Demographics Outweigh Company Size in Plan Availability

In the study, Who Gets Retirement Plans and Why: An Update, the Investment Company Institute says differences in workforce composition appear to be a primary cause for the low rate at which small employers sponsor retirement plans. As a group, the characteristics of small-firm employees differ substantially from the characteristics of large-firm employees.   

However, workers at small firms that sponsor plans are very similar to workers at large firms that sponsor plans, and workers at small firms that do not sponsor plans are very similar to workers at large firms that do not sponsor plans. In particular, employees who work for firms that sponsor plans are more likely to be older, have higher earnings, and work full-time year round, according to the ICI report.  

In addition, workers at small employers that sponsor retirement plans are as likely to participate as workers at large employers sponsoring retirement plans. Although only 17% of workers at firms with fewer than 10 employees have an employer that sponsors a plan—compared with 69% of workers at firms with 1,000 employees or more—if a firm sponsors a plan, approximately 80% of employees participate, regardless of firm size. 

The study found most workers who have the ability to save and be focused on saving for retirement are covered by an employer-provided retirement plan. Of those who want to save for retirement in the current year, three-quarters had access to a pension plan through their own employer or their spouse’s employer, and 93% of those with access participated.  

Younger and lower-income households are more likely to report that they save primarily for reasons other than retirement, such as to fund education, to purchase a house, to fund other purchases, or to have cash on hand in case of unexpected need.