Worker Participation in Employer-Sponsored
Pensions: Data in Brief
Updated December 1, 2020
Congressional Research Service
https://crsreports.congress.gov
R43439
Worker Participation in Employer-Sponsored Pensions: Data in Brief
Introduction
This report provides data on the percentage of U.S. workers who have access to and who
participate in employer-sponsored pension plans. The data are from the National Compensation
Survey (NCS), conducted by the Bureau of Labor Statistics (BLS).1
A pension is a voluntary benefit offered by some employers in which employees and employers
defer a portion of current wages to receive as income in retirement. Pension plans that meet the
requirements specified in the Internal Revenue Code are cal ed qualified plans and receive
specified tax advantages.2 Employers may offer two types of pension plans: defined benefit (DB)
plans or defined contribution (DC) plans. (Some employers offer both.) Since the late 1980s and
early 1990s, DC pension plans have been more common than DB pension plans.3
In DB pension plans, participants receive monthly payments in retirement based on a formula that
typical y uses either (1) a combination of length of service, accrual rate, and average of final
years’ salary or (2) a flat dollar amount times the number of months or years in the plan. For
example, a plan might specify that retirees receive an amount equal to 1.5% of their pay for each
year of service, where the pay is the average of a worker’s salary during his or her highest-paid
five years.4
In DC plans—of which 401(k) plans, 403(b) plans, 457(b) plans, and the federal government’s
Thrift Savings Plan are the most common—workers contribute a percentage of their wages to
individual accounts established by the employers. Employers may also contribute a match to the
DC plan, which is an additional contribution equal to some or al of the worker’s contribution.
Workers determine individual y how their account contributions are invested. The account may
accrue investment returns and can then be used as a source of income in retirement.5
About 70% of al U.S. workers have access to employer-sponsored pensions, and about 55% of
U.S. workers participate in employer-sponsored pensions. Access and participation rates vary
with various worker attributes. These attributes include whether the workers are full-time or part-
time, whether they work in the private or public sector, and whether or not they belong to a union.
The data also classify access and participation rates by the average wages of workers’ occupations
and the number of employees at workers’ places of employment.
1 T he NCS provides data on employer costs for employee compensation and the availability of employee benefits
among U.S. workers. NCS’s website is http://www.bls.gov/ncs/home.htm.
2 For example, a pension plan is qualified if it meets Internal Revenue Code requirements with respect to plan
participation, vesting of benefits, and distribution of benefits. See T itle 26, Section 401(a), of the United States Code.
Qualified plans are eligible for favorable tax treatment, such as deferred taxes on contributions and earnings.
3 For more information, see Sebastian Devlin-Foltz, Alice M. Henriques, and John Sabelhaus, The Evolution of
Retirem ent Wealth, Board of Governors of the Federal Reserve System, 20 15, https://www.federalreserve.gov/
econresdata/feds/2015/files/2015009pap.pdf.
4 A worker with 20 years of service covered by a DB plan that has an accrual rate of 1.5% with highest five years of
salary of $50,000 would receive a monthly pension benefit of $1,250 ($50,000 / 12 x 20 x .015 = $1,250). As an
example of a flat -rate benefit, a plan might offer a benefit of $50 per month of service in the plan, so an in dividual with
20 years (240 months) would receive a monthly pension benefit of $1,000 ($50 x 240 / 12 = $1,000).
5 Except for the T hrift Savings Plan, which is sponsored by the federal government, the plans are named for the section
of the Internal Revenue Code that authorizes them. Private sector employers sponsor 401(k) plans, public school
systems and nonprofit organizations sponsor 403(b) plans, and state and local governments sponsor 457(b) plans. For
more information, see http://www.irs.gov/Retirement -Plans/Plan-Sponsor/Types-of-Retirement-Plans-1 or CRS Report
R40707, 401(k) Plans and Retirem ent Savings: Issues for Congress.
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Worker Participation in Employer-Sponsored
Pensions
Table 1 contains both access and participation rates separately for workers in DB and DC plans
and combined for workers in either a DB or a DC plan. BLS indicates that employees are
considered to have access to a benefit plan if it is available for their use and are considered
participants if they have fulfil ed any applicable service requirements and, where applicable, paid
required contributions.
