Access to Retirement Savings in U.S. Varies By State, Pew Study Finds
By Mark Johnson, Ph.D., J.D.


American workers build up a majority – if not all – of their retirement savings through employer-sponsored plans. A recent study by The Pew Charitable Trusts, using data collected from across the nation, identified a number of differences in both access to and participation in employer-based retirement plans such as 401(k)s, 403(b)s, and pensions. According to Pew, factors that contribute to the discrepancy include industry, employer size, as well as employee wage and salary.


The Pew report, titled “Who's In, Who's Out: A Look at Access to Employer-Based Retirement Plans and Participation in the States,” was released in January and is available on the website of The Pew Trusts.


The information was drawn from federal sources, specifically the Census Bureau’s Current Population Survey, and focused on wage and salary workers in the private sector who worked full-time, full-year and were between the ages of 18 to 64. Moreover, the report noted that income, age, ethnicity, race, and education were characteristics that contributed to the differences found state-by-state, in addition to employer size and industry.


Significant differences in retirement plan access and participation were found to occur on a geographic basis. Wisconsin has the highest participation rate in the country (61 percent) for employer-based pension or retirement programs, according to Pew, compared to a low participation rate of 38 percent in Florida. Generally, states in the Midwest, New England and Pacific were found to have higher rates of participation. The South and Western states tend to have lower participation rates.


Pew found that 49 percent of workers in the private sector actually participate in an employer-based retirement plan, although 58 percent have access to a retirement plan but apparently choose not to take part.


Company size affected access and participation rates according to the report. For instance, the plan availability rate for individuals working at companies with 500 or more employees was as high as 74 percent. Employees at small companies, as measured by 10 or fewer employees, report having retirement plan access in 22 percent of the cases.


Pew determined that low-wage workers have much lower access levels and participation rates when compared to higher earners. Nationwide, approximately one-third of workers making $25,000 or less annually had access to an employer-based retirement plan, according to the report. Of this group of lower income workers, only 20% actually participated in the plan available to them.


On the higher end of the income scale, about three-quarters of employees making $100,000 or more have access to and participate in these plans. More than half the workers earning more than $25,000 but less than $49,000 annually had access to a plan (56 percent) while just under half (47 percent) participated in one. Those that earned between $50,000 and $99,000 annually had access rates of 72 percent and participation rates of 65 percent.


Workplace experience also appears to be a factor, since the Pew study found that younger workers as well as workers with lower educational levels generally are employed by firms and/or work in positions that are less likely to offer retirement program benefits.


Gender did not make a difference as much as other characteristics studied – on average, 57 percent of men and 58 percent of women had access to an employer-based retirement plan and almost 50 percent in each group participated in such a plan. The study did find some differences in plan access and participation rates by race and ethnicity, which are detailed in the report.


As many as 30 million workers do not have access to employer-based retirement plans according to Pew’s analysis. Generally, access and participation in employer-based retirement plans was lower in the South and West when compared to the Midwest, New England and parts of the Pacific Northwest.


The Pew report notes that policy makers in a number of states are evaluating ways to increase retirement plan options offered by businesses, while at the same time trying to educate workers on the importance of participating in retirement savings programs. On a federal level, programs like “myRA” (short for “My Retirement Account”) are being offered as a savings option for workers who do not have retirement plan access on the job.


The overall policy goal is to encourage more workers to set aside a greater portion of their earnings and thereby improve retirement funding levels.


January, 2016



ABOUT THE AUTHOR: Mark Johnson, J.D., Ph.D. Mark Johnson, Ph.D., J.D., is a highly experienced ERISA expert. As a former ERISA Plan Managing Director and plan fiduciary for a Fortune 500 company, Dr. Johnson has practical knowledge of plan documents as well as an in-depth understanding of ERISA obligations. He works as an expert consultant and witness on 401(k), ESOP and pension fiduciary liability; retiree medical benefit coverage; third party administrator disputes; individual benefit claims; pension benefits in bankruptcy; long term disability benefits; and cash conversion balances.


ERISA Benefits Consulting, Inc. by Mark Johnson provides benefit consulting and advisory services and does not engage in the practice of law.


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