The Retirement Planning Uncertainty Principle

Retirement planning research is at least in one respect similar to particle physics: It’s often hard to separate observer from observed.

A new report from the Employee Benefit Research Institute (EBRI) describes an interesting anomaly that emerged in the most recent population survey published by the U.S. Census Bureau.

According to EBRI, estimates from the new and redesigned Current Population Survey (CPS) show a confusing drop in the percentage of Americans who participate in a workplace retirement plan. So contrary are the results to recent provider-sponsored and independent reporting that EBRI suggests the CPS results “raise doubts about the use of CPS data to assess current and future retirement plan coverage policies.”

“At issue is the Annual Social and Economic Supplement (fielded in March) to the Census Bureau’s CPS, which is one of the most-cited sources of income data for retirement-age Americans,” EBRI explains. “The Census Bureau redesigned the income questions starting in the 2014 survey in response to findings that this survey has misclassified and generally under-reported income (in particular, sources of retirement income).”

EBRI says the redesign of the survey “did capture more income (especially pension income), but it also significantly lowered the survey’s estimates of retirement plan participation among those most likely to participate. Furthermore, these new CPS participation results trended downward in contrast to other surveys on retirement plan participation.”

EBRI suggests the reported drop in participation levels is perhaps tied in part to the conflicting time series of the participation levels in CPS relative to other surveys, “notably from the U.S. Bureau of Labor Statistics National Compensation Survey.” Craig Copeland, EBRI senior research associate and author of the report, says the discrepancies “raise doubts about the use of CPS participation data, especially for time series trends on retirement participation levels.”

NEXT: Survey design changes

As the EBRI report points out, in 2014, researchers at the Census Bureau conducted a test of the new set of CPS-income questions by doing a “spilt-panel design.”

“The new questionnaire resulted in higher percentages of individuals with pension income, but lower percentages of workers with a workplace retirement plan for that same year,” EBRI finds. “Specifically … in the 2014 CPS, which provides results for 2013, both the traditional questionnaire and a split sample design for the redesigned questionnaire were used to conduct the survey. Under the traditional survey design, the percentage of all workers found to be working for an employer that sponsored a plan was 50.2%, compared with 47.6% from the redesigned questionnaire, a difference of 2.6 percentage points.”

EBRI finds for full-time, full-year wage and salary workers ages 21 to 64 (those most likely to participate in a plan) the difference was even larger at 3.7 percentage points, or 60.8% traditional vs. 57.1% redesigned. For public-sector workers ages 21 to 64 the difference was 3.3 percentage points. 

The 2015 survey continued with the redesigned questionnaire, EBRI notes, and the percentages of workers working for an employer that sponsored a plan were found to have decreased among each work force. “In particular, the percentage of full-time, full-year wage and salary workers ages 21 to 64 working for an employer that sponsored a plan declined by 2.7 percentage points from 2013 to 2014,” EBRI finds.

Compared with other reports the findings are particularly confusing, EBRI concludes. “The decline contradicted the findings from the Bureau of Labor Statistics’ National Compensation Survey (NCS). This survey found that the percentage of private-sector wage and salary workers at establishments with 500 or more employees participating in an employment-based retirement plan increased in 2014 to 77% from 76% in 2013.”

The full report, “The Effect of the Current Population Survey Redesign on Retirement-Plan Participation Estimates,” is published in the December 2015 EBRI Notes and online at