Not al workers who have access to a pension plan at work participate in the plan. In addition, the
percentage of workers who participate in plans to which they have access differs between DB and
DC plans. The take-up rate is defined as the percentage of workers who participate in plans to
which they have access. Because most DB plans are funded entirely from employer contributions,
among workers who have access to DB plans, the take-up rate is 80%.6 Among workers who have
access to DC plans, the take-up rate is 72%. Reasons for the lower take-up rates for DC plans
compared with DB plans include the following: (1) until recently, workers had to make an active
decision to participate in DC plans, which meant that workers might delay (and eventual y forget
about) the decision to participate,7 and (2) because DC plans are at least partial y funded by
employee contributions, some workers might prefer to receive the money as current wages rather
than delay the income until they retire.8
The data in Table 1 are classified by a variety of attributes that highlight differences in pension
plan participation rates among groups of workers. Key distinctions in the data include the
following:
A greater percentage of full-time workers have access to pension plans compared
with part-time workers. Among part-time civilian workers, 40% had access to
6 T he access rate for civilian workers in DB plans is 25%, and the participation rate is 20%, which means that 80% (or
20% / 25%) of workers participate in DB plans to which they have access. (Participation ra te differences with the BLS
data are due to rounding.) U.S. Department of Labor data for 2011 (the most recent year for which data are available)
indicated that among private sector workers who participated in DB plans, 4% were required to make employee
contributions to the plans. Among public sector workers who participated in DB plans, 79% were required to make
employee contributions to their DB pension plans. See U.S. Department of Labor and U.S. Bureau of Labor Statistics,
National Com pensation Survey: Em ployee Benefits in the United States, March 2011 (Bulletin 2771), September 2011,
http://www.bls.gov/ncs/ebs/benefits/2011/ebbl0048.pdf.
7 An increasing number of DC plans have automatic enrollment in which new participants are deemed to participate in
accessible DC plans unless they opt out. Plan Sponsor Council of America’s 62 nd Annual Survey of Profit Sharing and
401(k) plans found that 60.2% of plans included automatic enrollment features in 2018. Vanguard found that the
percentage of DC plans with automatic enrollment features increased from 10% in 2006 to 50% in 2019. See Vanguard,
How Am erica Saves 2020, https://institutional.vanguard.com/ngiam/assets/pdf/has/how-america-saves-report-2020.pdf.
Employees who are automatically enrolled may opt out of the plan. Vanguard found that 7% of employees hired from
2014 and before 2017 who were automatically enrolled in DC plans had opted out as of mid-2017. See Jeffrey Clark
and Jean Young, Autom atic Enrollm ent: The Power of the Default, Vanguard, February 2018,
https://institutional.vanguard.com/iam/pdf/CIRAE.pdf. In DB pensions, employees are usually automatically enrolled.
See Barbara Butrica and Nadia Karemcheva, The Relationship Between Autom atic Enrollm ent and DC Plan
Contributions: Evidence from a National Survey of Older Workers, Center for Retirement Research at Boston College,
July 2015, https://crr.bc.edu/wp-content/uploads/2015/06/wp_2015-14.pdf.
8 Workers who do not participate in DC plans for which they are eligible lose (1) the tax benefits from saving in a
401(k) plan and (2) any potential employer match to the employees’ contributions. See, for example, James J. Choi,
David Laibson, and Brigitte C. Madrian, “ $100 Bills on the Sidewalk: Violations of No-Arbitrage in 401(k) Accounts,”
Review of Econom ics and Statistics, vol. 93, no. 3 (August 2011), pp. 748 -763.
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Worker Participation in Employer-Sponsored Pensions: Data in Brief
pension plans. Among full-time civilian workers, 80% had access to pension
plans.9
A greater percentage of state and local public sector workers (91%) have access
to pension plans compared with private sector workers (67%). State and local
public sector workers are more likely to have access to DB pension plans (86%,
compared with 15% of private sector workers), whereas private sector workers
are more likely to have access to DC pension plans (64%, compared with 37% of
public sector workers).10 About 25% of state and local government workers did
not participate in Social Security.11
Access rates are higher for workers in higher-paying occupations. For example,
42% of private sector workers in occupations with the lowest 25% of average
wages have access to employer-sponsored pensions, whereas 88% of workers in
occupations with the highest 25% of average wages do.
