EBRI Issue Brief
Retirement Plan Participation and the Current Population Survey: The Impact of New Income Questions on These Estimates
The data provided by the March Current Population Survey (CPS) are important as they are the most current annual data on retirement plan participation on a worker-level basis. Because the data are at the worker level, as opposed to the employer level, it is possible to determine differences in retirement plan participation by various worker characteristics. This shows which cohorts are most likely to face challenges when it comes to having adequate income in retirement.
However, the Employee Benefit Research Institute (EBRI) has noted since the 2014 redesign of the CPS that its estimates have not been consistent with other data sources — the CPS estimates have been much lower and have trended downward. This has led EBRI to question the usefulness of the CPS data as a source for drawing conclusions about trends in retirement plan participation.
In the 2019 dataset, the CPS added variables relating to income earned in a retirement account. Presumably, if workers earned income in a retirement account, it is safe to assume that they had a retirement account, meaning they were participating in a retirement plan.
This Issue Brief examines the trend in retirement plan participation using the traditional pension questions from the CPS while looking at the impact of the new variables on the retirement account income questions. When adjustments are made to the estimates using the new questions, the CPS numbers much more closely match other sources on retirement plan participation:
- Starting with the estimates of the percentage of workers participating in an employment-based retirement plan before the redesigned questionnaire from the 2014 CPS (2013 outcomes), the percentage participating has generally declined for each of the work force definitions studied. In 2018, it stood at 31.6 percent for all workers compared with 39.7 percent in 2011, prior to the redesign. However, when adjustments were made for the new questions, the percentage participating increased to 47.5 percent for all workers in 2018.
- Likewise, a decrease in the number of workers participating in a retirement plan also resulted from the 2014 redesign. For example, the number of full-time, full-year wage and salary workers ages 21‒64 estimated to be participating in an employment-based retirement plan decreased from 51.4 million in 2013 under the traditional survey to 41.0 million in 2016 before increasing to 42.5 million in 2017 and falling to 41.8 million in 2018. With the adjustments for the new income questions, the number participating in retirement plans for this work force according to the CPS rose to 61.8 million.
- This does not match the upward trend in the number of active participants in private-sector plans according to tabulations of Form 5500 filings by the Employee Benefits Security Administration with the U.S. Department of Labor, in which the number of active participants increased from 89.9 million in 2014 to 94.6 million in 2017 (last year available).
Now that the CPS allows for a new baseline of the combination of the results from the traditional and new questions, the validity and stability of the estimates can be tested as more years of data become available. Since there is only one year of data, a trend is obviously indeterminable. Once more years of data become available, the new methodology will be assessed by comparing the levels and trends across various other data sources.