DB and DC Plans Have Reversed Roles for Employees

June 21, 2007 (PLANSPONSOR.com) - Research from the Employee Benefit Research Institute (EBRI) confirms the role reversal since 1979 of defined benefit and defined contribution plans as the primary retirement savings vehicle for employees.

The latest Fast Facts from EBRI shows 62% of private-sector workers were covered by a DB plan only in 1979, compared to only 10% in 2005. Only 16% of workers were covered by a DC 401(k)-type plan only in 1979 versus 63% in 2006.

The data shows that the number of employees with both DB and DC plan coverage has remained relatively steady over the past quarter century (22% in 1979 and 27% in 2005).

The number of active participants in DC plans has steadily increased from 18.9 million in 1980 to 52.2 million in 2004, while the number of DB active DB plan participants dropped from 30.1 million to 20.6 million in the same time period.

Even when coverage rates were lower, there were more DC 401(k)-type plans being offered to participants than DB plans, as the data shows there were 341,000 DC plans in existence in 1980 and 148,000 DB plans. In 2004, the number of plans offered were 653,000 and 47,000, respectively.

The data also shows a higher percentage of men than women participate in employer-based retirement plans, and participation rates for public-sector retirement plans are greater than those for private-sector plans.

Public-sector workers have the highest level of participation in a retirement plan (75.8% in 2004). Among all workers, less than half (41.9% in 2004) participate in a retirement plan.

The latest Fast Facts from EBRI is here .