• Hours worked: EBRI FREQ Part-time and season UENTLY ASKED Q al workers are le UESTIONS: PENSION TRENDS ss likely to have employment-based “Research on Economic Security Issues: Retirement, Health Coverage, Testimony Submission for the Record See http://ebri.org/publications/benfaq/index.cfm?fa=retfaq14 Fast Facts from EBRI health benefits than full-time, full-year workers. Part-time or part-year workers accounted Employment-Based Benefits, and the Growing Debt of the Elderly” Fast Facts from Fast Facts from Fast Facts from EBRI EBRI EBRI for 30.2 percent of the employed population, but accounted for 41.4 percent of uninsured The num ber of defined benefit plans in the private sector has been shrinking, as small- and mid-sized EBRI News workers. The Em Contact: Joh Contact: Joh ployee Benefit Research Institute (EBRI) is n n MacDonald, EBRI, (202) MacDonald, EBRI, (202) 775-6 775-6349 349, , macdonald@ebri.org macdonald@ebri.org a nonprofit, nonpartisan research organization that Contact: John MacDonald, EBRI, (202) 775-6349, macdonald@ebri.org House Ways and Means Committee Contact: Joh employers have either drop n MacDonald, EBRI, (202) ped their pens 775-6 ion plans 349, or macdonald@ebri.org shifted to defined contrib ution retirement plans • Industry: Workers employed in agriculture, forestry, fishing, mining, and construction FF #16, FFE #34, has focused on health, retir Feb. Oct. 17, 3, 2006 2006 ement, and economic security issues since 1978. EBRI does not take policy FFE #35, Nov 14, 2006 (such as the 401(k) plan). In addition, the number of active participants in pension plans has been FF #38, Jan. 3, 2007 2121 K St. NW Suite 600 Washington, DC 20037-1896 positions and are disproportionately more likely to be does not lobby. www.ebri.org uninsured, with 36.9 percent uninsured. This declining since the late 1980s (historically, the number of total—including inactive—participants has (202) 659-0670 www.ebri.org Fax: (202) 775-6312 “T com raditi pares with 14.6 percent uninsured am onal” Pension Assets Lost ong wo Domin rkers in the m ance a Decad anufacturing sector, 18.5 e Ago, Hearing on: increased slig How Debt Has Increased for Older American Families htly, since pension plans typically pay benefits for the life of the retiree). In the public EBRI has conducted very extensive and in-depth research on many of the issues related to the Ways and A Breakdown of Debt for Older Families percent in w The $7 Trillion Question: Ho holesale and retail trade, and 22.1 percent in the service sector. w Do Employers Spend sector, defined benefit plans have re IRAs and 401(k) mained s Have the predominant type of retire Long Been Dominant ment plan. Means Committee’s Jan. 31 hearing on Economic Challenges Facing Middle Class Families. For this “Economic Challenges Facing Middle Class Families” • Firm size: Nearly 63 percent of all uninsured workers are either self-employed or WASHINGTON—How much debt do older American families have? How has it changed over time? That Amount on Worker Wages, Salaries, and Benefits? submission for the record, EBRI is included short, summary material, with links to the more detailed WASHINGTON—Where are bulk of private-sector retirement assets held in the United States? By a FOR IMMEDIATE RELEASE: Oct. 3, 2006 WASHINGTON—W working in priva hat perc te-secto entage of r firm Jan. 31, 2007, 2 p.m. s with f older Americ ewer than 100 em an families’ to ploye tal inc es. Nearly 27 percent of ome goes for debt What does it mean? analy substantial sis. Spe margin—and fo cifically, this includes: r many Def iy nears—individ ed Benefit P ue al ns retirement accounts (IRAs) have held more funds ions: Plan Trends CONTACT: Paul Fronstin, EBRI, 202-775-6352, fronstin@ebri.org payments? W self-em hat percen ployed workers are uninsured, com tage of older families had debt payments of pared with 18.8 percent of more than 40 per all workers. More cent of 1100 Longworth HOB (Single- and Multi-Employer Plans) than any other financial vehicle, followed by defined contribution plans (primarily 401(k) plans). 