EBRI: Plan Participation Among Families Is Up

July 23, 2003 (PLANSPONSOR.com) - More than four out of 10 families had a participant in an employment-based retirement plan in 2001, a level virtually unchanged from 1998's figures.

The figures from 2001 might not indicate much of a shift in the previous three years, but going back to 1992, headway is being made on increasing participation levels.   Where in 2001, 41.6% of families were represented by participation in either a defined benefit or defined contribution plan, in 1992, this same figure was only 38.8%, according to a release of data on the Survey of Consumer Finances by the Employee Benefit Research Institute (EBRI).

In fact, the percentage of families participating only in a defined contribution plan rose to 57.7% in 2001, from 37.5% in 1992.   Conversely, only 19.5% of families had only a defined benefit plan in 2001.

Additionally, the recent results showed 31.4% of families owned either an individual retirement account (IRA) or a Keogh plan, an increase from 28.4% in 1998 and 26.1% in 1992. Furthermore, more than half (58.6%) of families had a participant in a current or previous employer’s retirement plan or an IRA/Keogh, which is an increase from the 53.3% in 1992.

Contributions Levels

Looking at the defined contribution plan, plan balances are also on the rise – albeit the data only includes 2001’s figures, which missed a year of market declines in 2002.   Among all families with a defined contribution plan in 2001, the median plan balance was $18,000, an 81.8% increase from the 1992’s figures and a 10.2% rise since 1998. Similarly, among families with an IRA/Keogh plan, the median value of their plan was $27,000 in 2001, up 24% from 1998.

Outside of the employer-sponsored retirement plan, EBRI’s study also examined IRA holdings among families.   Not surprisingly, the most commonly owned IRA was the regular IRA, owned by 42.2% of family heads. This was followed by:

  • Rollover IRA held by 25.7%
  • Roth IRA owned by 16.4%.

However, when broken down by assets, family heads with rollover-IRAs-only moved to the top spot, accounting for 36.0% of the total assets, while the owners of regular-IRAs-only accounted for 31.3% of the assets.