satyendra k. verma · 2018. 8. 23. · a data and chart book by satyendra k. verma august 2006...

A Data and Chart Book

by

Satyendra K. Verma

August 2006

Retirement Plan Coverage of Boomers:

Analysis of 2003 SIPP Data

by

Satyendra K. Verma

Components Retirement Plan Coverage in 1998: Analysis of 1998 SIPP Data

by

Satyendra K. Verma

The AARP Public Policy Institute, formed in 1985, is part of the Policy and Strategy Group at AARP. One of the missions of the Institute is to foster research and analysis on public policy issues of importance to mid-life and older Americans. This publication represents part of that effort.

The views expressed herein are for information, debate, and discussion, and do not necessarily represent official policies of AARP.

© 2006, AARP. Reprinting with permission only. AARP, 601 E Street, NW, Washington, DC 20049 http://www.aarp.org/ppi

August 2006

Retirement Plan Coverage of Boomers:

Analysis of 2003 SIPP Data

by

Satyendra K. Verma

Introduction

The pension coverage and the retirement prospects of boomers are a growing concern among economists, policy experts, and demographers. This data and chart book is an update of the 2004 version. It replaces the U.S. Bureau of the Census 1998 Survey of Income and Program Participation (SIPP) data with the 2003 SIPP data from its Topical Module of Retirement Expectations and Pension Plan Coverage Wave 7 (February-May 2003). The revised chart book contains data on all types of pension coverage from a worker’s current job, coverage from previous job(s), IRAs, and lump-sum payments from retirement plans for a large representative sample of U.S. employees. The book presents various components of retirement coverage among post-boomers (age 16 to 37 in 2003); younger boomers (age 38 to 47 in 2003); older boomers (age 48 to 57 in 2003); pre-retirees (age 58 to 64 in 2003); and retirees (age 65 and older in 2003) as well as among subgroups of this workforce divided by gender, race, income, education, and class of worker. Retirement coverage is defined by three broad measures: Current Pension Coverage—pension plan coverage at one’s current primary job; Career Pension Coverage—coverage obtained at any time during a career (i.e., the current primary job, current secondary job, or any previous job); and Any Coverage—retirement plan coverage at any time from any source, including employer-sponsored pension plans during a career, and IRA and Keogh accounts. The purpose of this book is to present data in easy-to-understand tables, charts, and graphs. Most of the tables and graphs are self-explanatory. Instead of detailed analyses, brief explanations and the main themes are highlighted in a few lines wherever necessary. Retirement coverage of workers at their current jobs is analyzed by various types of pension plans: defined benefit (DB), cash balance (CB), and defined contribution (DC) plans. The book also highlights the retirement coverage from previous employment, lump-sum distributions, pension rollovers, and monthly pensions. In addition, a brief section is devoted to IRAs and the retirement coverage of women by their marital status and race. In 2003, the current pension coverage rate for all workers age 16 and older who had a job or owned a business was 45.7 percent. The rate of coverage during a working career was 54.4 percent, including pension plans from both the current job and previous job(s). When the measure was further expanded to include participation in IRAs or Keogh accounts, the rate of coverage increased to 58.8 percent.

i

Pre-retirees had the highest rate of retirement plan coverage in 2003 (71.5 percent), followed by older boomers (71.3 percent). Women were less likely to have retirement plan coverage than men regardless of their ages. Nonwhites werealso less likely to have such coverage compared to whites in all age groups. Of particular concern is the low rate of IRA coverage among minorities when compared to whites. Retirement coverage depends highly on personal income level, education, and tenure. Those workers with annual incomes of $30,000 or more were much more likely to have retirement plan coverage than those with incomes of less than $30,000. Low-income workers were most vulnerable to entering retirement without coverage.

There has been a shift from DB to DC plans, especially to 401(k) plans. Worker participation in DB plans has been declining since 1980. The 2003 SIPP data also presents coverage under CB plans, but only 2.5 percent of workers age 16 and older had such plans. About 57.5 million workers (41.5 percent) were offered DC or 401(k)-type plans but only 53.8 million (38.8 percent) participated in them, 47.2 million (34 percent) contributed to them through payroll deductions, and 39.5 million (28.5 percent) received employer matching contributions. In all age groups, nonwhites and women were somewhat less likely to have “DC-only” plan coverage than whites and men.

Besides current pension coverage, pension coverage from previous jobs is analyzed in this chart book. About 40 million persons in 2003, some of whom might still be in the labor force, had retirement plan coverage from previous employment. The benefit payments from previous pension coverage were either rolled over into other retirement plans, such as IRAs, or were received in the form of lump-sum distributions (LSDs) or annuities. Of all workers who had previous pension plans, 16 million (39 percent) received retirement benefits in the form of LSDs. Of those LSDs recipients, 54 percent, more than half, spent it all (mostly on paying off debts, loans, and bills), and 46 percent rolled it over into some other form of retirement plan—mostly into IRAs. In the concluding section, the book also shows the monthly pension amounts of retirees by gender and age.

ii

1. Distribution of Workers by Age, Income, and Tenure, 2003 1

1A. Age Distribution of Workers 1Table 1.1 Age Distribution of All Workers Age 16 and Older Who Have a Job or Own a Business (Job/Business), 2003 2Figure 1.1 Age Distribution of All Workers Age 16 and Older Who Have a Job/Business, 2003 2

1B. Income Distribution of Workers 3Table 1.2 Income Distribution of All Workers Age 16 and Older Who Have a Job/Business, 2003 3Figure 1.2 Income Distribution of All Workers Age 16 and Older Who Have a Job/Business, 2003 3

1C. Distribution of Workers by Tenure and Class 4Figure 1.3 Percent Distribution of All Workers Age 16 nad Older by Age and Tenure, 2003 4Table 1.3 Distribution of Workers by Current Primary Job, 2003 4

2. Retirement Plan Coverage by Socio-Demographic Characteristics, 2003 52A. Retirement Plan Coverage by Age 6

Table 2.1 Retirement Plan Coverage of All Workers at Current Primary Job by Age, 2003 6Table 2.2 Retirement Plan Coverage of All Persons at Current Job, Second Job, Previous Job(s), and IRAs by Age, 2003 6Figure 2.1 Retirement Plan Coverage of All Workers at Current Job, During Career, and Any Coverage by Age, 2003 8

2B. Retirement Plan Coverage by Gender, Race, and Tenure 9Table 2.3 Retirement Plan Coverage by Age and Gender, 2003 9

Table 2.4 Retirement Plan Coverage by Age and Tenure, 2003 9Table 2.5 Retirement Plan Coverage by Age and Race, 2003 10Table 2.6 Retirement Plan Coverage by Marital Status and Race, 2003 10

2C. Retirement Plan Coverage by Education and Income 11Table 2.7 Retirement Plan Coverage by Socio-Demographic Characteristics, 2003 Figure 2.2 Retirement Plan Coverage at Current Job, During Career, and Any Coverage by Education, 2003 12Figure 2.3 Retirement Plan Coverage at Current Job, During Career, Any Coverage, and IRAs by Income, 2003 12

TABLE OF CONTENTS

iii

3. Types of Pension Plans, 2003 13Chart 3.1 Types of Current Pension Plans, 2003 13Table 3.1 Reasons for Not Participating in Employer-Provided Primary Pension Plans by Gender, 2003 14

3A. DB and DC Plan Coverage by Socio-Demographic Characteristics 15Table 3.2 Types of Pension Plans by Socio-Demographic Characteristics, 2003 15

3B. DB and DC Plan Coverage by Age, Gender, and Race 17Table 3.3 Types of Pension Plans by Age and Race, 2003 17Table 3.4 Types of Pension Plans by Age and Gender, 2003 17

3C. DB and DC Plan Coverage by Age, Income, and Education 18Table 3.5 Types of Pension Plans by Age and Income, 2003 18Table 3.6 Types of Pension Plans by Age and Education, 2003 18

4. Employer Sponsored (DC and 401(k)) Plans by Type Contributions, 2003 19Table 4.1 Participants in Tax-Deferred Plans Through Payroll Deductions by Age, 2003 19Table 4.2 DC Plan or 401(k)-Type Plans by Socio-Demographic Characteristics of Participants and Type of Contribution, 2 20

