Plan Participation Rate Restarts Slow Climb

The percentage of workers participating in an employment-based retirement plan increased in 2013 for the first time since 2010, according to the Employee Benefit Research Institute (EBRI).

The increased participation rate was noted both among all workers and among private-sector workers, EBRI says. Specifically, the percentage of all workers participating in an employment-based retirement plan increased to 41% in 2013, up from 40% in 2010. The number of workers participating rose to 64.2 million in 2013, the highest number since 2007. In general, EBRI found, each category of workers was at its highest level of participation since the economic recession began in 2008.

The increases reflect the slowly improving national economy and employment rate in the aftermath of the recession, explains Craig Copeland, senior research associate at EBRI and author of the new report, “Employment-Based Retirement Plan Participation: Geographic Differences and Trends, 2013.” The research is based on recently released 2014 data from the Census Bureau’s Current Population Survey, EBRI says.

“Retirement plan participation by workers is tied to macroeconomic factors such as the labor market, in addition to various demographic factors,” Copeland says. “Other underlying factors also have an impact, but higher employment generally leads to higher levels of retirement plan participation.”

As the EBRI report notes, the percentage of workers participating in a plan varies significantly by the type of worker being considered. Trends in participation by demographic group include the following:

  • Among all American workers in 2013, 51% worked for an employer or union that sponsored a retirement plan (the sponsorship rate), while 41% participated in a plan;
  • Among wage and salary workers ages 21 to 64, the sponsorship rate increased to 56.0%, and the portion participating increased to 46%;
  • Among full-time, full-year wage and salary workers ages 21 to 64, the sponsorship rate was 62%, and 54.5% of the workers participated in a retirement plan; and
  • Almost 74% of wage and salary public-sector workers participated in an employment-based retirement plan.

In addition, demographic factors have a big impact on whether a worker has access to a retirement plan. For example, being white was associated with higher probabilities of participating in a retirement plan. Hispanic wage and salary workers were significantly less likely than both white and black workers to participate in a retirement plan, although native-born Hispanics were more likely to participate than non-native born Hispanics, EBRI says.

EBRI’s report also shows the overall gap between the percentages of black and white plan participants has narrowed when compared across earnings levels, with blacks surpassing whites at the income level of $75,000 or more.

In another important trend, workers with lower educational attainment had lower levels of retirement plan participation, EBRI says. While educational attainment has a strong correlation with earnings, when controlling for that factor, the higher educated still had the highest levels of participation. Those with the least education (no high school diploma) still had significantly lower levels of participation than those with at least a high school diploma, EBRI’s research shows.

While the overall percentage of females participating in a plan was lower than that of males, when controlling for work status or earnings, the female participation level actually surpassed that of males in 2013. EBRI says this gender gap significantly closed between 1987 and 2009 before widening again in 2010 to 2012. It has nearly closed again in 2013, according to the EBRI report.

EBRI notes that workers at large employers were far more likely to participate than those at smaller firms. Those in the manufacturing industry and the transportation, utilities, information, and financial industry had the highest probabilities of participating, while those in the “other-services industry” had the lowest probability.

Not only do the workers’ demographic characteristics affect the probability of their participation in an employment-based retirement plan, but their geographic location also has an impact. EBRI’s report shows wage and salary workers ages 21 to 64 living in Florida had the lowest probability (38.3%) of participating in a plan in 2013, while those living in Iowa had the highest probability (56.9%).

Those workers who do not participate in a plan tend to be young, part-time, low-income, or employed by small firms. For instance, of the 67.9 million wage and salary workers who worked for an employer who did not sponsor a plan, 17.9 million (26.4%) were ages 25 or younger or 65 or older, EBRI says. Almost 30 million (43.6%) were not full-time, full-year workers, and 29.2 million (43.0%) had annual earnings of less than $20,000. Furthermore, 39.3 million (57.8%) worked for employers with less than 100 employees, EBRI finds.

A full copy of EBRI’s report was published in the October EBRI Issue Brief, online at