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February 2006, Vol. 129, No. 2
Trends in retirement plan coverage over the last decade
Stephanie L. Costo
As lifespans lengthen, retirement benefits have become a growing concern among both employees and employers. Although there has been only a slight decline in overall retirement plan coverage, employer-sponsored plans have changed considerably in the last decade. Data from the Bureau of Labor Statistics (BLS, the Bureau) show a notable shift in participation over the last decade between the two most prominent types of retirement plans. Participation in defined contribution plans has eclipsed participation in defined benefit plans. In 1992–93, 32 percent of private-industry workers participated in a defined benefit plan, while 35 percent participated in a defined contribution plan.1 (See chart 1.) By 2005, the number of employees participating in defined contribution plans had increased to 42 percent, while the number participating in defined benefit plans had fallen to 21 percent.2 Even plan provisions in the same type of benefit have changed. Of note is the growing prevalence of cash balance arrangements among defined benefit plans and the greater number of investment options among defined contribution plans. According to a 2004 survey by Mercer Human Resource Consulting, 96 percent of employers changed one or more of their retirement programs in some way within the previous 3 years alone and expect future changes in the benefit structures.3
Using data from the BLS National Compensation Survey (NCS), this article describes some of the factors underlying these trends. It also examines some key provisions of both defined contribution and defined benefit plans.
This excerpt is from an article published in the February 2006 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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1 The 1992–93 BLS survey of benefits, part of the Employee Benefits Survey, includes data on both full- and part-time workers in private industry.
2 The 2005 BLS survey of benefits in private industry, part of the National Compensation Survey, combines data on both full- and part-time workers in private-sector establishments.
3 Coping with the Economy: Survey on Retirement Programs (Mercer Human Resource Consulting, Jan. 4, 2004).
Related BLS programs
National Compensation Survey - Benefits
participation in defined contribution pension plans—Aug.
Pension integration and retirement benefits—Feb. 2001.
Health and retirement benefits: data from two BLS surveys—Mar. 2000.
Trends in retirement eligibility and pension benefits, 1974-83—Apr. 1987.
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