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Retirement Planning > Retirement Investing

Most private sector workers have access to a retirement plan

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Most workers who are likely to be able to save and to focus primarily on saving for retirement have access to an employer-provided retirement plan, according to a new report.

In “Who Gets Retirement Plans and Why, 2013,” the Investment Company Institute (ICI) uses the most recent data on pension coverage to update its analysis of the employee characteristics that make some employers more likely to offer, and some workers more likely to seek, compensation packages that include retirement benefits.

The study finds a clear link between the savings goals of employees and the likelihood that they work for an employer that sponsors a retirement plan.

When asked the primary reason why they save, younger and lower-income households typically said that they save to fund education, purchase a house, fund other purchases, or have emergency cash on hand, and are less likely to cite retirement as the primary reason. In contrast, older and higher-earning households are more likely to save primarily for retirement.

Consistent with these savings preferences, groups of workers who are more focused on saving for retirement are also much more likely to work for an employer that offers a plan.

Among all private-sector wage and salary workers aged 21 to 64, 53 percent work for an employer that sponsors a retirement plan. Among full-time, full-year workers aged 30 to 64, 62 percent work for an employer that sponsors a retirement plan.

If the analysis is narrowed further to those groups of workers most likely to be focused on saving for retirement — workers aged 30 and older with at least moderate levels of earnings, and all but the lowest-earning workers aged 45 and older — then 70 percent work for an employer that sponsors a plan, while 75 percent have access to a retirement plan through either their own employer or their spouse’s employer.

The 93 percent participation rate among those within this group with access to a retirement plan further demonstrates their strong interest in retirement savings.

“It’s well known that about half of America’s workers are covered by an employer-sponsored retirement plan, but less is known about who is in that half, and why,” says Peter Brady, ICI senior economist and a coauthor of the study. “Policy discussions surrounding retirement often focus on this statistic, but the percentage of the workforce with a retirement plan today is an underestimate of the percentage of workers who will reach retirement having accrued employer-provided retirement benefits.

“Many more workers will have access to a plan at some point in their career than is indicated by taking a snapshot of coverage at any single point in time,” Brady adds.

As part of the update to the study, ICI also released updated supplemental tables that provide additional detail on pension coverage from 1979 to 2013. The data show that the portion of private-sector wage and salary workers aged 21 to 64 working for employers that sponsored retirement plans was 53 percent in 2013, up from 50 percent in 2012. Since 1979, private-sector retirement coverage has averaged 54 percent and ranged from 50 percent to 60 percent. The coverage rate had fallen below its historical average in 2008 and, in the wake of the financial crisis and recession, stood at 50 percent from 2009 to 2012. With the increase in 2013, the coverage rate is now close to its long-run average.


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