112,208 WASHINGTON—Employers in the United States are spending at least $7 trillion a year on total worker John MacDonald, EBRI, (202) 775-6349, macdonald@ebri.org A study family incom by the nonpartisan Em than 35 percent of workers in private-sect e? How do housing and cred ployee Benefit Research it card debt fit or firm Institute (EBRI) shows that nearly 61 percent of s with fewer than 10 em into the picture? ployees are (1985) 120,000 So-called “traditional” defined benefit pension plans were displaced a decade ago by defined RETIREMENT/PENSIONS: compensation, including wages, salaries, and benefits. Where does the money go? Am erican families with family heads age 55 and older had debt in 2004, almost 5 percentage points uninsured, compared with 13.4 percent of workers in private-sector firms with 1,000 or contribution plans in terms of assets held. The most recent data from the nonpartisan Employee Benefit • “EBRI Benefit FAQ: Pension Trends, EBRI Benefit FAQs, higher than i New Research from EBRI: n 2001 and about 7 percentage points higher than in 1992. A study in the September 2006 EBRI Notes has the answers to these questions. Overall, the study 100,000 more employees. Research Institute (EBRI) show that about 58% of private-sector retirement assets currently are held in http://ebri.org/publications/benfaq/index.cfm?fa=retfaq14 An article in the December 2006 EBRI Notes, published by the nonpartisan Employee Benefit Research found that total debt payments increased for families with a family head age 55 or older from defined contri • Location: bution T (DC) plans, com he proportion of the population with a pared with 42% in “traditiona nd without health insurance varies by l” defined benefit (DB) pensions. In Study Details Key Determinants of Health Care Coverage: • “Traditional Pension Assets Lost Dominance a Decade Ago, IRAs and 401(k)s Have Long Been Further, the debt of fam Institute (EBRI), provides iliethis breakdown for all s with family heads ove employ r age 75 has increased over ti ers, based on 2005 Commerce me as wDepart ell. An article in ment data: 80,000 2001 to 2004 and that housing debt and credit card fact, as data from EBRI show, assets held in DC plans first surpasse debt were both factors in the increase. The d DB pension assets in 1997—almost location. In 12 states—genera Dominant,” Fast Facts from EBRI, Feb. 3, lly in the south-central United S 2006. tates—the uninsured the September 2006 EBRI Notes, which contains these numbers, says that the increasing debt levels could Work Status, Income, Age, Gender, Firm Size, and Others • Wages and salaries: 80.6 percent 57,010 10 years ago. Data from the Federal Reserve and EBRI show that IRAs became dominant in 1998. study is available at www.ebri.org. averaged close to 20 percent of the population during 2003–2005. States with a relatively (1995) have serious implications for the future retirement security of older Americans, as their debt levels are 60,000 As research by EBRI and others has documented, the forces behind these trends involve a move away • All benefits: 19.4 percent HEALTH CARE: low percentage of uninsured individuals include Minnesota, Hawaii, Wisconsin, Iowa, rising at a time when their earning ability is declining. The EBRI Notes article is available at from defined benefit pensions by employers and a corresponding shift to defined contribution plans 28,769 WASHINGTON—Do you have a job? What is your income? How old are you? What is your • Key Determinants of Health Care Coverage and the Uninsured, EBRI press release, October 3, Here are some details of the study for families with a family head age 55 or older, showing the and New Hampshire. www.ebri.org 40,000 (2005) (principally the 401(k) plan). The sharp growth in IRAs has been driven by the rollover of assets by occupation? 2006 #7 How large is the firm 49. where you work? recen The article, a t increase in their debt lev vailable at www.ebri.org els: , shows these additional details: • Race and ethnic origin: While 64.7 percent of the population under age 65 is white, workers and retirees from other tax-qualified plans (such as pensions and 401(k)s) to IRAs upon job • 20,000 Wages and s 2,244 alaries: This sector accounted for about $5.7 trillion of total employer spending for Here is a look at the recent rise of debt am whites comprise 47.6 percent of the uninsured. ong families with a fam Individuals of Hispanic origin are m ily head age 55 or older and age 75 or ore 1,879 1,56 7 change or retirement. (1980) EMPLOYMENT-BASED BENEFITS: The answers to these questions—and a few others—go a long way to determ (1995) ining whether U.S. (2005) worker compensation in 2005, up from $4.8 trillion in 2000. In 1960, wages and salaries older: Families With a Family Head Age 55 or Older 1992 1995 2001 2004 likely to be uninsured than other groups (34.3 percent). Submitted by: • “The $7 Trillion Question: How Do Employers Spend That Amount on Worker Wages, Salaries, residents are likely to have health insuran 0 ce, according to a study published today by the accounted for about 9 Total debt payments a 2s per a perce cent of em ntage of ploy family er spending for total compensation, but that share has 9.2% 8.5% 8.8% 10.3% U.S. Retirement Plan Assets, 1995–2004 and Benefits?” Fast Facts from EBRI, Jan. 3, 2007. nonpartisan Em slipped over t income ployee