Benefits February 8, 2007

Study: Working Family Heads' Plan Participation Declined

February 8, 2007 (PLANSPONSOR.com) - The percentage of working heads of families who participated in an employer plan dropped more than 2% from 2001 to 2004, according to a new study.
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A news release from the Employee Benefit Research Institute (EBRI) said its research found that 46.1% of working family heads participated in an employer plan in 2004, down from 48.7% in 2001. Employers across the board with 10 or more workers saw the decrease, the study said.

However, the access to employer plans apparently wasn’t the problem. The percentage of family heads working for an employer that sponsored a retirement plan was just over 61% in 2004. EBRI said that number has remained steady since 1992.

The study found that:

  • 56% of heads of families who participated in an employment-based retirement plan had only a defined contribution plan;
  • 26% of heads of families had only a defined benefit plan; and
  • 18% had both.

This was a significant change from 1992, when 42% of heads of families had only a defined benefit plan and 41% had only a defined contribution plan, the EBRI study reported. The most significant shift toward defined contribution plans came among employees of small firms.

Further, the study reported that:

  • 58% of retirement plan participants working for employers with 500 or more employees were in a defined contribution plan in 1992. This number grew to 72% by 1995 and held steady at around 75% through 2004.
  • 37% of participants working for employers with 10 to 19 employees were in a defined contribution plan in 1992. This number increased to 69% in 1995, bumped up to more than 90% in 1998 and remained at more than 80% from 2001 to 2004.

The study is based on the Survey of Consumer Finances, a triennial survey ofU.S. families sponsored by the Federal Reserve in cooperation with the Department of the Treasury. The EBRI study report is here .

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