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October 12, 2004
Retirement Plan Participation Ends Decline

The percentage of workers participating in employment-based retirement plans rose marginally in 2003, reversing a two-year decline, according to a new analysis from a Washington-based nonprofit group that studies employee benefits.

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The group, the Employee Benefit Research Institute (EBRI), reports that the portion of all workers in an employment-based retirement plan rose to 42 percent (up from 41.8 percent the prior year), while the level for full-time, full-year workers ages 21-64 hit 57.1 percent (compared with 56.7 percent in 2002). Workers working for the largest firms or in the public sector showed the largest participation gains in 2003.

The new data are contained in the October EBRI Issue Brief, which analyzes the most recent Census data available and concludes that the number of workers participating in a plan increased, modestly, to 63.5 million, but was still below the previous peak of 67.1 million recorded in 2000. In the public sector, 15.2 million workers participated, matching the prior all-time high.

The report also found:

  • Participation among workers ages 21-64 without a high school diploma has become increasingly rare, declining from 31.5 percent in 1987 to 21.9 percent in 2003. For those who completed high school, but lacked further education, the decline was less severe, from 43.9 percent in 1987 to 42.6 percent in 2003.

  • By contrast, participation levels rose among those who attended college. For those with a bachelor's degree, the participation level went from 52.1 percent in 1987 to 59.3 percent in 2003. Workers with an additional degree saw a rise from 65.6 percent in 1987 to 69.8 percent in 2003.

  • The only income group showing an increased participation rate in 2003 included those whose income exceeded $50,000 annually. It rose from 73.3 percent in 2002 to 74.5 percent in 2003.

  • Participation levels for workers at small firms increased from 1987 to 2003, but remain below those for the largest employers. At firms with 25-99 employees, the level rose from 28.2 percent to 39.4 percent between 1987 and 2003. At firms employing between 100 and 500 workers, the level rose from 42.5 percent to 49.4 percent over the same period.

  • The percentage of workers participating at the smallest firms (fewer than 10 employees) was 16.5 percent in 2003. By contrast, the participation rate was 60.3 percent among those working for firms employing a 1,000 or more.

"While the overall retirement participation level has stabilized, we're seeing significant changes within subgroups," said EBRI Chairman and President Dallas Salisbury. "These numbers show that the economy drives participation in a retirement plan. A tightening labor market may drive participation higher in the years ahead."


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