Plan sponsorship and participation grows since recession, EBRI reports

Since the end of the recession, a higher percentage of workers are working for employers that offer retirement plans and a higher percentage of them are participating in the plans, according to a new report by the Employee Benefit Research Institute (EBRI). The data in the report are from the U.S. Census Bureau’s latest Survey of Income and Program Participation (SIPP) on retirement plan participation, covering December 2011 to March 2012.

According to the EBRI report, in 2012, 61% of all employees age 16 or older worked for an employer or union that sponsored a pension or retirement plan for any of its employees in 2012—up from 59% in 2009. In addition, employees participating in a retirement plan increased to 46% in 2012, up slightly from 2009 (45%) but below the level measured in 2003 (48%).

The EBRI found that the vesting rate stood at 43% in 2012, up from 24%. 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 the faster vesting requirements in private-sector pension plans established since 1979, the EBRI noted.

Defined contribution plans were considered the primary plan by 78% of employees with a plan. Defined benefit plans were the primary plan for 21% of employees, according to the EBRI findings.

Craig Copeland, author of the study, noted that while the employee participation rates in salary reduction plans (such as 401(k) plans) has been going up, the average employee contribution to those plans dropped in 2012 (6.7% of salary) from 2009 (7.4% of salary). This is at least partially driven by the growth of automatic enrollment in 401(k) plans, which tend to bring in more first-time, lower-income participants but often at lower contribution rates, he said.

Source: EBRI press release PR #1037, August 27, 2013.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer’s Benefits Reports.

Visit our News Library to read more news stories.