4A. Employer and Employee Contributions to All Tax-Deferred Plans 21Table 4.3 Frequency Distribution in Tax-Deferred Plan Where Only Employer Contributes, 2002 22Table 4.4 Frequency Distribution Total Value Accumulated in Tax Deferred Plans, 2003 22Table 4.5 Frequency Distribution of Employee Contributions in All Tax-Deferred Plans (February-May, 2003) 22Table 4.6 Frequency Distribution of Employee and Employer Contributions in All Tax-Deferred Plans (February-May 2003 22Table 4.7 Percent Distribution of Employee Contributions to All Tax-Deferred Plans by Socio-Demographic Characteristics 23

4B. Employee’s Choice of Investment in Tax-Deferred Plans 24Figure 4.1 Frequency Distribution of Investment Receiving Largest Share from Current Employee Contributions by Type, 20 24

5. IRAs by Socio-Demographic Characteristics, 2003 25Table 5.1 IRA Ownership Among All Persons and All Workers by Age, 2003 25Table 5.2 IRA Ownership Among All Workers by Age, Gender, and Race, 2003 25Figure 5.1 IRA Ownership Among All Workers by Marital Status and Race, 2003 26Figure 5.2 IRA Ownership Among All Workers by Age and Race, 2003 26Figure 5.3 IRA Ownership Among All Workers by Age, 2003 27Table 5.3 IRA Ownership and Current Pension Coverage by Socio-Demographic Characteristics, 2003 28

iv

6. Retirement Plan Coverage Among Women, 2003 296A. Retirement Plan Coverage Among Women by Age, Marital Status, and Race 29

Figure 6.1 Retirement Plan Coverage Among All Working Women Age 16 and Older, 2003 29Table 6.1 Retirement Plan Coverage Among All Working Women by Age and Race, 2003 30Table 6.2 Retirement Plan Coverage Among All Working Women by Marital Status and Race, 2003 30

6B. IRA Ownership Among Women by Age, Marital Status, and Race 31Figure 6.2 IRA Ownership Among Working Women by Age and Race, 2003 31Figure 6.3 IRA Ownership Among Working Women by Marital Status and Race, 2003 32

6C. Types of Retirement Plans Among Women by Age, Marital Status, and Race 33Table 6.3 Types of Retirement Plan Coverage Among Women by Age and Race, 2003 33Table 6.4 Types of Retirement Plan Coverage Among Women by Marital Status and Race, 2003 33Figure 6.4 Types of Retirement Plan Coverage by Gender and Race, 2003 34

7. Pension Plan Coverage from Previous Employment by Socio-Demographic Characteristics, 2003 35Table 7.1 Pension Plan Coverage from Previous Employment by Socio-Demographic Characteristics, 2003 35Chart 7.1 Flow Chart of Previous Pension Plan Coverage, 2003 36Figure 7.1 Sources of Pension Plan Coverage, 2003 36

7A. Pension Plan Coverage from Previous Employment by Age, Gender, Race, and Marital Status 37Table 7.2 Pension Plan Coverage Among All Workers from Current and Previous Employment, 2003 Table 7.3 Pension Plan Coverage from Previous Employment by Age, Gender, and Race, 2003 38Figure 7.2 Pension Plan Coverage from Previous Employment by Marital Status and Race, 2003 38

7B. Lump-Sum Distributions (LSDs) from Previous Pension Plans 39Chart 7.2 Flow Chart of LSDs and Rollovers, 2003 40

7C. LSDs and Survivor’s Benefits by Age, Gender, and Race 41Table 7.4 LSD Recipients Among Those Who Have Pension Plan Coverage From Previous Employment 41

by Age, Gender, and Race, 2003Figure 7.3 Percent Distribution of LSD Recipients by Amounts of LSD Received, 2003 42Figure 7.4 Percent Distribution of LSD Recipients by Amounts of LSD Received and Gender, 2003 42

v

7D. LSDs and Their Uses 43Table 7.5 Percent of All Recipients by LSD Amounts and Rollover Decisions, 2003 43Table 7.6 All LSD Recipients and Recipients Who Rolloed Over by Age, 2003 43Table 7.7 Multiple Use of Cash-Outs by LSD Recipients (Who Did Not Roll Over) by Most Important Category, 2003 44

8. Pensions and Retirement Lump-Sums, 2003 45Chart 8.1 Flow Chart of Pensions and Retirement Lump-Sums, 2003 46

8A. Amount of Monthly Pension 47Table 8.1 Percent Distribution of Monthly Pension Amounts from Worker's Own Job by Age, Gender, and Race, 2003 47Figure 8.1 Percent Distribution of Monthly Pension Amounts from Worker's Own Job by Gender, 2003 48

50

vi

References

1

1. Distribution of Workers by Age, Income, and Tenure, 2003 1A. Age Distribution of Workers About 138.6 million workers age 16 and older had a job or owned a business in 2003. This chart book divides workers in 2003 into five age cohorts by their birth year: post-boomers born from 1966 to 1987 (age 16 to 37), who constituted about 42 percent of all workers; younger boomers born in from 1956 to 1965 (age 38 to 47), who constituted about 26 percent; older boomers born from 1946 to 1955 (age 48 to 57), who constituted about 21 percent of all workers; pre-retirees born from 1939 to 1945 (age 58 to 64), who constituted 7 percent; and retirees born in 1938 or before (age 65 and older) who were still in the labor force and constituted about 4 percent of all workers (Figure 1.1). All of the data in this chart book are drawn from the Survey of Income and Program Participation (SIPP) (2001), Retirement Expectations and Pension Plan Coverage, Wave 7 (February-May 2003). Some of the definitions used in the book are drawn directly from the U.S. Bureau of the Census and the Labor Department’s Bureau of Labor Statistics. According to the Census Bureau, a job is defined as an arrangement of regular work for pay. Jobs include self-employment at a business, professional practice, or farm. A business is defined as an activity that involves the use of machinery or equipment in which money has been invested, an activity requiring a “place of work,” or an activity that requires advertising. Payment may be in the form of profits or fees. The labor force includes all persons classified as employed or unemployed in accordance with the definitions contained in the glossary of the Bureau of Labor Statistics.[cite?] Persons are employed if they are 16 years and older in the civilian non-institutional population and during the reference week (a) did any work at all (at least 1 hour) as paid employees; worked in their own business, profession, or on their own farm; or worked 15 hours or more as unpaid workers in an enterprise operated by a member of the family; and (b) all those who were not working but who had jobs or businesses from which they were temporarily absent because of vacation, illness, bad weather, childcare problems, maternity or paternity leave, labor-management dispute, job training, or other family or personal reasons, whether or not they were paid for the time off or were seeking other jobs.

2

Post-boomers: age 16-37 1966 - 87 58.749 42.4Boomers: age 38-57 1946 - 65 65.074 46.9 Younger boomers: age 38-47 1956 - 65 36.441 26.3 Older boomers: age 48-57 1946 - 55 28.633 20.7Pre-retirees: age 58-64 1939 - 45 9.844 7.1Retirees: age 65 and older 1933 or before 4.975 3.6All workers 138.643 100.0

Table 1.1: Age Distribution of All Workers Age 16 and Older Who Have a Job/ Business, 2003

Workers by Age Birth Year Number of Workers (Millions)

Percent

Figure 1.1: Age Distribution of All Workers Age 16 and Older Who Have a Job/Owned a Business,

2003

Retirees: age 65 and older

2%

Boomers: age 38-5732%

Older boomers: age

48-5714%

Younger boomers: age

38-4718%

Pre-retirees: age 58-64

5%

Post-boomers: age 16-37

29%

3

1B. Income Distribution of Workers In the SIPP sample of workers age 16 and older who had a job or owned a business, 71 percent earned less than $40,000 per year (at 2003 prices), while 29 percent earned more than $40,000.

