
51
20
43
March 2007
51
20
43
Source: U.S. Department of Labor, National Compensation Survey.
Note: Data represent 102 million workers employed in the private sector in 2003 and
108 million workers employed in the private sector in 2007.

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