May 2013

The relationship between job characteristics and retirement savings in defined contribution plans


Occupation also could be pertinent. Given that the recession more adversely affected blue-collar workers,34 DC plan participants in managerial and professional occupations may have been less likely than blue-collar workers to reduce their contributions, all else being equal. Having a job that also offers a DB pension plan may be associated with a recessionary decline in contributions to DC plans.35 For example, one might expect individuals who participate in both a DC and DB plan to be more likely to reduce DC contributions in favor of consumption in the event of a financial emergency or growing pessimism about the economy. On the other hand, jobs that provide both DB and DC plans may attract individuals with a taste for savings, and these individuals may be less apt than others to reduce their contributions.36

Personal earnings often play a pivotal role in determining DC plan participants’ level of contributions. In general, lower earners are less likely to participate in a DC retirement plan when eligible.37 More importantly for this study, among workers already participating in a DC plan, consistency of contribution amounts over time is likely to be highly sensitive to changes in individual earnings, and perhaps even more so during a recession.

Data and methods

Our data consist of the 2008 panel of the Survey of Income and Program Participation matched to W-2 tax records received by the Social Security Administration. The SIPP is a nationally representative panel survey of the civilian noninstitutional U.S. population conducted by the Census Bureau. In this study, we used waves 1 through 5 of the 2008 SIPP panel. The first interviews (wave 1) inquired about income and employment in the months of May through August of 2008. The last interviews (wave 5) referred to the months of December 2009 through March 2010.38

Linking the SIPP with SSA’s Detailed Earnings Record (DER) file provides longitudinal information on respondents’ annual earnings and tax-deferred contributions to DC plans (e.g., 401(k), 403(b)) on the basis of their W-2 tax records.39 These data are exceptionally useful for tracking individual earnings and DC plan contributions over multiple years. Another virtue is that they more accurately measure DC retirement account contributions than do self-reported data, as collected in household surveys.40 The administrative data do not contain information on employer contributions.

Our study sample consists of people ages 29–59 years in wave 1 of the 2008 SIPP panel who (1) were matched to the administrative records, (2) were present through wave 5 of the SIPP panel, (3) had positive earnings in both 2007 and 2009, and (4) had participated in a DC plan in 2007. We thus observe how workers who were already contributing to a DC retirement account at the start of the recession changed their contributions, if at all, during the recession.

To make the analysis more straightforward, we applied several other restrictions:

  • Because DC retirement plans are not offered to most part-time workers, we limited our sample to workers employed full time at wave 1.
  • To ensure that a person’s job characteristics reported in wave 1 (referring to the summer of 2008) were applicable to the beginning of the recession (late 2007), we selected only people who had started their primary job before December 2007.
  • We looked only at private-sector workers because the relationship between job characteristics and DC retirement plan contributions are likely to be different for public sector workers.41
  • Workers must have remained with the same employer from the start of the SIPP through December 2009, the calendar year including the official end of the recession.42 This is important because it allows us to exclude cases in which job change or job loss led to reductions in DC plan contributions.
  • The analysis excludes agricultural workers and the self-employed because of their unique labor market situations.

Exhibit 1 lists our selection rules for the SIPP-DER dataset, which yielded a final sample of 4,747 individuals.


34 Andrew Sum and Ishwar Khatiwada, “The nation’s underemployed in the ‘Great Recession’ of 2007–09,” Monthly Labor Review, November 2010, pp. 3–15.

35 Gur Huberman, Sheena S. Iyengar, and Wei Jiang, “Defined contribution pension plans: determinants of participation and contribution rates,” Journal of Financial Services Research 31, no. 1, 2007 pp. 1–32.

36 Ibid.

37 Irena Dushi, Howard M. Iams, and Christopher R. Tamborini, “Defined contribution pensions participation and contributions by earnings levels using administrative data,” Social Security Bulletin, vol. 71, no. 2, 2011, pp. 67–76; and David Joulfaian and David Richardson, “Who takes advantage of tax-deferred savings programs? Evidence from federal income tax data. National Tax Journal, September 2001, pp. 669–688.

38 One-fourth of the SIPP sample is interviewed every month, and each interview asks about events that occurred in the previous 4 months.

39 On the basis of agreements between the Social Security Administration (SSA) and the Census Bureau, SSA administrative records are linked to SIPP panels and are available for research purposes on approved projects at restricted data sites. About 90 percent of respondents in the 2008 panel have their survey reports matched to their own SSA W-2 records. The matched and full SIPP samples are consistent across a range of key characteristics.

40 Irena Dushi and Howard M. Iams, “The impact of response error on participation rates and contributions to defined contribution pension plans,” Social Security Bulletin, vol. 70, no. 1, 2010, pp. 45–60; John Turner, Leslie Muller, and Satyendra K. Verma, “Defining participation in defined pension plans, Monthly Labor Review, August 2003, pp. 36–43. More information about SSA matched datasets can be found in Chang Hwan Kim and Christopher R. Tamborini, “Response error in earnings: an analysis of the Survey of Income and Program Participation matched with administrative data,” Sociological Methods and Research (forthcoming); and also in Jennifer McNabb, David Timmons, Jae Song, and Carolyn Puckett, “Uses of administrative data at the Social Security Administration,” Social Security Bulletin, vol. 69, no. 1, 2009, pp. 75–84.

41 For example, the relationship between employer size and DC plan participants’ level of contributions may vary between private and public-sector workers.  Also, compared with private-sector workers, state and local workers are more likely to participate in a DB plan as well as a DC plan, have higher rates of union membership, and have retirement plans whose terms sometimes can be changed only by enacting a new law. Most importantly, because the majority of state and local government employees participate in defined benefit pensions, their DC plans are typically supplemental plans.

42 About three-quarters (78 percent) worked for the same employer at the start of the SIPP and in December 2009.

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About the Author

Christopher R. Tamborini

Christopher R. Tamborini is a senior research analyst in the Office of Retirement Policy, Social Security Administration.

Patrick Purcell

Patrick Purcell is an economist in the Office of Research, Evaluation, & Statistics, Social Security Administration.

Howard M. Iams

Howard M. Iams is a senior research advisor in the Office of Research, Evaluation, & Statistics, Social Security Administration.