Millions Percent Less than $20,000 52.563 37.9$20,000 to $39,999 46.303 33.4$40,000 to $59,999 20.122 14.5$60,000 to $79,999 10.224 7.4$80,000 to $99,999 4.163 3.0$100,000 or more 5.267 3.8Total 138.643 100.0

Table 1.2: Income Distribution of Workers Age 16 and Older Who Have a Job/ Owned a

Business, 2003

Figure 1.2: Income Distribution of Workers Age 16 and Older Who Have a Job/Owned a Business, 2003

37.933.4

14.5

7.43.0 3.8

0.05.0

10.015.020.025.030.035.040.0

Less than $20,000

$20,000 to$39,999

$40,000 to$59,999

$60,000 to$79,999

$80,000 to$99,999

$100,000 ormore

Per

cent

4

1C. Distribution of Workers by Tenure and Class About 48 percent of all workers had held their primary job for more than 5 years in 2003. As expected, this proportion rose with age (Figure 1.3). About 81 percent worked for private employers and 18 percent for some level of government (Table 1.3). (According to the U.S. Census Bureau definition, a primary job is one to which a worker devotes 35 hours or more per week.)

Figure 1.3: Percent Distribution of All Workers Age 16 and Older by Age and Tenure, 2003

74.5

42.333.0 25.7

52.4

25.5

57.767.0 71.8 74.3

47.6

28.2

0.0

20.0

40.0

60.0

80.0

100.0

Post-boomers:age 16-37

Youngerboomers:age 38-47

Olderboomers:age 48-57

Pre-retirees:age 58-64

Retirees: age65 and older

All Workers

Per

cent

Job less than 5 yrs. Job 5 yrs. or more

Private Employees 100.358 81.5State and Local 17.786 14.4Federal 4.028 3.3Others 1.030 0.8Total* 123.203 100.0

* 15.4 million (138.6 less 123.2) reported not having a current job/business

Table 1.3: Distribution of Workers by Current Primary Job, 2003

(All Workers Age 16 and Older Who Have a Job/ Business)

Employees Number (Millions) Percent

5

2. Retirement Plan Coverage by Socio-Demographic Characteristics, 2003 Retirement coverage is analyzed by using three definitions:

Level 1: Current Pension Coverage—retirement plan coverage at the current primary job; Level 2: Career Pension Coverage—retirement plan coverage during the whole career including employer-sponsored pension plans (such as 401(k) plans) at a current primary job, a current secondary job, or any previous job; and

Level 3: Any Coverage—any retirement plan coverage from any source including employer-sponsored plans during a career (such as IRA or Keogh accounts). This category is the broadest definition of coverage.

Table 2.1 presents the current coverage from one plan or multiple plans. Of 138.6 million workers, about 81 million (58.4 percent) were offered pension plans, but only 63.4 million (45.7 percent) participated in them—49.6 million (35.8 percent) had one plan, and 13.8 million (almost 10 percent) had multiple plans. Table 2.2 presents the retirement coverage of all workers from various sources, including IRAs and Keoghs. Nearly 2 million workers had coverage from sources other than a primary employer, 40.9 million had coverage from a previous employer, and 32.7 million had IRAs.

6

2A. Retirement Plan Coverage by Age

Millions Millions % of W Millions % of W Millions % of W Millions % of WPost-boomers: age 16-37 58.749 32.271 54.9 17.206 29.3 4.354 7.4 21.560 36.7Younger boomers: age 38-47 36.441 23.124 63.5 15.580 42.8 2.549 7.0 18.128 49.7Older boomers: age 48-57 28.633 18.059 63.1 12.223 42.7 5.682 19.8 17.905 62.5Pre-retirees: age 58-64 9.844 5.724 58.1 3.845 39.1 0.995 10.1 4.840 49.2Retirees: age 65 and older 4.975 1.778 35.7 0.776 15.6 0.215 4.3 0.991 19.9All workers 138.643 80.956 58.4 49.629 35.8 13.795 9.9 63.424 45.7

Table 2.1: Retirement Plan Coverage of All Workers at Current Primary Job by Age, 2003 (Percent of All Workers Age 16 and Older Who Have a Job/ Business)

All Current PlansWorkers

(W) Workers by AgeWorkers Offered Pension Plans

Workers Participation in Plans at Current JobOne Plan Multiple Plans

Post-boomers: age 16-37 87.246 58.749 21.560 0.488 7.763 5.849Younger boomers: age 38-47 45.003 36.441 18.128 0.705 8.946 7.437Older boomers: age 48-57 37.222 28.633 17.905 0.528 8.266 8.058Pre-retirees: age 58-64 17.371 9.844 4.840 0.120 4.998 4.564Retirees: age 65 and older 34.094 4.975 0.991 0.005 10.896 6.754All 220.937 138.643 63.424 1.845 40.870 32.662

Total Number of Workers (Millions)

Number of Persons Age 16 and Older Who Have Coverage from Various Sources (Millions)

Plans from Previous Job(s)*

Table 2.2: Retirement Plan Coverage of All Persons from Current Job, Second Job, Previous Job(s), and IRAs by Age, 2003

Workers by Age

Total Number of Persons (Millions)

Current Primary Job

Plans from Second Job/

Business

All IRAs

* These are not mutually exclusive categories. One may have coverage from more than one source. Those who have coverage from previous plans may or may not be in labor force, and hence “persons” and not “workers” is the unit of analysis. A detailed discussion on pension coverage from previous employment and IRAs is presented in the following chapters

7

Contd. Figure 2.1 (on page 8) presents workers with current, career, and any coverage. As can be seen below, of all workers age 16 and older, 45.7 percent had coverage from their current employer, and 54.4 percent had coverage from employer(s) during their career. If IRAs were included, retirement plan coverage from any source of all workers who were in labor force increased to 58.8 percent. Retirement plan coverage increased with age, but a little more than one-half of post-boomers (age 16-37), one-third of younger boomers (age 38-47), and a little less than 30 percent of older boomers and pre-retirees still lacked retirement coverage from any source. For older boomers, the rate of career pension coverage (66.1 percent) was more than 10 percentage points higher than the rate of pension coverage at a current primary job (56.1 percent), and any coverage from any source including IRAs (71.8 percent) was almost 16 percentage points higher. For pre-retirees, any coverage was almost 23 percentage points higher than their current coverage; and for retirees, any coverage was about 15 percentage points higher than career pension coverage and 38 percentage points higher than current pension coverage. One of the reasons for high rates of any coverage among retirees is because of higher rates of IRA ownership due to large rollovers from previous pension plans. + Other Plans + Previous Plans + IRAs

Current pension coverage (63.424 million, 45.7%)

Career pension coverage (75.369 million, 54.4%)

Any coverage (81.587 million, 58.8%)

8

Figure 2.1: Retirement Plan Coverage of All Workers Age 16 and Older at Current

Job, During Career, and Any Coverage by Age, 2003

36.7

54.8 56.149.2

19.9

45.742.2

63.8 66.1 63.3

43.1

54.4

44.6

68.271.8 72.0

58.0 58.8

0.010.020.030.040.050.060.070.080.0


Youngerboomers: age 38-

47

Older boomers:age 48-57

Pre-retirees: age58-64

Retirees: age 65and older

All Workers

Perc

ent o

f cur

rent

wor

kers

Current Pension Coverage Career Pension Coverage Any Coverage

9

2B. Retirement Plan Coverage by Age, Gender, Tenure, and Race There were statistically significant gender differences at all ages in retirement coverage (Table 2.3). Women in general had lower rates of coverage than men except in the case of current pension coverage where female pre-retirees and retirees had slightly higher rates of coverage. Workers who had jobs for five years or more had higher rates of current, career, and any coverage in all age groups (Table 2.4).

Post-boomers: age 16-37 31.385 27.364 38.2 35.0 43.2 41.2 45.5 43.5Younger boomers: age 38-47 19.377 17.064 56.9 52.4 64.8 62.7 69.1 67.2Older boomers: age 48-57 14.894 13.739 57.4 54.8 66.9 65.3 72.5 71.2Pre-retirees: age 58-64 5.330 4.514 48.8 49.6 64.6 61.7 72.4 71.7Retirees: age 65 and older 2.854 2.122 19.2 20.9 46.6 38.4 62.0 52.7All workers 73.840 64.803 47.0 44.3 55.3 53.3 59.7 57.9

WomenMen Men

Any Coverage (%)

Women Women Men Women

Career pension coverage includes current job, current second job and previous jobs. Any coverage include pension plans during career or IRAs or both.