Access rates increase as the size of workers’ firms increases. For example, 49%
of private sector workers in firms with fewer than 50 employees have access to
employer-sponsored pensions, whereas 88% of workers in firms with 500 or
more employees do.
9 Civilian workers is defined by the Bureau of Labor Statistics (BLS) as all private industry and state and local
government workers. Federal government, military, and agricultural workers are excluded. See http://www.bls.gov/bls/
glossary.htm#C.
10 T he NCS refers to public sector workers as state and local government workers. Nearly all federal civilian employees
are covered by the Civil Service Retirement System or the Federal Employees’ Retirement System. For more
information, see CRS Report 98-810, Federal Em ployees’ Retirem ent System : Benefits and Financing .
11 See Laura D. Quinby, Jean-Pierre Aubry, and Alicia H. Munnell, “Pensions for State and Local Government
Workers Not Covered by Social Security: Do Benefits Meet Federal Standards?, ” Social Security Bulletin, vol. 80, no.
3 (2020), https://www.ssa.gov/policy/docs/ssb/v80n3/v80n3p1.pdf.
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Table 1. Access and Participation Rates in Employer-Sponsored Pension Plans, March 2020
Either Defined Benefit or Defined
Contribution
Defined Benefit
Defined Contribution
Access
Participation
Access
Participation
Access
Participation
Al workers
71%
55%
25%
20%
60%
43%
Civilian Workersa
Ful -time
80%
66%
30%
24%
68%
51%
Part-time
40%
22%
10%
7%
34%
16%
Al workers
67%
51%
15%
11%
64%
47%
Ful -time
77%
61%
18%
14%
73%
57%
Part-time
39%
20%
7%
5%
36%
17%
Union
91%
82%
64%
54%
61%
51%
Nonunion
65%
48%
11%
8%
64%
47%
Average Wage of Occupation
Lowest 25%
42%
22%
4%
2%
41%
21%
Private-Sectorb
Workers
Second 25%
67%
48%
12%
8%
62%
44%
Third 25%
79%
64%
18%
14%
75%
59%
Highest 25%
88%
78%
31%
24%
84%
72%
Number of Employees at Place of Employment
1-49
49%
34%
6%
4%
47%
32%
50-99
69%
46%
10%
8%
66%
43%
100-499
80%
60%
15%
12%
76%
56%
500 or more
88%
77%
39%
28%
82%
69%
CRS-4
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Either Defined Benefit or Defined
Contribution
Defined Benefit
Defined Contribution
Access
Participation
Access
Participation
Access
Participation
Al workers
91%
83%
86%
76%
37%
18%
Ful -time
99%
90%
94%
83%
41%
20%
State and Localc
Government
Part-time
45%
39%
40%
35%
15%
7%
Workers
State government
96%
86%
90%
76%
49%
24%
Local government
90%
82%
85%
76%
33%
16%
Source: March 2020 National Compensation Survey (NCS), https://www.bls.gov/ncs/ebs/benefits/2020/employee-benefits-in-the-united-states-march-2020.pdf.
Notes: Definitions are from the NCS’s Glossary of Employee Benefit Terms, available at http://www.bls.gov/ncs/ebs/glossary20152016.htm, and Bureau of Labor
Statistics (BLS) Information Glossary, at http://www.bls.gov/bls/glossary.htm#C.
a. Defined by BLS as al private industry and state and local government workers, excluding federal government, military, and agricultural workers.
b. Referred to in the NCS as private industry workers, excluding agricultural workers and private households.
c. Referred to in the NCS as public sector workers, excluding federal workers.
CRS-5
Worker Participation in Employer-Sponsored Pensions: Data in Brief
Author Information
John J. Topoleski
Elizabeth A. Myers
Specialist in Income Security
Analyst in Income Security
Disclaimer
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Congressional Research Service
R43439 · VERSION 11 · UPDATED
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