More workers than commonly thought participate in retirement plans,
according to a study by the Investment Company Institute. But even with the new numbers, there's plenty of room for improvement.
The study by the mutual fund industry's trade group found that 63% of all workers aged 26 to 64 participated in an employer-sponsored retirement plan either directly or through a spouse.
ICI's study looked at data from the IRS Statistics of Income Division Form W-2 study. The data provide an alternative measure to the most commonly cited data on retirement plan participation, the U.S. Bureau of Labor Statistics' Current Population Survey (CPS), which, the ICI said, understated retirement plan participation by about five percentage points. Overall, among all working taxpayers aged 26 to 64 in 2013, 55% were active participants in a retirement plan (defined benefit, defined contribution or both), and 63% were either active participants or
had a spouse who was an active participant.
Most of those who don't participate in employer savings tend to be those who are young and in lower income brackets, the paper notes. "They are investing in different things — their education, their family, a house," Peter Brady, senior ICI economist and author of the paper.
Older, high-income workers are more likely to have and use employer-sponsored retirement plans. The share of workers who were active participants in a retirement plan or who had a spouse who was an active participant was higher for older workers (68% for workers aged 45 to 64), and higher still for older workers with more income (77% for workers aged 45 to 64 with adjusted gross income of $30,000 or more).
Nevertheless, the new data doesn't mean that there's plenty of room for improvement, said Aron Szapiro, director of public policy research at Morningstar. "More research is good, but it's still almost half of workers without access to employer plans."
The ICI has opposed state-sponsored retirement plans, such as
the one offered in Oregon, but Mr. Brady said the study wasn't geared towards fueling that fight. "The employer plan system is doing quite well, but that doesn't mean it can't be improved," Mr. Brady said.
"The system works well for large- and mid-sized employers," Mr. Szapiro said. "But not so much for small employers who are just trying to keep the lights on. My bottom line is that that the research is interesting, but still reveals we have work to do."