MenWorkers by Age

Current Pension Coverage (%)

Career Pension Coverage (%)

Number of Workers (Millions)

Table 2.3: Retirement Plan Coverage by Age and Gender, 2003 (Percent of All Workers Age 16 and Older Who Have a Job/Business)


Any Coverage (%)

Job 5 Yrs. or More

Job Less than 5 Yrs.

Job 5 Yrs. or More






Job 5 Yrs. or More

Table 2.4: Retirement Plan Coverage by Age and Tenure, 2003 ( Percent of All Workers Age 16 and Older Who Have a Job/Business)


Job 5 Yrs. or More

Workers by Age

10

There were statistically significant differences in retirement coverage by race at all ages, as Table 2.5 shows. For all workers, any coverage from any source among whites was about 8 percentage points higher than among nonwhites. For older boomers the difference was even greater, about 14 percentage points. When divided by marital status (Table 2.6), the “married, spouse present” category had higher rates of current coverage than any other category with one exception—nonwhite “divorced” persons had higher rates coverage than nonwhite persons who were “married, spouse present



White Nonwhite White Nonwhite

Any Coverage (%)

White Nonwhite Workers by Age



White Nonwhite

Table 2.5: Retirement Plan Coverage by Age and Race, 2003 (Percent of All Workers Age 16 and Older Who Have a Job/Business)

Married, spouse present 68.674 10.439 52.5 50.1 62.9 57.1 69.0 59.4Married, spouse absent 1.168 0.542 35.0 39.3 41.2 42.3 41.4 42.3Widowed 2.377 0.538 40.9 41.2 54.6 50.9 64.0 53.4Divorced 13.422 2.325 49.7 53.9 61.4 62.1 65.6 64.0Separated 2.406 0.858 39.0 43.5 48.1 51.1 52.1 51.5Never married 28.498 7.395 30.4 32.8 34.7 37.2 37.3 38.3All workers 116.545 22.098 46.1 44.0 55.1 50.2 60.2 52.0

White Nonwhite White

Table 2.6: Retirement Plan Coverage by Marital Status and Race, 2003 (Percent of All Workers Age 16 and Older Who Have a Job/Business)

Nonwhite White Nonwhite White Nonwhite Workers by Marital Status



Career Pension Coverage (%) Any Coverage (%)

11

2C. Retirement Plan Coverage by Education and Income Retirement plan coverage, however defined, increased with the level of education (Table 2.7). There was a 39 percentage point difference in pension coverage at one’s current job between those with a less than a high school education and those with a college education. For pension coverage during a career or for any coverage, the difference between individuals with less than a high school education and a college education was more than 45 percentage points. Current pension coverage rates tripled when moving from annual incomes of less than $20,000 to incomes greater than $40,000. Any coverage from any source was 80 percent or higher above $40,000 in income.

All workers 138.643 63.424 42.2 75.369 50.9 23.083 18.6 81.588 56.9

By EducationLess than high school 15.866 3.430 21.6 3.931 24.8 0.546 3.4 4.199 26.5High school 38.848 15.993 41.2 18.825 48.5 4.154 10.7 20.371 52.4Some college 44.167 19.870 45.0 23.967 54.3 6.458 14.6 25.923 58.7College 39.763 24.131 60.7 28.646 72.0 11.926 30.0 31.094 78.2

By IncomeLess than $20,000 52.563 11.352 21.6 16.308 31.0 5.627 10.7 18.952 36.1$20,000 to $39,999 46.303 24.476 52.9 28.305 61.1 6.718 14.5 30.139 65.1$40,000 to $59,999 20.122 13.849 68.8 15.436 76.7 4.452 22.1 16.135 80.2$60,000 to $79,999 10.224 7.109 69.5 7.887 77.1 2.974 29.1 8.383 82.0$80,000 to $99,999 4.163 3.065 73.6 3.347 80.4 1.329 31.9 3.539 85.0$100,000 or more 5.267 3.573 67.8 4.086 77.6 1.984 37.7 4.438 84.3* Career pension includes current job, current second job, and previous jobs. Any coverage includes pension plans during career or IRAs or both.

Percent MillionsPercent Millions Percent Millions

Career Pension Coverage*

Table 2.7: Retirement Plan Coverage by Socio-econoinc Characteristics, 2003 (Percent of All Workers Age 16 and Older Who Have a Job/Business)

Number of Workers

MillionsWorkers

Current Pension Coverage IRAs Any Coverage

Percent Millions

12

Figure 2.2: Retirement Plan Coverage at Current Job, During Career, and Any Coverage by Education, 2003

21.6 24.8 26.5

41.248.5 52.4

45.054.3

58.760.7

72.078.2

0.0

10.0

20.030.0

40.0

50.0

60.070.0

80.0

90.0


Less than high school High school Some college College

Figure 2.3: Retirement Plan Coverage at Current Job, During Career, Any Coverage, and IRAs by Income, 2003

0.0

20.0

40.0

60.0

80.0

100.0

Less than$20,000

$20,000 to$39,999

$40,000 to$59,999

$60,000 to$79,999

$80,000 to$99,999

$100,000 ormore

Perc

ent

Current Pension Coverage Career Pension Coverage Any Coverage IRAs

13

3. Types of Pension Plans, 2003

Chart 3.1: Types of Current Pension Plans, 2003

Number of workers age 16 and older who were offered employer-sponsored pension plans = 80.956 million (58.4% of workers)

Those who participated

= 7.066 million (5.1%)

DB-only plans = 8.838 million

(6.4 %) (a) (No DC or 401(k)

plans)

DB and DC/401(k) plans = 22.791 million (d);

CB and DC/401(k) plans = 3.675 million (e)

All Dual coverage: 26.466 million (19.1%) (f)

Note: Definition of all DC or 401(k)-type plans is drawn from Patrick Purcell, Participation in Retirement Plans: Findings from the Survey of Income and Program Participation. October 5, 2005. CRS, Library of Congress. Washington, DC. * By definition, all cash balance plans are defined benefit plans. ** In SIPP 2003 these plans were defined as tax-deferred plans “E3TAXDEF” (such as 401(k) plans) that were offered to workers with employers not offering primary pension plans or whose primary plan contributions were not tax-deferred.

Number of workers age 16 and older = 138.6 million

Additional tax-deferred 401(k)-

type plans offered **

=12.448 million

DB: Defined benefit plans DC: Defined contribution plans CB: Cash balance plans

DC/401(k)-only = 27.391 million

(19.7%) (c) (No DB or CB

plans)

Coverage: All DB plans (a+d) = 31.629 million (22.8%) All CB plans (b+e) = 4.403 million (3.2%) All DC/401(k) Plans (c+f) = 53.857 million (38.8%) All current plans (a+b+c+f) = 63.424 million (45.8%)

CB-only plans* = 0.728 million

(0.5%) (b) (No DC or 401(k)

plans)

14

Even when employer-sponsored retirement plans were available, some workers did not qualify to participate for lack of hours worked or length of service. Some withdrew voluntarily. Table 3.1 presents all of the reasons for not participating in pension plans. The two most common reasons for not participating were not having enough hours, weeks, or months per year, and not having worked long enough. More women than men either did not qualify or did not participate in such plans.

Total Women Men Women Men 1. No one in my type of job is allowed in the plan 1.356 0.603 0.754 6.3 8.02. Do not work enough hours, weeks, months per year 4.286 2.520 1.766 26.6 18.83. Have not worked long enough 4.154 2.001 2.153 21.1 22.94. Started job too close to retirement 0.115 0.074 0.042 0.8 0.45. Too Young 0.452 0.237 0.215 2.5 2.36. Cannot afford to contribute 2.797 1.404 1.393 14.8 14.87. Do not want to tie up money 1.709 0.697 1.012 7.3 10.88. Employer doesn't contribute or contribute enough 0.271 0.121 0.151 1.3 1.69. Do not plan to be in job long enough 0.392 0.229 0.162 2.4 1.710. Do not need it 0.236 0.114 0.122 1.2 1.311. Have an IRA or other pension coverage 0.308 0.147 0.161 1.6 1.712. Spouse has pension plan 0.186 0.136 0.050 1.4 0.513. Haven't thought about it 0.969 0.461 0.508 4.9 5.414. Some other reason 1.646 0.748 0.898 7.9 9.6All 18.878 9.490 9.388 100.0 100.0

Table 3.1: Reasons for Not Participating in Employer-Provided Primary Pension Plans by Gender, 2003

Percent "Yes" by Gender

Number of Cases (n = 14.728 million)

The sum of all of the answers for various reasons does not add up to the total number of those who did not participate in pension plans (n = 14.728 million) because there could be multiple reasons for not participating in plans.

