EBRI: Retirement Plan Participation Drops

The decline in participation levels in 2002 reverses the trend of increasing participation levels among the worker population form 1987’s 37.6%. With the fall off, participation levels now sit at the same level as 1997, according to the Employee Benefit Research Institute’s (EBRI) “Employment-Based Retirement and Pension Plan Participation: Declining Levels and Geographic Differences” study.

An examination from another angle shows that of the 151.3 million workers in the United States 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 a plan – of 53.4% and a participation level of 41.8%.

The aggregate number, though, includes the self-employed and those with a typically looser connection to the workforce – those under 21 and older than 64. Thus, EBRI breaks the numbers down even further to reveal for wage and salary workers ages 21-64, the sponsorship rate increases to 59.5% and the proportion participating increases to 48.2%.

However, these numbers pale in comparison to a 65.1% sponsorship rate and 56.7% participation rate for full-time, full-year wage and salary workers ages 21-64 and the 83.7% sponsorship rate and staggering 74.8% participation rate for public wage and salary workers age 21-64.

Demographic Breakdown

EBRI found the percentage of wage and salary workers ages 21-64 participating in a retirement plan increased through age 55 then declined. For those ages 21-24, 19.8% participated in a plan, compared with 58.6% of those ages 45-54.

Higher rates of participation were also noted overall among male workers than their female counterparts by a count of 42.7% to 40.8%. However, when examined at the full-time, full-year wage and salary workers, female participation rates were greater by a count of 57.4% to 56.3%. In fact, across all the worker status categories, females were more likely to participate in retirement plans than males. EBRI believes the lower overall statistic then is a result of female workers’ overall lower earnings and/or lower rates of full-time work in comparison to men.

Geographic Differential

The lowest levels of participation were noted among states in the South, West or Southwest, with Florida’s 40.9% recording the lowest probability of participating in a plan in 2002 for wage and salary workers, followed by:

• Colorado – 41.1%
• Nevada – 42.1%
• New Mexico – 42.7%
• California – 43%
• Arkansas – 44.1%.

On the bright side were the higher participation rates noted among states in the upper Midwest along with some in the Northeast and Mid-Atlantic with Minnesota’s 56.9% leading all others. That was followed by:

• Wisconsin – 55.9%
• Kansas – 55.7%
• Maryland – 55.3%
• Iowa – 55.1%
• North Dakota – 54.7%.

Mirroring this trend were participation rates among consolidated metropolitan statistical areas (CMSAs), with Miami-Fort Lauderdale, Florida recording the lowest (34.8%) and Milwaukee-Racine, Wisconsin (58.7%) the highest. Other high scores were recorded in Washington DC-Baltimore, Maryland (55.1%), Cleveland-Akron, Ohio (55.0%) and Boston-Worcester, Massachusetts (53.5%), while low tallies were noted in Los Angeles-Riverside, California (40.0%), Denver-Bolder, Colorado (42.3%) and Dallas-Fort Worth, Texas (43.3%).