New EBRI Research: Worker Participation In Retirement Plans Drops to '97 Level Participation Highest in Upper Midwest, Lowest in South, Southwest

10/27/2003

From: Jim Jaffe, 202-775-6353 or jaffe@ebri.org; Craig Copeland, 202-775-6356 or copeland@ebri.org; both of the Employee Benefit Research Institute

WASHINGTON, Oct. 27 -- The percentage of the workforce participating in an employment-based retirement plan declined for the second consecutive year in 2002, according to new research from the Employee Benefit Research Institute. It fell back to its 1997 level, but is still four percentage points higher than it was in 1987.

The data show that 41.8 percent of all workers participated in an employment-linked retirement plan last year, down from the 44.4 percent peak set in 2000. In 1987, the participation level was 37.6 percent.

Historic demographic trends continue and the group most likely to be covered includes highly-educated, well-compensated white workers who work full time for a large or public sector employer. However, trends among various groups have narrowed a bit.

Research published in the October EBRI Issue Brief, "Employment-Based Retirement and Pension Plan Participation: Declining Levels and Geographic Differences," finds that the highest participation is found in the industrial states that ring the Great Lakes and their adjacent western neighbors, while participation is lowest in the Pacific and Gulf coasts states.

Other high points include:

-- Public sector workers had the highest percentage participating at 74.8 percent.

-- A growing number of workers who for work for small firms participated in a plan. Between 1991 and 2002, the percentage of workers participating in a plan at firms with a 1,000 or more workers declined from 61.9 percent to 59.5 percent, but rose from 19.8 percent to 26.3 percent for those with firms of 10-24 workers.

-- The decline during 2000-2002 affected all categories surveyed.

-- A large decrease over time occurred in the percentage of workers with the least education participating in a plan. For those lacking high school diplomas, this percentage dropped from 31.5 percent in 1987 to 21.9 percent in 2002.

"The big question now is whether this decline is a permanent trend," said EBRI President and CEO Dallas Salisbury, "but the answer is still a few years away."