Reasons

15

3A. DB and DC Plan Coverage by Socio-Demographic Characteristics

Millions Millions Percent Millions Percent Millions Percent Percent Percent Percenta b c=b/a d e=d/a f g=f/a (c+g) (d+g) (c+e+g)

All workers 138.643 9.567 6.9 27.391 19.8 26.466 19.1 26.0 38.8 45.7Age Post-boomers: age 16-37 58.749 2.959 5.0 10.147 17.3 8.455 14.4 19.4 31.7 36.7Younger boomers: age 38-47 36.441 3.033 8.3 8.522 23.4 8.408 23.1 31.4 46.5 54.8Older boomers: age 48-57 28.633 2.622 9.2 6.234 21.8 7.215 25.2 34.4 47.0 56.1Pre-retirees: age 58-64 9.844 0.717 7.3 2.104 21.4 2.019 20.5 27.8 41.9 49.2Retirees: age 65 and older 4.975 0.237 4.8 0.384 7.7 0.370 7.4 12.2 15.2 19.9GenderMen 73.840 4.883 6.6 15.364 20.8 14.452 19.6 26.2 40.4 47.0Women 64.803 4.684 7.2 12.027 18.6 12.014 18.5 25.8 37.1 44.3Race White 116.545 8.012 6.9 23.797 20.4 21.889 18.8 25.7 39.2 46.1Nonwhite 22.098 1.555 7.0 3.594 16.3 4.577 20.7 27.7 37.0 44.0Firm Size and TenureEmployees: less than 100 68.279 2.954 4.3 10.020 14.7 7.184 10.5 14.8 25.2 29.5Employees: 100 and more 70.364 6.613 9.4 17.371 24.7 19.282 27.4 36.8 52.1 61.5Worked less than 5 years 72.666 3.280 4.5 11.571 15.9 9.173 12.6 17.1 28.5 33.1Worked 5 years or more 65.977 6.287 9.5 15.820 24.0 17.293 26.2 35.7 50.2 59.7EducationLess than high school 15.866 0.637 4.0 1.514 9.5 1.279 8.1 12.1 17.6 21.6High school 38.848 2.855 7.3 7.109 18.3 6.029 15.5 22.9 33.8 41.2Some college 44.167 3.012 6.8 8.665 19.6 8.193 18.6 25.4 38.2 45.0College 39.763 3.063 7.7 10.104 25.4 10.964 27.6 35.3 53.0 60.7Marital StatusMarried 79.114 6.150 7.8 17.729 22.4 17.391 22.0 29.8 44.4 52.2Widowed/separated/divorced 23.636 1.789 7.6 4.614 19.5 4.646 19.7 27.2 39.2 46.7Never married 35.893 1.628 4.5 5.048 14.1 4.429 12.3 16.9 26.4 30.9

All DB/CB Plans

All DC/ 401(k)

All Plans

Table 3.2: Types of Pension Plans by Socio-Demographic Characteristics, 2003 (Percent of All Workers Age 16 and Older Who Have a Job/Business)

Characteristics All Workers DB or CB-Only DC or 401(k)-Only Both DB/CB and

DC/401(k) Plans

16

Millions Millions Percent Millions Percent Millions Percent Percent Percent Percenta b c=b/a d e=d/a f g=f/a (c+g) (d+g) (c+e+g)

IncomeLess than $20,000 52.563 2.112 4.0 4.939 9.4 4.301 8.18 12.2 17.6 21.6$20,000 to $39,999 46.303 3.963 8.6 10.980 23.7 9.534 20.6 29.1 44.3 52.9$40,000 to $59,000 20.122 1.937 9.6 5.799 28.8 6.112 30.4 40.0 59.2 68.8$60,000 to $79,000 10.224 0.890 8.7 2.915 28.5 3.303 32.3 41.0 60.8 69.5$80,000 to $99,000 4.163 0.339 8.1 1.193 28.6 1.533 36.8 45.0 65.5 73.6$100,000 or more 5.267 0.324 6.2 1.566 29.7 1.683 32.0 38.1 61.7 67.8

Class of Workers*Private 100.358 13.830 13.8 19.850 19.8 6.393 6.4 20.2 26.1 39.9State and Local 17.786 6.454 36.3 2.798 15.7 1.518 8.5 44.8 24.3 60.6Federal 4.028 1.256 31.2 0.762 18.9 0.552 13.7 44.9 32.6 63.8Family Workers 1.030 0.025 2.4 0.045 4.3 0.005 0.4 2.9 4.8 7.2* 15.441 million workers were either not employed or did not reveal their employers in the reference period of SIPP

All DB plans are DB/CB-only plans plus (DB/CB and DC/401(k)) plans. All DC plans are DC/401(k)-only plans plus (DB/CB and DC/401(k)) plans.

Both DB/CB and DC/401(k) Plans Characteristics

All Workers

All DB/CB

All DC/ 401(k) All Plans

Table 3.2 contd.

DB or CB-Only DC or 401(k)-Only

In Table 3.2 above DB plans and CB plans are combined into one category, and DC plans include all tax-deferred 401(k)-type plans. Of all age groups, older boomers (age 48-57) had the highest rates of DB or CB-only coverage. Because of the shift from DB plans to DC-type plans, rates of coverage for DC-only plans were higher than for DB-only plans. The rates of dual coverage (both DB/CB and DC/401(k) plans) were higher among (1) older boomers, (2) college graduates, (3) government employees, (4) those who worked for large firms (100 or more employees), (5) those who worked for 5 years or more, and (6) those who earned $40,000 or more annually.

17

3B. DB and DC Plan Coverage by Age, Gender, and Race Table 3.3 shows that whites had a slight edge over nonwhites in DC-only coverage, while nonwhites had a slight edge over whites in dual coverage (both DB/CB and DC or 401(k) in all age groups. Nonwhite retirees (age 65 and older) had higher dual coverage rates (a 9 percentage point difference) than white retirees. Results were mixed for DB-only coverage. Except for retirees, men in other age groups had higher rates of DC-only coverage and dual coverage than women.


Nonwhite White Nonwhite White

Table 3.3: Types of Pension Plans by Age and Race, 2003 (Percent of All White and Nonwhite Workers Age 16 and Older Who Have a Job/Business)

Workers by Age


DB or CB-Only (%)

DC or 401(k)-Only (%)

Both DB/CB and DC/401(k) Plans (%)

White Nonwhite White Nonwhite


DB or CB only (%)

Men Women Men WomenMen Women Men Women

Table 3.4: Types of Pension Plans by Age and Gender, 2003 (Percent of All Male and Female Workers Age 16 and Older Who Have a Job/Business)

Workers by Age


Both DB/CB and DC/401(k) Plans (%)

DC or 401(k)-only (%)

18

3C. DB and DC Plan Coverage by Age, Income, and Education For all age cohorts in Table 3.5, higher income groups (those with incomes of more than $40,000) had higher rates of coverage for DB-only, DC-only, and dual coverage plans. Similarly, Table 3.6 shows that in all age groups those with “college” education had higher rates of DC-only coverage and dual coverage than those with “less than college” education. Results by education were mixed in DB-only coverage.


Income ≥ $40,000

Income < $40,000

Income ≥ $40,000

Income < $40,000

Income ≥ $40,000

Income < $40,000

Income ≥ $40,000

Table 3.5: Types of Pension Plans by Age and Income, 2003 (Percent of All High and Low Income Workers Age 16 and Older Who Have a Job/Business)

Workers by Age

Number of Workers (millions) DB or CB only (%) DC or 401(k)-only

(%)Both DB/CB and

DC/401(k) Plans (%)Income <

$40,000


Table 3.6: Types of Pension Plans by Age and Education, 2003 (Percent of All "Less than College" and "College" Workers Age 16 and Older Who Have a Job/Business)

Less than College College Less than

College CollegeWorkers by Marital Status

Number of Workers (Millions) DB or CB only (%) DC or 401(k)-only (%) Both DB/CB and

DC/401(k) Plans (%)

Less than College College Less than

College College

19

4. Employer-Sponsored (DC and 401(k)) Plans by Type of Contribution, 2003 Of the 63.4 million workers who participated in employer-sponsored pension plans, 57.5 million (41.5 percent of workers) were offered DC or 401(k) plans, but only 53.9 million (39 percent) participated in them (Table 4.1). Older boomers had the highest rate of coverage followed by younger boomers and pre-retirees. For those who were age 65 and older, the rate of coverage was low because tax-deferred plans did not exist at the time of their pension coverage.

