Preservation and Annuitization in Retirement Saving Accounts

BLS Survey Shows Change in Group Health and Retirement Plan Participation

January 1998, Vol. 19, No. 1
Paperback, 12 pp.
PDF, 68 kb
Employee Benefit Research Institute, 1998

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Executive Summary

Preservation and Annuitization in Retirement Saving Accounts—Many workers are accumulating significant amounts of money in individual account
retirement saving vehicles such as individual retirement accounts (IRAs), 401(k) plans,
and other forms of defined contribution plans. A great deal of attention is currently
being focused on the decisions that workers must make regarding their participation in
these plans: first, whether to participate, and then, how much to contribute and how to
allocate assets among the options available. In addition, attention is paid to the issue
of benefit preservation on job change, i.e., do workers spend their account balances or do
they roll them over into an IRA or a new employer's plan or leave them in their former
employer's plan. Little attention has been focused to date on the decisions that workers
make regarding the disposition of their account balances on reaching retirement age. Are
these assets simply annuitized by most? Do the funds continue to be actively invested, say
in an IRA account?

BLS Survey Shows Change in Group Health and Retirement Plan Participation—Medicare as an Participation in the two major employee benefit programs—group health insurance and
retirement income plans—declined between 1980 and 1995, according to the latest Bureau
of Labor Statistics (BLS) employee benefit survey of medium and large private
establishments. The 1995 survey covers 33.4 million full-time workers and 6.8 million
part-time workers in nonfarm establishments employing 100 or more employees. BLS gathers
the data for this survey by obtaining the plan documentation from a randomly selected
sample of employers and conducting follow-up interviews for clarification.