Will the baby boom generation be
able to afford retirement? This Issue Brief sheds
light on the debate by providing the most recent
tabulations of employment-based pension coverage rates,
participation rates, and vesting rates. It also examines
the extent of supplemental pension plan coverage and
focuses on the use of salary reduction plans as both
primary and supplemental retirement savings plans.
Pension coverage rates,
participation rates, and vesting rates increased over the
period from 1987 to 1991. The overall increases, although
not always sizable, are notable in view of the attention
that has been focused on the decline in pension coverage
rates and participation rates during the mid and latter
1980s. The pension coverage rate went from 66.4 percent
in 1987 to 67.6 percent in 1991. The participation rate
went from 52.7 percent to 53.1 percent. The proportion of
workers vested in a plan went from 44.8 percent to 47.4
percent. These trends were driven by sizable increases in
the coverage rates, participation rates, and vesting
rates of female workers.
Among pension plan participants,
61.7 percent named a defined benefit plan as their
primary plan. Older plan participants were more likely to
report a defined benefit plan as their primary plan.
Over one-half (51.5 percent) of all
pension participants with a primary defined benefit plan
were covered by a supplemental salary reduction plan in
1991, and among those with such coverage, 65.3 percent
participated in the supplemental plan. These individuals
accounted for 56 percent of all salary reduction plan
participants.
The total participation rate in
salary reduction plans almost doubled between 1987 and
1991 and more than tripled between 1984 and 1991. In
1984, 6.1 percent of workers participated in a salary
reduction plan, compared with 9.8 percent in 1987 and
19.1 percent in 1991.
In 1991, 14.8 percent of workers
not participating in an employment-based plan owned an
individual retirement account (IRA). By comparison, 25.8
percent of workers participating in such a plan also
owned an IRA. Among workers not participating in an
employment-based plan, IRA ownership rates increased with
both earnings and age.