Millions Millions Percent Millions Percent Millions PercentPost-boomers: age 16-37 58.749 21.560 36.7 23.752 40.4 18.601 31.7Younger boomers: age 38-47 36.441 18.128 49.7 14.862 40.8 15.407 42.3Older boomers: age 48-57 28.633 17.905 62.5 13.999 48.9 14.972 52.3Pre-retirees: age 58-64 9.844 4.840 49.2 3.797 38.6 4.123 41.9Retirees: age 65 and older 4.975 0.991 19.9 1.064 21.4 0.754 15.2All workers 138.643 63.424 45.7 57.474 41.5 53.857 38.8

Number of Workers

Table 4.1: Participants in Tax-Deferred Plans Through Payroll Deductions by Age, 2003 (Percent of Workers Age 16 and Older Who Have a Job/Business)

Workers by AgeThose Who Participate

in All Current PlansThose Who are Offered

DC or 401(k) PlansThose Who Contribute in DC or 401(k) Plans

Most DC or 401(k)-type plans can be divided into three categories:

a. Plans in which only employers contribute and employees either do not contribute or their contributions are not tax-deferred.

b. Plans in which only employees contribute, and c. Plans in which employees contribute and employers match those contributions, either fully or partially.

Table 4.2 highlights these plans by socio-demographic characteristics. Of 47.2 million (34 percent) of workers who contributed to DC or 401(k)-type plans, only 39.5 million (28.5 percent of all workers or 83.7 percent [calculated as 39.511/47.172] of those who contributed) received an employer match. Higher rates of coverage were observed in every type of plan if workers were employed by large firms, had tenure of 5 years or more, had more education, and earned $40,000 or more.

20

Number of WorkersMillions Millions Percent Millions Percent Millions Percent

All workers 138.643 6.097 4.4 47.172 34.0 39.511 28.5Age, Gender and Race Post-boomers: age 16-37 58.749 1.947 3.3 16.318 27.8 13.800 23.5Younger boomers: age 38-47 36.441 1.856 5.1 14.997 41.2 12.555 34.5Older boomers: age 48-57 28.633 1.597 5.6 11.742 41.0 9.651 33.7Pre-retirees: age 58-64 9.844 0.547 5.6 3.511 35.7 3.001 30.5Retirees: age 65 and older 4.975 0.149 3.0 0.605 12.2 0.504 10.1Gender Male 73.840 3.365 4.6 26.149 35.4 21.97 29.8Female 64.803 2.732 4.2 21.023 32.4 17.541 27.1Race White 116.545 5.349 4.6 39.895 34.2 33.203 28.5Nonwhite 22.098 0.748 3.4 7.277 32.9 6.308 28.5Firm Size and TenureEmployees: Less than 100 68.279 2.236 14.864 21.8 12.204 17.9Employees: 100 and more 70.364 3.861 5.5 32.308 45.9 27.307 38.8Worked less than 5 years 72.666 2.265 3.4 18.269 25.1 15.318 21.1Worked 5 years or more 65.977 3.832 5.8 28.903 43.8 24.193 36.7Education Less than high school 15.866 0.382 2.4 2.393 15.1 2.083 13.1High school 38.848 1.452 3.7 11.485 29.6 9.836 25.3Some college 44.167 1.813 4.1 14.712 33.3 12.489 28.3College 39.763 2.450 6.2 18.582 46.7 15.102 38.0Marital Status Married 79.114 3.899 4.9 30.739 38.9 25.490 32.2Widowed/separated/divorced 23.636 1.076 4.6 8.133 34.4 6.975 29.5Never married 35.893 1.122 3.1 8.300 23.1 7.046 19.6Income Less than $20,000 52.563 1.056 2.0 8.051 15.3 6.915 13.2$20,000 to $39,999 46.303 2.249 4.9 18.096 39.1 15.468 33.4$40,000 to $59,999 20.122 1.366 6.8 10.412 51.7 8.492 42.2$60,000 to $79,999 10.224 0.711 7.0 5.361 52.4 4.382 42.9$80,000 to $99,999 4.163 0.291 7.0 2.415 58.0 1.917 46.0$100,000 or more 5.267 0.424 8.1 2.837 53.9 2.337 44.4

Table 4.2: DC or 401(k)-Type Plan by Socio-Demographic Characteristics of Participants and Type of Contribution, 2003

Only Employees Contribute

Only Employers Contribute

p yEmployees'

ContributionsCharacteristics

21

4A. Employer and Employee Contributions to All Tax-Deferred Plans For all tax-deferred DC and 401(k)-type plans where only the employer contributed and the employee’s contribution was either zero or not tax-deferred, the modal contribution by an employer was between $1,000 and $2,499 (Table 4.3). About 4.3 million workers had these plans as primary plans, and about 2 million had them as secondary plans. About 32 percent of the plans had an accumulated value between $5,000 and $9,999 in primary plans, and 44 percent had between $10,000 and $49,999 in secondary plans (Table 4.4). Of the 47.2 million workers who contributed to DC plans (Table 4.5), data on employee nonzero contributions in dollars were available for only 22.5 million workers (47.2 million less 24.6 million). The rest (24.6 million) contributed a fixed proportion of their salary. In terms of dollars, the tax-deferred contribution by employees varied from $1 to $10,000 or more. The modal nonzero employee contribution was between $2,000 and $4,999. As Table 4.6 shows, the modal salary contributed was between 5 and 10 percent for employees and 3 percent to 5 percent for employers. The 3 percent to 5 percent employer contribution was also the highest range contributed by employers (34 percent). As indicated before, not all tax-deferred plan holders received a match from their employers. Data were available for only 24.6 million workers. The employer match varied as follows.

Employer’s match depends: Percent of Cases Entirely on employee’s contribution 61 percent

Partially on employee’s contribution 24 percent Not at all on employee’s contribution 15 percent Total 100 percent Table 4.7 (on page 23) highlights the employees’ contributions by their socio-demographic characteristics. Note: There was one discrepancy in the SIPP data. The question on employer contributions referred to the worker’s contribution in the last one year of the survey ( i.e., 2003), while the question regarding the employee’s contribution referred to contributions in the reference period of SIPP (February-May 2003). It is possible that some workers who answered “yes” to the question, “Do you contribute in tax-deferred plans?” might have contributed outside of the reference period.

22

Millions Percent Millions Percent$1 to $100 0.751 17.4 0.469 23.7$101 to $500 0.351 8.1 0.149 7.5$501 to $1,000 0.403 9.4 0.108 5.4$1,001 to $2,500 1.635 38.0 0.645 32.6$2,500 to $5,000 0.558 12.9 0.391 19.8More Than $5,000 0.609 14.1 0.216 10.9Total 4.307 100.0 1.978 100.0

Secondary Plans

Table 4.3: Frequency Distribution of Employer Contributions Only, 2002

* These contributions refer to the preceding year of the survey. Employee contributions are either zero or not tax-deferred.

Contributions* Primary Plans

Millions Percent$0 24.635 52.2$1 to $499 1.730 3.7$500 to $999 2.743 5.8$1,000 to $1,999 6.012 12.7$2,000 to $4,999 6.850 14.5$5,000 to $9,999 3.174 6.7More than $10,000 2.028 4.3Total 47.172 100.0

Table 4.6: Frequency Distribution of Employee Contributions in All Tax-Deferred

Plans (February - May 2003)

Data on nonzero dollar contributions were available only for 22.5 million workers.

