EBRI Issue Brief

Employment-Based Retirement and Pension Plan Participation: Declining Levels and Geographic Differences

Oct 1, 2003 28  pages


  • This Issue Brief examines the level of participation by workers (both public and private) in employment-based pension or retirement plans. Participation is examined for 2002 across various worker characteristics and those of their employers. The report then investigates retirement plan participation across U.S. geographic regions, including by state and certain consolidated metropolitan statistical areas (CMSAs). In addition, trends from 1987-2002 in this participation are presented.
  • Of all 151.3 million workers in 2002, 80.7 million worked for an employer or union that sponsored a pension or retirement plan, and 63.2 million participated in the plan. This translates into a sponsorship rate (the percentage of workers working for an employer or union that sponsored) of 53.4 percent and a participation level of 41.8 percent. For wage and salary workers ages 21-64, the sponsorship rate increases to 59.5 percent and the proportion participating increases to 48.2 percent.
  • The states with the lowest levels of participation-e.g., Florida, Colorado, and Nevada-were in the South, West, or Southwest. The states with the highest participation were in the upper Midwest-e.g., Minnesota and Wisconsin-along with some in the Northeast or Mid-Atlantic, such as Maryland.
  • For the all worker population, the percentage of workers participating in an employment-based retirement plan increased fairly steadily from 37.6 percent in 1987 to 44.4 percent in 2000, before declining significantly in 2001 and 2002 to 41.8 percent. This was higher than the 1987 level and equal to the 1997 level. The all wage and salary workers ages 21-64 and private-sector wage and salary workers ages 21-64 populations duplicated this pattern. In contrast, full-time, full-year wage and salary workers ages 21-64 had an almost constant percentage of retirement plan participants over the 1987-2001 period, before falling to a new low for the time period 1987-2002. The percentage of public-sector wage and salary workers decreased again in 2002 but remained near its traditional level.
  • It is good news that small-employer, part-time, and part-year workers have higher retirement plan participation levels than they had a decade ago and have been able to sustain some of the gains after the downturn subsequent to 2000. Nevertheless, as the current "jobless recovery" continues not to produce a sizeable increase in employment, it is likely that more of these gains could be lost, as employers may not have to offer retirement plans to attract and retain workers. The troubling news is that the workers with traditionally high levels of participation did not have a significant increase in their level of participation during a very prosperous time in the American economy, and with the declines in 2001 and 2002, experienced their lowest participation levels since at least 1987. Thus, the overall level of participation in retirement plans has shown only a minor increase from 1987 to 2002 and appears headed downward, at least in the short term.