EBRI Issue Brief

Current Population Survey: Issues Continue for Retirement Plan Participation and Retiree Income Estimates

Jun 12, 2018 17  pages


Executive Summary

The Annual Social and Economic Supplement (fielded in March of each year) to the Current Population Survey (CPS), conducted by the U.S. Census Bureau, is one of the most-cited sources of income data for those whose ages are associated with being retired (typically ages 65 or older). In 2014, the U.S. Census Bureau conducted a redesign of the CPS questionnaire to improve income estimates that were reported from the survey. After the CPS redesign, despite no changes to the retirement plan questions, the estimates of the percentage of workers who participated in an employment-based retirement plan decreased dramatically.

This EBRI Issue Brief enumerates the top-level results on the percentage of workers participating in an employmentbased retirement plan from the 2017 CPS (which asks about participation in 2016), and compares the results with those found in prior years both before and after the redesign of the CPS questionnaire. This allows for an evaluation of the latest results to see if the participation results in 2016 are still being affected by the questionnaire changes. In addition, the trend in total and pension income for those ages 65 or older is examined over the same period, along with a comparison of the aggregate pension income found in CPS with Internal Revenue Service (IRS) data.

This study finds various results about retirement plan participation and the income of individuals ages 65 or older. Specifically, the results from the redesigned questionnaire indicate: 

Lower overall percentage of workers participating in a retirement plan: Compared with the 2013 estimate before the questionnaire redesign, the 2016 estimate shows a reduction of 13.5 percentage points in the percentage of full-time, full-year wage and salary workers ages 21-64 participating in a retirement plan—from 54.5 percent before the questionnaire redesign to 41.0 percent in 2016. 

Declines in participation among those most likely to participate: Since the redesign, the survey has shown ongoing, substantial declines among full-time, full-year wage and salary workers with the highest likelihoods of participating in each of four important demographic groups. For example, among those ages 55-64, the percentage participating in a plan fell from 57.1 percent in 2013 (redesigned) to 48.1 percent in 2016. 

Discrepancy in the participation trend relative to another government survey: Under the Bureau of Labor Statistics’ National Compensation Survey (NCS), the percentage of private-sector wage and salary workers at establishments with 500 or more employees participating in an employment-based retirement plan remained relatively flat between 2013 and 2016, at around 76 percent. In contrast, similar numbers from the CPS found that the percentage participating decreased from 64 percent before the redesign in 2013 to 47 percent in 2016.

A higher percentage reporting pension income: The percentage of Americans ages 65 or older reporting they received pension/annuity income increased from 30.6 percent in 2013 before the redesign to 35.4 percent in 2014 and 2016. 

Generally, higher overall reported income. The average pension/annuity income for those ages 65 or older increased from $18,628 before the redesign in 2013 to $20,317 after the redesign, and then reached $22,335 in 2016. The median income increased from $12,300 to $13,212, before climbing to $14,358 in 2016.

While the redesign improved the income estimates from CPS, the impact on the retirement plan participation numbers is problematic—potentially erroneously giving the impression the percentage of workers participating has declined. Consequently, unless modifications are made to the CPS, continuing to use it for estimating the participation in employment-based retirement plans will provide misleading and inaccurate estimates and conclusions about these plans. Furthermore, even after the redesign, the aggregated CPS pension/annuity income only amounted to approximately 55 percent to 65 percent of the similar income reported by the IRS.