Among all workers, 44% participate in a defined contribution (DC) retirement plan according to a Beyond the Numbers report from the Bureau of Labor Statistics, “Defined contribution retirement plans: Who has them and what do they cost?”
Data from the BLS National Compensation Survey (NCS) shows overall employee participation rates for DC plans vary significantly by some worker characteristics. This is because many employers do not offer the benefit or, for those employers that do offer the benefit, their employees may not want to contribute any of their salary in order to participate. Workers in high-paying jobs, for example, are more likely to participate in DC plans than are workers in low-paying jobs. In 2016, 63% of management, professional, and related workers (relatively high-paying jobs) participated in DC plans, compared with 19% of service workers (relatively low-paying jobs).
The five types of DC retirement plans reviewed in the report are: savings and thrift, deferred profit sharing, money purchase pension, employee stock ownership (ESOP), and savings incentive match plan (SIMPLE). The rate of employee participation varies by type of plan, by worker and establishment characteristics and geographic areas. In 2015, 74% of all private industry workers participating in DC plans participated in savings and thrift plans; also of note, in establishments with one to 99 workers, 66% of workers participated in savings and thrift plans. In establishments with 100 or more workers, 81% participated in savings and thrift plans.
Savings and thrift is the most prevalent type of DC plan. NCS data show that in 2015, 62% of savings and thrift plan participants were in plans in which the employer matched up to a specified percentage of employee earnings. Of those plans, one-half matched up to 6% of employee contributions (or earnings) and the remaining half matched lower contribution ceilings, typically 3% or 4% of earnings. In 2015, 100% of savings and thrift plans had provisions that permitted employees to make pre-tax contributions, and 50% of plans permitted post-tax contributions. NEXT: Employer costs for DC plans