EBRI Issue Brief

Employment-Based Retirement and Pension Plan Participation: Geographic Differences and Trends

Apr 1, 2003 28  pages


  • This Issue Brief examines the level of participation by workers in employment-based pension or retirement plans. Their participation is examined for 2001 across various worker characteristics and those of their employers. The report then examines retirement plan participation across U.S. geographic regions, including by state and certain consolidated metropolitan statistical areas (CMSAs). Participation trends from 1987 to 2001 are also presented.
  • Of all 150.9 million workers in 2001, 83.5 million worked for an employer or a union that sponsored a pension or retirement plan, and 64.9 million participated in the plan. This translates into a sponsorship rate (the percentage of workers working for an employer or a union that sponsored a plan) of 55.3 percent and a participation level among all workers of 43.0 percent. For wage and salary workers ages 21-64, the sponsorship rate increases to 61.7 percent and the portion participating increases to 49.8 percent.
  • The bigger the employer, the more likely a worker is to participate in an employment-based retirement plan. Among workers who worked for employers with fewer than 10 employees, 18.0 percent participated in a plan, compared with 61.6 percent of those working for an employer with 1,000 or more employees.
  • The states with the lowest levels of participation—Florida, Texas, California, and Washington state—were in the South, Southwest, and the upper Northwest. The states with the highest participation were in the upper Midwest—Minnesota, Wisconsin, Michigan, and the Dakotas—along with some in the Northeast or Mid-Atlantic, such as Pennsylvania and Maryland.
  • For the all worker population, the percentage of workers participating in an employment-based retirement plan increased from 37.6 percent in 1987 to 39.7 percent in 1991, then fell to 39.0 percent in 1993. The percentage subsequently increased steadily through 2000 to 44.4 percent, before declining significantly in 2001 to 43.0 percent. The all wage and salary workers ages 21-64 and private-sector wage and salary workers ages 21-64 populations mirrored this pattern. In contrast, full-time, full-year wage and salary workers ages 21-64 had an almost constant level of retirement plan participation over the 1987-2001 period, with a minor increase in the late 1990s. Public-sector wage and salary workers had a pattern similar to that of the full-time, full-year workers.
  • Small employer, part-time, and part-year workers had higher retirement plan participation levels in 2001 relative to 1987, which is good news. Nevertheless, as the economy has remained stagnant, these workers are the ones less likely to be able to participate, as employers may have to cut back on their offerings to remain profitable in a weaker economy. The bad 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 in the 1990s. Thus, the overall level of participation in retirement plans has shown only a small increase from 1987 to 2001 and appears, in the short term, to be headed downward.