Benefit Research Institut ime. e (EBRI). The study appears in the October EBRI The study discuses each or these factors in detail and provides more than 25 charts that provide a $4.00 Percentage of families with debt payments more Dallas Salisbury,CEO 5.8% 5.6% 7.2% 7.3% Issue Brief, “Sources of Health Insu 1 rance and Ch992 aracteristics of the Uninsured: Analysis of the 2001 2004 • Retirement benefits: Employer spending was $628.4 billion for retirement benefits in 2005, up full statistical picture of those who have health insurance (along with the sources of coverage) So urce: Pensio n Insurance Data Bo o k, 2005, PBGC. 1 998 Was Cross-Over GROWING DEBT than OF THE AMERICAN ELDERLY: Families With Debt March 2006 Current Population Survey,” available at from $458.8 The Empl billion in 2000. Retirem oyee Benefit Rese ent benefits arch Institute (EBRI) have long www.ebri.org been the largest single sector for * Estimates. Year for IRA Dominance and those who do not. $3.50 40 percent of income • “How Debt Has Increased for Older American Families,” Fast Facts from EBRI, Oct. 17, 2006. Family head age 55 or older 54% 56% 61% 1 997 Was Cross-Over Year for benefits expenditures, but have been declining as a share of the whole. In 1960, retirement T-148 Percentage of families with housing debt • “A Breakdown of Debt for Defined Contribution Dominance Older Families,” Fast Facts from EBRI, 24% 27% Nov. 14, 20 32% 06. 36% Family head age 75 or older 32% 29% 40% benefits accounted for nearly 60 percent of total benefits spending, but by 2005 that number had “Work status and income play a dominant role in determining an individual’s likelihood of $3.00 (median amount: half above, half below) As the study notes, the proportion of uninsured working-age Americans rose slightly to 17.9 Average Family Debt ($36,904) ($34,471) ($53,255) ($60,000) Defined Benefit Pensions: Active Participant Trends declined to 46 percent of the total. having health insurance,” writes Paul Fronstin, director of the EBRI health research and Family head age 55 or older $29,309 $41,294 $51,791 percent in 2005, and the overall percentage of Percentage of families with credit care debt the population under age 65 with health insurance “Research on Economic Security Issues: Retirement, Health Coverage, ADDITIONAL LINKS TO EBRI ECONOMIC SECURITY 31% RESEAR31% CH: 31% 34% (Single-Employer Pensions) • $2 .50Health benefits: In 2005, employers spent $596.5 billion on health benefits, up from $399.6 education program Family head age 75 or and author of the study. In ad older $ 7,769 dition, age, gender, firm $ 9,549 size, hours of work, $20,234 (median amount) declined in 2005 to a post-1994 low of 82.1 percent. Declines in health insurance coverage have • “Measuring Retirement Income Adequacy: Calculating Realistic Income Replacement Rates,” ($1,147) ($1,231) (1,353) ($2,000) Employment-Based Benefits, and the Growing Debt of the Elderly” billion in 2000. Health benefits, which are taking an ever-increasing share of employers’ benefits Median Family Debt industry, and location are all im 23,000 portant determinants of an individual’s likelihood of having 22.2 million EBRI Issue Brief, September 2006, been recorded in all but Source: EBRI Notes, Septem three years since 1994. ber 2006 (All debt values are in (midpoint, half above, half below) $2.00 $14,498* $24,497* $32,000* spending, accounted for 44 percent of employer spending on benefits in 2005, up from 42 percent coverage— 2004 dollars. as are race an ) d ethnicity, Fronstin says. http://ebri.org/publications/ib/index.cfm?fa=ibDisp&content_id=3745 22,000 Family head age 55 or older $4,218* $ 5,326* $14,800* in 2000 and just 14 percent in 1960. The study also reports that the Family dead age 75 or older segment of the U.S. population under age 65 with employment- $1.50 • “Defined Benefit Plan Freezes: Who's Affected, How Much, and Replacing Lost Accruals,” 21, • 000 Other benefits: Employer spending on other benefits, such as unemployment insurance, life As the study notes, the impact of these indicators varies widely. Here is some of what the study Source: EBRI Notes, September 2006. based health insurance dropped from 64.4 percent in 1994 to 62 percent in 2005, the latest year EBRI Issue Brief, March 2006, insurance, and workers’ compensation, was $138.3 billion in 2005, up from $94.2 billion in 2000. Fast Facts from EBRI is issued occasionally by the nonpartisan Employee Benefit Research Institute to highlight benefits information that may be * For fa says about each of the indicators fo milies with debt. r U.S. residents under age 65 in 2005: 20, $1.0000 0 for which statistics are available. The change was small from 2004 to 2005 (0.4 percentage