EBRI: Census Bureau Reported Inaccurate Estimates of Plan Participation

A new report by EBRI suggests that the Census Bureau’s estimates of steep declines in employer-sponsored retirement plan participation were misleading.

The U.S. Census Bureau’s Current Population Survey (CPS) miscounted the amount of Americans participating in employer-sponsored retirement plans, according to the Employee Benefit Research Institute (EBRI).

Two years ago, the CPS underwent a major redesign of its questions pertaining to income. This shift seems to have led to inaccuracies in reporting, the EBRI argues. The organization’s research indicates that the survey’s estimates of major declines in employment-based plan participation contradict other government data. Furthermore, EBRI notes that groups of workers with the sharpest drops in participation, based on CPS findings, are actually those most likely to engage in retirement plans. These groups include older employees, higher earners, and workers with larger employers.

“Unless modifications are made to the survey, using CPS for estimating the participation in pension and other retirement plans will provide misleading and inaccurate estimates and conclusions,” warns Craig Copeland, senior research associate at EBRI and author of the report.

He notes that the Annual Social and Economic Supplement (fielded in March of each year) to the CPS is one of the most cited sources of income data for those likely to be retired, which include people aged 65 and older.

The Census Bureau initiated the 2014 redesign following previous research which indicated that the survey misclassified and generally under-reported income—particularly pension income.

The EBRI reports that while the changes appear to have improved the accuracy of data on pension income, changes also resulted in historically sharp reductions in the levels of worker participation in employment-based retirement plans.

For example, the percentage of full-time, full-year wage and salary workers ages 21 to 64 participating in an employment-based retirement plans dropped by more than 11 percentage points from a 2013 estimate, resulting in more than 9 million fewer individuals participating in an employer-sponsored retirement plan.

However, EBRI points out that these findings are contradicted by separate data gathered for the U.S. Bureau of Labor Statistics’ National Compensation Survey, which found that the percentage of private-sector wage and salary workers at establishments with 500 or more employees participating in employment-based retirement plans actually increased from 76% in 2013 to 77% in 2014, and then returned to 76% in 2015.

The full report, “Another Year After the Current Population Survey Redesign and More Questions About the Survey’s Retirement Plan Participation Estimates,” is published in the Nov. 21 “EBRI Notes,” and it can be accessed online at www.ebri.org.