GAO Study Finds Pension Coverage Gaps

August 28, 2000 ( - A new report from the General Accounting Office found that over half (53%) of working Americans are still not covered by a pension plan, despite a healthy economy. The study also found that 85% of those not in an employer plan tended to be low income, part-time, young or worked for a relatively small company.

Coverage is up about 5% from a decade earlier, though it was partially offset by a 2% increase in the number who lacked a plan, according to the report.

Common Causes

Get more!  Sign up for PLANSPONSOR newsletters.

Of the 53%, about 39% of working Americans were employed at a company that did not sponsor a plan, while the remaining 14% either were not eligible or chose not to participate in their firm’s plan.

The report noted that while:

  • 40% of all employees earned less than $20,000, 81% of those earning less than $20,000 lacked pension coverage
  • 22% of all employees worked for firms with less than 25 employees, 82% at those firms were not covered
  • 40% of all full-time employees were not covered, 79% of those who worked part-time, or part of the year were not covered.

The report also noted that 76% of those under age 30 lacked pension coverage. Eighty-two percent of those with incomes less than $20,000/year were part-time or part-year employees.

The report concluded that while nearly 2/3 of workers making more than $20,000/year had pension coverage, more than 80% of those making less than $20,000/year did not.

Among current retirees in 1998, nearly half (48%) lacked pension coverage or annuities. Retirees without pension income were more likely to be single, female, less educated and Hispanic or not white.

The report also noted that, at about $76 billion in 2000, tax preferences for employer pension plans are now the single largest tax expenditure, exceeding tax subsidies for home mortgages and health benefits.

Other Characteristics

 The report noted other characteristics associated with a lack of pension coverage include:

  • a relatively low education level
  • high-turnover industries where vesting requirements are not met.

While 58% of private sector employees lacked coverage, just 27% of public sector workers were so exposed. The study said that the traditional exclusion of public sector employees from coverage by Social Security, and the public sector’s higher proportion of union representation, could explain that differential.

The study, conducted between August 1999 and April 2000, analyzed data from the Bureau of the Census and the Bureau of Labor Statistics. It focused on conditions in 1998.

You can check out the study at .