INTRODUCTION 3 24 EBRI L expect to meet those standards) are different from those who are covered. pension statisticalor analysis retirement undertaken plan. by ThisEBRIis shows the that concept the major we call difference coverage.in T-42 Consider" Mr. four Chairman, important my name characteristics. is Emily Andrews.Noncovered I am research workers director are much atmore the Specifica coverage lly,rates 56stems percentfromof only 88 million two sources nonfarm workers firm size said and they unionization. were covered likely to work in small firms with fewer than I00 employees (68 percent Employee Small firmsBenefit that are Research unionized Institute. are more Ilikely am pleased to provide to appear coverage before than small this under a plan in 1983. Among nonagricultural employees age 25 to 64 working nonunionized firms. compared Subcon_itteeto 17during percent). its consideration They are lessoflikely the need to work for under a national a unionretirement contract 1,000 hours or more who have worked on their jobs at least one year, 70 Oral Statement on (I0 incomepercent policy.compared One ofto the 38 issues percent).you have Noncovered raised wois rkersthe also extenttend to to which havea percent Thesewerefigures covered suggest in 1983.thatFirms [f employing policies could 500 or bemoredevised employees whichprovided would lower earnings and shorter job tenure. coverage to 82 percent of their employees (chart 3). national increase the retirement extent CoofveraKe income coverage Under policyamong Employer-Sponsored should small address firms, Plans many the more issue workers of pension would qualify for pension benefits at retirement. If firms with fewer than I00 coverage, We alsoi want would Before tolike knowthe tohowU.S provide .coverage Housesome ofisRepresentati information targeted. vesMost basedcovered on a workers survey Committee on Education and Labor RECENT TRENDS IN EMPLOYER SPONSORED COVERAGE Subcommittee on earn workers sponsored relatively were by EBR[ as modest likely and thesalaries. toU.S.haveDepartment aOver pension 16ofpercent plan Health asof andfirms all Humancovered with Services i00employees to in May 500 Labor-Management Relations workers, earned less7.6than million $25,000morea year employees in Iq83.would be covered; of these 3.6 million [983. I plan to discuss four topics in my testimony today: Hearings on Employee Benefits and To evaluate the coverage issue, we need to know how coverage has changed would obe Who vested. is covered Changes by employer-sponsored in coverage have retirement much largerplans; effects on pension the Need for a National Retirement Income Policy March 21 and April 2 and 3, 1985 WHO IS NOT COVERED BY EMPLOYER SPONSORED PLANS over the past few years, and, ideally, why it has changed. The coverage rate receipto than Who changes is not coin vered vesting by employer-sponsored and participation. plans; of fell between o Recent 1979 trendsandin 1983 employer-sponsored among nonfarm coverage; workers and from 61 percent to 56 The challenge is to devise policies to encourage expanded coverage without Emily S. Andrews percent.Of o What course, Declines influences not took everyone pension place Research hascoverage. among pensionDirector bothcoverage. private sector Noncoveredand workers government can producing adverse indirect effects on workers or firms. I hope the Employee Benefit Research Institute be employees sorted (chart into 2). five categories (chart i). Fifteen percent of uncovered information EBRI was we pro formed vide can in help 1978 you as meet a non-profit, that challenge. non-partisan, public policy Declining coverage rates may have been caused by the 1982 recession and workers research areorganization self-employed. to conduct These workers researchappearand toeducational reinvest their programs. savings My in comments generally their owntoday poo businesses r are economic set instead. within conditions. thisThree framework. Economic percent They expansion of should uncoveredsince not workers bethe construed Mayare 1983 in as agriculture. survey may have These produced workers renewedare growth seasonal in coverage. and have Other any evidence number ofsuggests other endorsing any particular policy to encourage or discourage coverage under that coverage may have been affected by post-ERISA legislation such as ERTA employer-sponsored retirement plans. employment problems. Twenty-seven percent of uncovered workers are under age and TERRA. Statistics for 1984 and 1985 are needed to determine whether The 25 orviews age 65 expressed and over.in Through this statement the Retirement are solely Equity those Act (REA) of the employers author will and should not be attributed to the Employee Benefit Research institute, its WHO IS COVERED BY EMPLOYER-SPONSORED RETIREMENT PLANS legislative change has reduced coverage growth. Few are forecasting the type include 583,000 additional younger employees in their pension plans. officers, t_ustees, sponsors, or other staff. The Employee Benefit Research Institute is a non-profit, non-partisan public policy research organization of robust growth in pension coverage experienced before 1979. Workers without coverage who were on the job less than a year or who To start, how prevalent are employer sponsored plans? Most nonfarm usually worked less than 1,000 hours accounted for another 20 percent of all Emily S. Andrews earned her Ph.D. in economics f_om the University of Pennsylvania. Before joining EBRI she held policy research positions at the WHAT INFLUENCES PENSION COVERAGE? uncovered worker's. Those who met all 1983 ERISA participation standards made Social employeesSecurity tell Administration us that they work and the for U.S. an employer Departmentwhoof sponsors Labor. some type of up the remaining 34 percent of all uncovered workers. But, they only represent Whether 16 percent an employee of total has employment. employer-sponsored coverage depends on the characteristics Noncovered of workers the workplace meeting ERISA and participation characteristics standards of the (or employee. who couldA EMPLOYEE BENEFIT RESEARCH INSTITUTE 2121 _ _,trvvt, "N\\ _t+It_+" _,¢,¢ \\,t+,llttt_tt++x. l)t+ 1,_,_. [ch'|'ho+_c :202_ ¢,-,_)+0t,,¢