Retirement Plan Participation Dips, But…

November 18, 2010 ( – A new report suggests that workplace retirement plan participation is down, but better than it has been in the past decade.


The Survey of Income and Program Participation (SIPP) data, reported in the November issue of EBRI Notes, shows that 59% of all workers over age 16 had an employer that sponsored a pension or retirement plan for any of its employees in 2009.  While that was down from previous levels – 60% in 1998 and 63% in 2003 – it was the same level as reported in 2006. 

Moreover, workers participating in a plan increased to 45% in 2009, up slightly from 2006 (44%), though lower than the 48% reported in 2003.

The vesting rate (the percentage of workers who say they were entitled to some pension benefit or lump sum distribution if they left their job) stood at 42% in 2009, nearly double the 24% reported in 1979. However, according to the report’s authors, this increase is largely due to the increased number of workers participating in defined contribution retirement plans (such as 401(k) plans), where employee contributions are immediately vested, and faster vesting requirements in private plans.

Defined contribution plans were the primary plan for 60% of those with a workplace retirement plan, while defined benefit (pension) plans were the primary plan for 39% percent of workers.

Contribution Rates

While the participation level in salary reduction plans (and their status as a worker’s primary plan) decreased, the average employee contribution for workers who reported a positive employee contribution to these plans remained virtually unchanged in 2009 (7.4%), compared with 2006 levels (7.5%), though it was much higher than the 6.6% rate in 1988, according to the report. 

On the other hand, the distribution of the contribution rates moved to a higher percentage of the lower contributors from 1993 to 2009, with the percentage of those contributing 5% or less increasing from 44.8% in 1993 to 48.9% in 2009.  “Consequently, the high contributors—those who contributed 10% or more—were more likely to contribute a higher amount in 2009 than in 1993 and to have a higher overall average contribution,” according to the report.

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