Annual Employee Contribution

Employees

Millions Percent Millions Percent$1 to $1,000 0.386 10.8 0.119 6.0$1,000 thru $4,999 0.782 18.4 0.249 12.6$5,000 thru $9,999 0.543 31.8 0.263 13.3$10,00 thru $49,999 1.707 21.3 0.873 44.1$50,000 or more 0.889 17.6 0.474 24.0Total 4.307 100.0 1.978 100.0

Total Value* Primary Secondary

Table 4.4: Frequency Distribution of Total Value Accumulated in Tax Deferred Plans, 2003

* This value refers to plans where only employers contribute, employee contribution are either zero or not tax-deferred.

% of Salary Millions Percent % of Salary Millions PercentUp to 1.0 1.035 4.4

< than 3.0 4.647 18.9 1.0 to 1.9 2.487 10.5 3.0 to 4.9 6.809 27.6 2.0 to 2.9 5.455 23.15.0 to 9.9 9.747 39.6 3.0 to 4.9 8.047 34.010.0 to 14.9 2.582 10.5 5.0 to 9.9 5.090 21.515.0 or more 0.850 3.5 10.0 or more 1.548 6.5Total 24.635 100.0 23.662 100.0

Employee Contribution Employer Contribution

Table 4.6: Frequency Distribution of Employee and Employer Contributions in all Tax-Deferred Plans (February-May, 2003)

23

All Workers 7.7 12.2 26.7 30.4 14.1 9.0 100.0AgePost-boomers: age 16-37 8.3 14.7 31.9 27.8 12.8 4.4 100.0Younger boomers: age 38-47 6.8 11.1 25.3 34.0 12.6 10.0 100.0Older boomers: age 48-57 7.7 9.9 22.7 30.6 16.9 12.2 100.0Pre-retirees: age 58-64 7.3 14.0 24.4 25.7 16.4 12.2 100.0Retirees: age 65 and older 16.3 7.4 19.7 25.5 12.6 18.5 100.0EducationLess than high school 10.1 18.6 32.0 27.7 5.4 6.2 100.0High school 10.0 16.4 31.7 25.6 10.9 5.4 100.0Some college 8.3 13.8 29.5 30.8 12.3 5.2 100.0College 5.7 8.1 21.3 33.0 18.0 13.9 100.0GenderMen 5.9 8.0 25.4 31.6 17.7 11.4 100.0Women 9.8 17.2 28.2 28.9 9.7 6.1 100.0RaceWhite 10.1 16.1 25.0 32.1 11.4 5.3 100.0Nonwhite 7.3 11.6 26.9 30.1 14.5 9.6 100.0Marital StatusMarried 7.1 10.5 25.9 31.9 14.4 10.2 100.0Divorced/separated/widow 8.9 15.1 27.3 26.9 14.5 7.3 100.0Never married 8.4 15.3 29.0 28.4 12.6 6.2 100.0

Table 4.7: Percent Distribution of Employee Contributions to All Tax-Deferred Plans by Socio-Demographic Characteristics, 2003

$10,000 or More

$1 to $499Characteristics $500 to

$999$1,000 to $1,999

$5,000 to $9,999 Total$2,000 to

$4,999

24

4B. Employee’s Choice of Investment in Tax-Deferred Plans

Figure 4.1: Frequency Distribution of Investment Receiving the Largest Share from Employee Current Contributions by Type,

2003

8.8

9.1

15.3

15.7

20.1

26.5

34.7

44.2

0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0

Long-term interest-bearing securities

Government securities

Corporate bonds or bond funds

Other investments

Company stock

Money market funds

Diversified stocks and bonds

Stock funds

Percent

It should be remembered that both short- and long-term interest rates were low in the reference period of the survey, February-May 2003. The percent of shares do not add up to 100 percent because an employee could invest in multiple categories.

25

5. IRAs by Socio-Demographic Characteristics, 2003 Anyone with earned income can acquire an IRA or Keogh account independent of pension coverage. Table 5.1 shows that the rate of IRA ownership increased through age 64 and then declined. The rates of IRA coverage were higher for all workers (who had a job or owned a business) than for all persons. More than one-fourth of pre-retiree persons (age 58 to 64) and almost one-third of pre-retiree workers had IRAs (Table 5.1). The rate of IRA ownership differed more with race than with gender. Among workers, whites had much higher rates of IRA coverage than nonwhites at all ages. The racial gap widened more with age. Racial differences in coverage existed even by marital status. For example, white “widowed” had the highest rate of IRA coverage (26 percent) and nonwhite “married (spouse absent) the lowest (2.1 percent). (See Figure 5.1.)

Millions Percent Millions PercentPost-boomers: age 16-37 87.246 5.849 6.7 58.749 5.097 8.7Younger boomers: age 38-47 45.003 7.437 16.5 36.441 6.622 18.2Older boomers: age 48-57 37.222 8.058 21.6 28.633 6.904 24.1Pre-retirees: age 58-64 17.371 4.564 26.3 9.844 2.990 30.4Retirees: age 65 and older 34.094 6.754 19.8 4.975 1.470 29.5All workers 220.937 32.662 14.8 138.643 23.083 16.6

Table 5.1: IRA Ownership Among All Persons and All workers by Age, 2003

By Age Persons (Millions)

IRA Ownership

All Persons Age 16 and Older All Workers Age 16 and Older Who Have a Job/Business

Workers (Millions)

IRA Ownership

Men Women White NonwhitePost-boomers: age 16-37 58.749 8.9 8.4 9.355 5.390Younger boomers: age 38-47 36.441 18.7 17.6 19.738 10.361Older boomers: age 48-57 28.633 24.2 24.0 26.558 9.460Pre-retirees: age 58-64 9.844 29.3 31.7 33.349 10.769Retirees: age 65 and older 4.975 32.2 26.0 31.661 12.739All workers 138.643 16.9 16.3 18.287 8.014

By RacePercent of IRA Ownership

Table 5.2: IRA Ownership Among All Workers by Age, Gender, and Race, 2003 (Percent of All Workers Age 16 and Older Who Have a Job/Business)


By GenderBy Age

26

Figure 5.1: IRA Ownership Among All Workers by Marital Status and Race, 2003

25.7

22.1

17.1

12.5

9.9

7.5

7.4

10.9

8.0

3.9

4.9

2.1

0.0 5.0 10.0 15.0 20.0 25.0 30.0

Widowed

Married, spouse present

Divorced

Separated

Never married

Married, spouse absent

Percent of Workers

WhiteNonwhite

Figure 5.2: IRA Ownership Among All Workers by Age and Race, 2003

9.4

19.7

26.6

33.3 31.7

18.3

5.410.4 9.5 10.8 12.7

8.0

0.0

10.0

20.0

30.0

40.0


Youngerboomers: age

38-47




All workers

Perc

ent

White Nonwhite

27

The rate of IRA ownership was unusually high among retirees, and this could be because of the substantial rollovers of lump-sum distributions received from their previous pensions (Figure 5.3).

Figure 5.3: IRA Ownership Among All Workers by Age, 2003

5.0

11.014.4 15.1

6.53.6

7.29.7

15.3

23.1

8.7

18.2

24.1

30.4 29.5

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Post-boomers: age16-37

Younger boomers:age 38-47




Perc

ent

Both IRAs and Current Pension Coverage IRAs Only (No Current Pension Coverage)All IRAs

