Retirement Plan Participation: Survey of Income and Program Participation (SIPP) Data, 2006

February 2009, Vol. 30, No. 2
Paperback, 16 pp.
PDF, 2,809 kb
Employee Benefit Research Institute, 2009

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Executive Summary

LATEST DATA: This article presents results from the latest data from the U.S. Census Bureau’s Survey of Income and Program Participation (SIPP) on retirement plan participation. While SIPP data have the advantage of providing relatively detailed information on the retirement plans that workers participate in, they also have the drawback of being fielded only once every three to five years. By comparison, the Census Bureau’s Current Population Survey provides overall participation levels of workers on an annual basis, but does not provide information on the plan types in which the workers are participating.


SPONSORSHIP LEVEL: The sponsorship level for all workers for pay age 16 and over (workers whose employer or union sponsors a pension or retirement plan for any of the employees) was 59 percent in 2006, according to SIPP. This is higher than or equal to the estimates from the Census Bureau.


PARTICIPATION LEVEL: The percentage of workers participating in a plan regardless of whether the plan was sponsored at the workers’ place of employment (the participation level) decreased to 44 percent in 2006 from 48 percent in 2003, matching its 1998 level of 44 percent and within the range of the levels found in 1979–1993.


PRIMARY PLAN TYPE: Overall, 67.1 percent of participants had a defined contribution (401(k)-type) plan as their primary plan in 2006; this is larger than in 2003 and more than double the level found in 1988. Correspondingly, a smaller percentage of workers had a defined benefit (pension) plan as their primary plan: 30.9 percent in 2006, compared with 46.3 percent in 1998, and substantially lower than the 56.7 percent level found in 1988. In addition, 30.1 percent of nonagricultural wage and salary workers age 16 and over had a salary reduction plan that they considered as their primary retirement plan in 2006, compared with just 7.5 percent in 1988.


SALARY REDUCTION PLANS: Salary reduction plans (such as 401(k) plans) are the predominant type of defined contribution plan. The sponsorship level of these plans for nonagricultural wage and salary workers age 16 and over was 52.4 percent from 2006, a steady increase from 45.9 percent in 1998. The participation level was 36.3 percent in 2006, also higher than 15.3 percent in 1988. However, the average employee contribution to these plans remained unchanged in 2006 (at 7.5 percent), after increasing gradually from 7.1 percent in 1993. High contributors (those who contributed 10 percent or more of their salary to the plan) were more likely to contribute a higher amount in 2006 than in 1993.