Coverage Status of Workers under Employer Provided Pension Plans

Findings From the Contingent Work Supplement to the February, 1999 Current Population Survey


Data from Employee Benefits Supplements to the Current Population Survey (CPS), conducted at approximately 5-year intervals from 1972 to 1993, found that the pension coverage rate of private wage and salary workers remained relatively stable over this period at about 50% for full-time workers. More recent data from the Contingent Work Supplements (CWS) to the CPS, conducted in 1995, 1997, and 1999 indicate that pension coverage may now be increasing.

Pension coverage is not the primary focus of the CWS but it does ask a limited set of questions of all workers about coverage under a "pension or retirement plan." The brief description of a pension plan given in the survey leads to somewhat of an undercount when compared to the more broadly worded questions in the Employee Benefits Supplements.(1) Nevertheless, the pension data collected by the CWS are useful in examining variables associated with pension coverage and in tracking coverage trends over the 1995-1999 period.

The attached tables present findings on employer sponsorship and coverage among wage and salary workers (excluding incorporated self-employed workers) under pension plans based on responses to the 1999 CWS. Most tables are limited to private sector workers but a few tables compare sponsorship and coverage rates between private and public sector workers. Tables are also included showing trends over the 1995-1999 period. The major findings are summarized below:

Summary of Findings for Private Wage and Salary Workers

Employer Sponsorship of Pension Plans

In 1999, 58% of all private wage and salary workers were employed by firms sponsoring pension plans. The rate of employment in firms with plans was 64% for full-time workers and 37% for part-time workers.

Twenty-six percent of women workers are employed on a part-time basis compared to only 12% of male workers. The relatively low rate of employment by part-time workers in firms with pension plans brought the overall percentage of women working for firms with plans (57%) below that of men (60%), even though both full-time and part-time women employees were more likely to work for a firm with a plan than their male counterparts.

Younger workers were less likely to be employed by firms providing plans. Only 40% of workers under age 25 and 57% of workers 25-29 said that they were employed by a firm with a pension plan. Among workers ages 35 and older, almost two-thirds worked for a firm with a plan.

Employment in a firm providing a plan was highly correlated with education level. The sponsorship rate was 33% for workers without a high school degree compared to 56% for high school graduates, 61% for workers with some college education, and 74% for college graduates.

Workers in high pay and unionized industries and occupations were most likely to be employed by firms sponsoring plans. The sponsorship rate was greater than 70% for workers employed in mining, manufacturing, communications and utilities, and finance, insurance, and real estate industries.

The plan sponsorship rate was less than 50% in agriculture, construction, and retail trade. Service industry workers, who now make up almost one-third of the private sector wage and salary labor force, had a 56% rate of employment in firms sponsoring a pension plan. This rate, which was only slightly below the overall 58% rate for all private sector workers, reflects a mixture of high pay and low pay firms in the service sector.

Among different occupational groups, employment by a firm with a plan was above 70% for executive and managerial, professional specialty, and technical and related support occupations. The sponsorship rate was 50% or less for farming, service, and labor occupations.

Pension Participation Rates

The overall pension coverage rate in 1999 was 44%, including 47% for men and 40% for women.

While the same demographic and economic variables associated with employment in a firm sponsoring a pension plan were also associated with plan participation, the disparities in coverage patterns were often even more pronounced. Eligibility requirements and the increasing use of 401(k) plans requiring voluntary employee contributions as a condition of participation often result in low coverage rates for part-time, temporary, and low-wage employees even in firms sponsoring plans.

The pension coverage rate was 51% for full-time employees and 14% for part-time employees. The higher percentage of women workers employed on a part-time basis was a major factor in the lower overall coverage rate of women when compared to men.

The coverage rate varied by race and ethnicity. The pension plan participation rate was 47% for whites, 41% for blacks, 38% for Asian and Pacific Islanders, and 27% for Hispanics.

Pension coverage increased sharply with earnings levels. Only 6% of workers earning less than $200 per week participated in a plan compared to 54% of workers earning $500-$599 per week and 76% of workers earning $1,000 or more per week.

Among unionized workers, 70% participated in a pension plan compared to 41% of non-unionized workers.

Participation Rates in Firms With Plans

Among workers whose employers sponsored pension plans, three-fourths participated in the plans.

The frequent use of minimum annual hour, length of service, and employee contribution requirements by pension plans are especially strong barriers to participation among younger workers. Only 36% of workers under age 25 employed by firms with plans participated in the plans compared to 68% of workers ages 25-29 and 88% of workers ages 50-54.

Only 19% of workers earning less than $200 per week were enrolled in their employers' plans compared to 79% or more of workers earning $400 or more per week. More than half of non-participants in the low wage group indicated that they did not work enough hours to be eligible to participate.

Among workers not enrolled in their companies' plans, the most common reason cited for non-participation was that they did not yet meet the service or age requirements of the plan. This reason was given by 39% of men and 34% of women.

The second most common reason given for non-participation, cited by 27% of non-participants, was a voluntary decision not to participate. Presumably, workers giving this reason declined coverage in a 401(k) plan.

The third most common reason for non-participation was the part-time status of workers. Pension plans are permitted to exclude workers who work less than 1,000 hours per year. Overall, 19% of all non-participants did not participate for this reason, including 22% of women and 15% of men.

Trends in Pension Coverage of Private Wage and Salary Workers

The three CWSs conducted at two-year intervals beginning in 1995 showed that among private wage and salary workers, the coverage rate increased from 41% in 1995 to 42% in 1997 and 44% in 1999. Among full-time workers pension coverage increased from 48% to 51% over the 1995-1999 period, while among part-time workers coverage increased from 12% to 14%.

Data from the CWS surveys also showed an increase in the rate of employment in firms sponsoring pension plans, from 54% in 1995 to 58% in 1999. Among workers in firms with plans, the percentage who participated in the plan was stable from 1995 to 1999 at 75%.

Data on reasons for non-participation from the CWS indicated that the percentage of non-participants who chose not to participate increased from 24% to 1995 to 27% in 1999. The overall rate of non-participation remained at 25% because of offsetting decreases in other reasons for non-participation, such as the percentage of workers in job categories not eligible for participation, which declined from 8% in 1995 to 6% in 1999.


  1. The initial question in the 1993 Employee Benefits Supplement defined retirement plans as including regular pensions and also including "other plans where money is accumulated in an individual account for retirement - like thrift, savings, profit sharing or stock plans." The survey also asked a follow-up question specifically about coverage under a 401(k) plan. It appears that the narrowly worded pension question in the CWS leads to an undercount of about 2 to 3 percentage points in the pension coverage rate when compared to the comprehensive set of questions in the Employee Benefit Supplement.