Nearly Half of Marylanders Not Plan Participants

A study, “Are Maryland Workers Ready for Retirement?,” found that a big problem is that employer sponsorship of retirement plans in the state is declining. Maryland employees’ access to employer-sponsored plans have fallen eight percentage points over the past 10 years, signifying an overall downward trend in retirement security for Maryland residents. As of 2010, only 59% of employed state residents, ages 25 to 64, worked for an employer that offered access to either a defined benefit or defined contribution plan.

Young employees, ages 25 to 44, suffered the largest drop in sponsorship (13%). The research suggests this downward trend will continue as this group ages. Among ethnic groups, Hispanic employees saw a 20% decline in sponsorship rates, more than double that experienced by white and black, non-Hispanic counterparts, both of whom had a 9% decline in sponsorship. Asian employees, however, saw an increase in plan sponsorship of 4%.

Sponsorship was found to vary across industries with the biggest decline in entertainment and recreation services, which showed a 26% decrease. In addition, those in the construction services saw a 25% decrease.

Decreasing sponsorship also varied by company size. Firms with 500 to 999 employees showed the biggest drop (16%). Small firms with fewer than 24 employees and those with 25 to 99 employees saw decreases of 12% and 10%, respectively. 

In reviewing the liquid assets of Marylanders, the study found 41% of near-retirement households have too little saved and will have to rely almost exclusively on Social Security or defined benefit pensions for their retirement income. Only 34% were found to have assets in excess of $300,000 and considered to have adequate income for retirement.

According to the study, the downward trend started in 2000, which suggests the declining figures are not a temporary artifact from the 2008-to-2009 recession, but more a product of persistent structural trends.

The study report says further research is needed to answer: Are there regulatory or other obligations that are causing employers to close or forego retirement plans?; and How can more small businesses be encouraged to sponsor plans?

A copy of the study report is here.