A. PENSION RECEIPT RATE AND HEALTH COVERAGE
RATES OF RETIREES

In 1994, the majority of retirees were receiving, in addition to Social Security, some type of benefit earned in conjunction with their employment ¹. There is, however, considerable variation in the types of benefits received and some notable relationships between sources of retirement income and the characteristics of the individual retirees and their prior employment.

Among all retirees ages 55 and older, 48% reported employer provided pension benefits, either in the form of a lifetime annuity or a lump sum distribution taken in 1994 or earlier and used for retirement ². Thirty percent of retirees received employment based health plan coverage that could be continued for life. Almost one-fourth of retirees received both pension benefits and health insurance from their former employer.

Receipt of both pension and health benefits is far higher among retirees from public sector jobs than from private sector employment. Overall, 77% of Federal, state and local government retirees reported receipt of pension and/or health benefits compared to 48% of private sector retirees.

Male retirees reported a much higher rate of employment based benefits than women. Among men, 30% receive both pension and health benefits, 27% receive only pension benefits, and 9% receive only health coverage. Among women, 15% receive both benefits, 23% receive only pension benefits, and 6% receive only health coverage.

While male retirees in both the private and public sectors are more likely to receive retirement benefits than their female counterparts, the disparity in benefit receipt is greater in the private sector, where 60% of men receive pension and/or health benefits compared to only 33% of women. Among public sector retirees, 85% of men and 70% of women receive some retirement benefits.

Benefit Receipt Rates for Private Sector Workers and Retirees.
Table A2 shows the percentage of private sector workers and retirees ages 55 and over who currently receive various types of retirement benefits, including employer pension benefits, employment based health coverage from a prior employer, and Social Security benefits. About 40% of retirees receive employer plan pension benefits ³, about 24% receive health coverage that can be continued for life, and 84% receive Social Security benefits. Ten percent report no benefits.

Among retirees ages 65 and over, 42% receive pension benefits, 25% receive health coverage, and 96% receive Social Security benefits (Table A3) . Only 2% receive no benefits.

With the proliferation of pension coverage under 401(k) plans, it is becoming increasingly common for workers changing jobs to receive lump sum distributions from their former plan. Among workers ages 55 and over, 18% have pension benefits based on prior employment. The pension receipt rate increases to 27% for workers ages 65 and over. Most of these benefits were received as lump sum distributions and rolled over into retirement savings. In contrast to the substantial minority of older workers with pension benefits based on prior employment, no workers reported health coverage from a prior employer that could be continued for life, indicating that retiree health benefits are virtually always received from the last employer before retirement.

1For purposes of this report, retirees are defined as persons who have withdrawn from the labor force and who either formerly held a job with the same employer for a period of 5 years or more or who receive pension benefits and/or health plan coverage based on former employment.

²In this report, a distinction is made between persons with retirement benefits from pension plans and persons with any type of benefit from pension plans. The Section A tables include only individuals with retirement benefits, which are defined here as either lifetime annuities or lump sum distributions received after age 54 or at an earlier age and rolled over into retirement savings. The Section B tables include all individuals with any type of benefit received from pension plans, including those who received lump sum distributions prior to age 55 and used the distributions for purposes other than retirement savings.

Similarly, a distinction is made between retiree health coverage under a former employer's plan that can be continued at a group rate for life and coverage that can be continued for only a limited specified period. Section A tables show figures for employment based health coverage that can be continued for life. Section E tables show the number of persons falling into each group.

³An additional 2% of retirees indicated that they will eventually receive deferred vested pension benefits and an additional 1% received lump sum distributions which they used for purposes other than retirement savings.