Participation in retirement plans fell sharply between 2004 and 2005 at U.S. employers with 10 to 99 employees

Bigger employers are still more likely to offer retirement plans than smaller employers are, and employers with fewer than 10 employers continue to be the least likely to offer retirement plans, according to researchers at the Employee Benefit Research Institute, Washington.

Only 15.8% of workers at the smallest employers participated in retirement plans in 2005, compared with 25.1% at employers with 10 to 24 employees, 36.9% at employers with 25 to 99 employees and 48.4% at employers with 100 to 499 employees, EBRI researchers report.

But the participation rate fell only 1.1 percentage points between 2004 and 2005 at employers with 100 to 499 employees, and participation fell only 0.2 percentage points at the employers with 1 to 9 employees.

Meanwhile, participation at employers with 10 to 24 employees sank 2.1 percentage points, and participation at employers with 25 to 99 employees plummeted 2.7 percentage points.

The 2.7 percentage point drop appears to be the biggest EBRI has recorded for employers with 1 to 500 employees since at least 1987.

Participation rates for most groups of private-employer employees have been falling since 2000.

“It may take a significant tightening in the labor market (like the one that occurred in the late 1990s) before the percentage of workers participating in an employment-based retirement plan significantly increases,” EBRI researchers warn.