This Issue Brief compares
changes from 1989 to 1998 in pension participation,
accumulation, and allocation for employed women, versus
employed men, ages 18-62. In addition, it provides an
estimate of the gender “pension gap” in defined
contribution accumulations, contrasts this with the
gender “earnings gap,” and provides
explanations for these differences.
Between 1989 and 1998, the
percentage of employed women with a pension or retirement
plan at their current job increased from 43 percent
to 45 percent, compared with a decline from 53 percent to
52 percent for employed men. For both women and men, the
percentage with defined contribution retirement plans
increased dramatically, while the percentage with defined
benefit pension plans dropped sharply.
Between 1989 and 1998, the ratio of
women's to men's defined contribution plan accumulations
increased from 40 percent to 44 percent, indicating a
narrowing of the gender pension gap. However, the
narrowing was concentrated among the cohort ages 45-53 in
1998. The gender pension gap increased for women in other
age groups.
Gender differences in defined
contribution plan accumulations can be attributed to
differences in earnings and job characteristics. Between
1989 and 1998, for workers with defined contribution
plans, the ratio of women's to men's earnings remained
unchanged at 57 percent. Employed women with defined
contribution plans are more than twice as likely to earn
less than $25,000 per year than employed men with defined
contribution plans, but almost five times less likely to
earn more than $100,000 per year.
From 1989 to 1998, the percentage
of employed men with defined contribution balances
invested mostly in low-risk, low-return assets declined
much more than the percentage of employed women who
followed that investment strategy. Whereas the
percentages of men and women with retirement plans
invested mostly in bonds were nearly equal at 31 percent
and 32 percent in 1989, respectively, by 1998, 20 percent
of women (compared with 14 percent of men) had their
retirement plans invested mostly in bonds.
The trend toward defined
contribution plans and riskier retirement portfolios has
resulted in significant wealth accumulation over the
decade. In real terms, both men and women have greater
retirement plan wealth, but increases have been larger
for men than for women. Since there is no evidence that
plan provisions vary by gender, improvements in the
gender pension gap will come only with changes in women's
labor force experience and investment decision-making.
