What Are the Latest Trends with Retirement Plan Participation?
Participation in retirement plans continues to grow, the Congressional Research Service (CRS) indicates in its most recent report.
The increase in participation is not dramatic. But while the growth may only be inching up, it nonetheless is consistent and relentless.
In the latest update to “Worker Participation in Employer-Sponsored Pensions: Data in Brief and Recent Trends,” the CRS looks at worker participation in defined benefit (DB) and defined contribution (DC) plans, as well as overall trends in participation. The report is a snapshot of participation in March 2023, the latest period for which they have information.
Broad Observations
The CRS says that access and participation rates vary, depending on whether they are (1) full-time or part time, (2) are employed in the public sector or the private sector, and (3) belong to a union. In addition, the percentage of workers who participate in plans to which they have access differs by employer size, industry sector, and between DB and DC plans.
March 2023
In March 2023, among all workers, 73% had access to retirement plans.
Public vs. private. Access was very high among state and local public-sector workers at 91%, while access among private-sector workers was 70%.
Part-time vs. full-time. Among part-time civilian workers, 44% had access to pension plans, while nearly twice as many full-time workers did at 82%. Workers who belonged to unions were also more likely than those who did not belong to a union to have access to a DB plan.
Size matters. Access to a retirement plan was higher as the size of an employer’s workforce increased. The CRS says that 53% of private-sector workers in firms with fewer than 50 employees had access; that jumped to 91% in firms with 500 or more employees.
By job. Workers in management jobs were the most likely to have access to or participate in a retirement plan; 86% had access, and 74% participated. Those with service-sector jobs were the least likely: 43% had access to a plan, and 25% participated in one.
DB plans. State and local public-sector workers were more likely to have access to DB plans – in fact, nearly six times as likely, at 86% and 15%, respectively.
DC plans. The results for DC plans were almost the reverse of those for DB plans – 39% of public-sector workers had access to a DC plan, while almost twice as many private-sector workers did at 67%. Workers who did not belong to a union were slightly more likely than workers who belong to a union to have access to a DC plan – at 68% and 63%, respectively.
Trends
Access to retirement plans, and participation in them, have risen – incrementally, but consistently, CRS further reports. It is instructive to look at trends over three recent years: 2018, 2021, and 2023.
Overall access and participation. Overall access to a retirement plan in March 2018 stood at 71%, and in March 2021 at 72%; that figure rose to 73% in 2023. Participation stood at 55%, 56%, and 56%, respectively, for those years.
Part-time vs. full-time. More employees had access to a retirement plan if they were full-time as opposed to part-time for all three years, and it grew very slightly.
- 2018: Full-time, 81%; part-time, 40%
- 2021: Full-time, 81%; part-time, 42%
- 2023: Full-time, 82%; part-time, 44%
Full-time employees also participated more heavily than part-time employees.
- 2018: Full-time, 66%; part-time, 23%
- 2021: Full-time, 66%; part-time, 22%
- 2023: Full-time, 66%; part-time, 24%
DC plans. Access to DC plans among all workers grew gradually. In 2018, it stood at 60%; 2021, 61%; 2023, 63%. Participation in DC plans among all workers also grew incrementally during that period: 2018, 42%; 2021, 43%; 2023, 45%.
Access vs. Participation
The reports clearly indicate that access and participation are not synonymous – not all workers who have access to an employer-sponsored plan participate in it.
Why? The CRS attributes the disparity to two reasons:
- Some employees might prefer to receive their money as current wages rather than delay the income until they retire.
- Until the recent advent of automatic enrollment, workers had to make an active decision to participate in DC plans; consequently, workers might delay participating, or even forget to do so.
Finding Out More
The 2018 data is here.
The 2021 data is here.
The 2023 is here.