http://ebri.org/publications/ib/index.cfm?fa=ibDisp&content_id=3628 of current interest. EBRI is a private, nonprofit research institute based in Washington, DC, that focuses on health, savings, Other benefits accounted for just over 10 percent of employers’ spending for benefits in 2005, • Work status: Workers are more likely to have insurance than nonworkers. Nearly 71 points), but share of the populat retirement, and economic security issues. EBRI ion under age 65 with em does not lobby and does not t ploym ake policy ent-based health insurance has positions. www.ebri.org compared with just under 10 percent in 2000. Over the long term, other benefits have been a 19,000 • “The Influence of Automatic Enrollment, Catch-Up, and IRA Contributions on 401(k) $0.50 percent of workers had employment-based health benefits, compared with nearly 37.7 declined significantly since 2000, when the number was 66.8 percent. Even after the drop in shrinking share of employer spending on benefits, down from nearly 26 percent in 1960. Accumulations at Retirement,” EBRI Issue Brief, July 2005, Fast Facts from EBRI is issued occasionally by the nonpartisan Employee Benefit Research Institute to 18,000 percent of nonworkers. coverage, employment-based health benefits remain by far the most common source of coverage http://ebri.org/publications/ib/index.cfm?fa=ibDisp&content_id=3565 $0.00 highlight benefits information that may be of current interest. EBRI is a private, nonprofit research • Income: Workers with low earnings are much less likely to be insured than those with in the United States. 17,000 The EBRI Notes article provides a detailed breakdown of employer spending for total compensation and 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 institute based in Washington, DC, that focuses on health, savings, retirement, and economic security • “ERISA at 30: The Decline of Private-Sector Defined Benefit Promises and Annuity Payments? high earnings. One-third of workers with earnings of less than $20,000 were uninsured, benefits for selected years from 1960 to 2005. The article also contains a breakdown of spending for total issues. EBRI does not lobby and does not take policy positions. www.ebri.org What Will It Mean?” EBRI Issue Brief, May 2004, 16,000 compared with 5.4 percent of workers with earnings of $75,000 or more. Defined Benefit Defined Contributi on IRA 16.2 millio n EBRI is a private, nonprofit research institute based in Washington, DC, that focuses on health, benefits by the federal, state, and local governments. http://ebri.org/publications/ib/index.cfm?fa=ibDisp&content_id=3500 • Age and gender: Younger adults are more likely than older adults to be uninsured. 15,000 savings, retirement, and economic security issues. EBRI does not lobby and does not take policy Source: Federal Reserve Flow of Funds, 1 995–2004, Table L.11 8.b, c, and I, and EB RI P ension Investment Report. • “Can America Afford Tomorrow's Retirees: Results From the EBRI-ERF Retirement Security Nearly 40 percent of men ages 21–24 and 30.6 percent of women ages 21–24 were position s. www.ebri.org EBRI is a privat Projection M e, nonprofodel,” it research instit EBRI Issue Brief, ute based in Wash Novem ington, DC, that ber 2003, focuses on health, savings, retirement, and uninsured. This compares with 15.8 percent of men ages 45–54 and 14.8 percent of EBRI first reported in 2001 that private-sector pensions had lost their asset dominance to DC plans (EBRI Notes, January 2001, So urce: Pensio n Insurance Data Bo o k, 2005, PBGC. The Employee Benefit Research Institute (EBRI) is a nonprofit, nonpartisan research institute that focuses on health, economic security issues. EBRI does not lobby and does not take policy positions. www.ebri.org Fast Facts from EBRI is issued http://ebri.org/publications/ib/index.cfm?fa=ibDisp&content_id=182 “IRA Assets Co * Ewom stimate ntinue to Grow,” e s.n ages 45–54 who were uninsured. http://ebri.org/publications/notes/index.cfm?fa=notesDisp&content_id=3226) and most recently PR #749 retirement, and economic security issues. EBRI does not take policy positions and does not lobby. www.ebri.org occasionally to highlight benefits information that may be of current interest. updated this trend in its January 2006 EBRI Notes (“IRA and Keogh Assets and Contributions,” http://ebri.org/publications/notes/index.cfm?fa=notesDisp&content_id=3614) Contact: Stephen Blakely, editor, EBRI, blakely@ebri.org, www.ebri.org 1980 1985 1986 1987 1988 1989 1990 1 991 1992 1993 1994 1995 1996 1997 1998 1980 1999 1985 2000 1986 2001 1987 2002 1988 2003 1989 2004 1990 2005 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004* 2005* $ Trillions Number of Plans (in thousands)