Employment-Based Retirement Plan Participation: Geographic Differences and Trends, 2005

November 2006
EBRI Issue Brief #299
Paperback, 36 pp.
PDF, 914 kb
Employee Benefit Research Institute, 2006

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Executive Summary

Latest CPS Data: This Issue Brief examines the level of participation by workers in public- and private-sector employment-based pension or retirement plans, based on the U.S. Census Bureau’s March 2006 Current Population Survey (CPS), the most recent data currently available.

Sponsorship Rate: About 58 percent of all working-age (21–64) wage and salary employees work for an employer or union that sponsors a retirement plan. Of these working-age employees, slightly less than half (47 percent) participate in a retirement plan.

Participation Level: Among full-time, full-year wage and salary workers ages 21–64 (those with the strongest connection to the work force), about 55 percent participated in a retirement plan.

--> Trends: This is down from almost 57 percent in 2004. Participation trends increased significantly when the labor market was tight in the late 1990s, and decreased when unemployment went up in 2001 and 2002. With a more stable job market in 2003 and 2004, the participation trend flattened out. But even with the stable job market in 2005, the retirement plan participation level declined; therefore, it appears a much tighter job market may be needed to push participation trends upwards.

--> Age: Participation increases with age (56.5 percent for wage and salary workers age 55–64, compared with 18.4 percent for those 21–24).

--> Gender: Among all workers, men had a higher participation level than women, but among full-time, full-year workers, women had a higher percentage participating than men (56.4 percent for women, compared with 53.7 percent for men). Female workers’ lower probability of participation in the aggregate results from their overall lower earnings and lower rates of full-time work in comparison with males.

--> Race: Hispanic wage and salary workers were significantly less likely than both white and black workers to participate in a retirement plan. The gap between the percentages of black and white plan participants that exists overall narrows when compared across earnings levels; among workers earning $30,000–$39,999, black and white workers had a virtually identical level of participation. In contrast, the participation gap between Hispanics and whites persisted in all earnings groups, although it showed some narrowing in the highest two earnings groups. A key factor in Hispanic participation levels is whether the worker is native-born or non-native-born; native-born Hispanics have participation levels closer to other minority groups, but non-native-born Hispanics have far lower participation levels.

Geographic Differences: Wage and salary workers in the South, West and Southwest had the lowest participation levels (Florida had the lowest percentage, at 38 percent) while the upper Midwest and Northeast had the highest levels (Minnesota had the highest participation level, at 56 percent).