28

In Millions In Millions Percent In Millions Percent In Millions Percent All workers 138.6 12.891 9.3 10.193 7.4 23.083 16.6Age, Gender and Race Post-boomers: age 16-37 58.749 2.954 5.0 2.144 3.6 5.097 8.7Younger boomers: age 38-47 36.441 3.996 11.0 2.625 7.2 6.622 18.2Older boomers: age 48-57 28.633 4.130 14.4 2.774 9.7 6.904 24.1Pre-retirees: age 58-64 9.844 1.488 15.1 1.503 15.3 2.990 30.4Retirees: age 65 and older 4.975 0.323 6.5 1.147 23.1 1.470 29.5Gender Men 73.840 7.237 9.8 5.254 7.1 12.491 16.9Women 64.803 5.654 8.7 4.939 7.6 10.592 16.3Race White 116.545 11.752 10.1 9.560 8.2 21.312 18.3Nonwhite 22.098 1.139 5.2 0.633 2.9 1.771 8.0Firm Size and Tenure 0.000 Employees: 100 or more 70.364 8.416 12.0 2.948 4.2 11.364 16.2Worked 5 years or more 65.977 8.593 13.0 5.212 7.9 13.805 20.9Education Less than high school 15.866 0.206 1.3 0.340 2.1 0.546 3.4High school 38.848 1.932 5.0 2.222 5.7 4.154 10.7Some college 44.167 3.309 7.5 3.149 7.1 6.458 14.6College 39.763 7.444 18.7 4.481 11.3 11.926 30.0Marital Status Married 79.114 9.092 11.5 7.241 9.2 16.333 20.6Widowed/separated/divorced 23.636 1.994 8.4 1.576 6.7 3.570 15.1Never married 35.893 1.805 5.0 1.375 3.8 3.180 8.9Income Less than $20,000 52.563 1.498 2.8 4.129 7.9 5.627 10.7$20,000 to $39,999 46.303 3.782 8.2 2.936 6.3 6.718 14.5$40,000 to $59,999 20.122 3.169 15.8 1.283 6.4 4.452 22.1$60,000 to $79,999 10.224 2.131 20.8 0.843 8.2 2.974 29.1$80,000 to $99,999 4.163 0.981 23.6 0.348 8.4 1.329 31.9$100,000 or more 5.267 1.330 25.3 0.654 12.4 1.984 37.7

Table 5.3: IRA Ownership and Current Pension Coverage by Socio-Demographic Characteristics, 2003 (All Worrkers Age 16 and Older Who Have a Job/Business)

Both IRAs and Current Pension Coverage

IRAs Only (No Current Pension Coverage) All IRAsCharacteristics

Number of Workers

29

6. Retirement Plan Coverage Among Women, 2003 6A. Retirement Plan Coverage Among Women by Age, Marital Status, and Race As shown before, men had higher rates of pension coverage than women. Of all working women age 16 and older, almost 58 percent had pension plan coverage from any source, 44.3 percent had coverage at a current job, and 53.3 percent had coverage during their careers (Figure 6.1). Retirement plan coverage increased with age. Pre-retirees had the highest rate of any coverage (which includes IRAs), almost 72 percent, followed closely by older boomers. Table 6.1 demonstrates that nonwhite working women overall had slightly lower rates of pension coverage at a current job, and 4 percentage points lower coverage during a career. Except in the case of pre-retirees and retirees, white working women had higher rates of current and career pension coverage than their nonwhite counterparts. White working women had higher rates of any coverage than nonwhites at all ages. It may be because of higher rates of IRA coverage among whites than nonwhites (not shown). Results were mixed (Table 6.2) when working women were divided by marital status.

Figure 6.1: Retirement Plan Coverage Among All Working Women by Age, 2003

35.0

52.4 54.849.6

20.9

44.341.2

62.7 65.3 61.7

38.4

53.3

43.5

67.271.2 71.7

52.757.9

0.0

20.0

40.0

60.0

80.0


Youngerboomers: age

38-47


Pre-retirees:age 58-64

Retirees: age65 and older

All Women

Perc

ent


Percent

30

Post-boomers: age 16-37 22.133 5.231 35.0 34.7 41.5 39.7 44.1 40.9Younger boomers: age 38-47 13.918 3.146 52.7 51.3 63.6 58.5 68.7 60.4Older boomers: age 48-57 11.547 2.192 55.2 52.3 66.4 59.4 73.1 61.1Pre-retirees: age 58-64 3.943 0.571 48.8 55.3 61.2 65.4 72.3 67.7Retirees: age 65 and older 1.855 0.266 19.1 33.5 38.0 40.7 54.0 43.7All women 53.397 11.407 44.5 43.7 54.0 50.0 59.2 51.6

Table 6.1: Retirement Plan Coverage Among All Working Women by Age and Race, 2003 (Percent of All of Working Women Age 16 and Older Who Have a Job/Business)

Working Women by Age

Number of Working Women (Millions)



White Nonwhite White Nonwhite White Nonwhite White Nonwhite

Married, spouse present 30.120 4.847 49.4 49.4 60.2 56.1 66.7 58.3Married, spouse absent 0.502 0.299 35.8 44.8 41.0 49.2 41.5 49.2Widowed 1.859 0.368 40.8 43.8 54.3 51.4 64.6 54.4Divorced 7.354 1.419 50.9 57.0 62.7 62.7 66.9 64.1Separated 1.255 0.561 34.5 40.8 44.3 49.6 49.5 49.6Never married 12.307 3.914 30.4 32.1 35.0 37.9 37.3 38.9All women 53.397 11.407 44.5 43.7 54.0 50.0 59.2 51.6

Table 6.2: Retirement Plan Coverage Among All Working Women by Marital Status and Race, 2003 (Percent of All of Working Women Age 16 and Older Who Have a Job/Business)

Working Women by Marital Status





Among working women, the rate of current pension coverage was higher among unmarried nonwhites than unmarried whites. A disproportionately large number of unmarried nonwhite working women, 53.4 percent compared with 36.2 percent of their white counterparts, worked in government jobs where the rates of pension coverage were higher.

31

6B. IRA Ownership Among Women by Age, Marital Status, and Race IRA ownership among women was consistently higher among whites than nonwhites in all age groups. The rates of IRA ownership varied very little, from 5 percent to 12 percent, among nonwhite working women. On the other hand, the rates of IRA ownership among white working women ranged from a low of 9 percent among post-boomers to a high of 35 percent in pre-retirees.

Figure 6.2: IRA Ownership Among Working Women by Age and Race, 2003

9.3

19.7

26.6

34.6

28.5

18.3

4.88.5 10.1 11.9

8.6 7.3

0.0

10.0

20.0

30.0

40.0


Youngerboomers: age

38-47




All Women

Perc

ent White

Nonwhite

32

Figure 6.3 shows that more white women owned IRAs compared to nonwhite women in every category of marital status. The largest gap between white and nonwhite women was 16.6 percent among widows. The smallest difference was in the never married category (5.8 percent).

Figure 6.3: IRA Ownership Among Working Women by Marital Status and Race, 2003

26.7

21.5

18.4

11.3

11.1

10.2

10.1

10.1

7.2

4.4

2.1

4.4

0.0 5.0 10.0 15.0 20.0 25.0 30.0

Widowed

Married, spouse present

Divorced

Separated

Married, spouse absent

Never married

Percent

NonwhiteWhite

33

6C. Types of Retirement Plans Among Women by Age, Marital Status, and Race Although white working women overall had higher rates of DB or CB-only coverage and DC-only coverage than their nonwhite counterparts, they had lower rates of dual coverage (Table 6.3 and Figure 6.4). The largest difference was between white men and nonwhite men and women with DC-only plans. However, when divided by marital status, divorced working women regardless of race had the highest rates of DB or CB-only, DC or 401(k)-only, and dual coverage (Table 6.4).

Post-boomers: age 16-37 22.133 5.231 4.8 5.0 17.0 13.2 13.3 16.5Younger boomers: age 38-47 13.918 3.146 8.7 8.5 22.3 16.9 21.6 26.0Older boomers: age 48-57 11.547 2.192 10.8 8.4 20.9 17.1 23.5 26.8Pre-retirees: age 58-64 3.943 0.571 7.5 10.7 21.1 23.1 20.1 21.6Retirees: age 65 and older 1.855 0.266 4.6 5.5 8.3 8.4 6.2 19.6All women 53.397 11.407 7.3 6.9 19.2 15.3 17.9 21.5

Table 6.3: Types of Retirement Plan Coverage Among Women by Age and Race, 2003 (Percent of All Working Women Age 16 and Older Who Have a Job/Business)

Working Women by Age


DB or CB- Only Plan (%)

DC or 401(k)-Only Plan (%)

DB/CB and DC/401(k) Plan (%)


Married, spouse present 30.120 4.847 8.2 7.4 21.0 17.0 20.1 24.9Married, spouse absent 0.502 0.299 6.1 7.7 19.1 10.8 10.5 26.3Widowed 1.859 0.368 6.1 7.1 17.9 16.0 16.7 20.7Divorced 7.354 1.419 8.7 9.3 22.0 19.8 20.3 27.8Separated 1.255 0.561 3.5 7.9 16.3 12.5 14.7 20.4Never married 12.307 3.914 4.8 5.1 13.7 12.3 11.9 14.7All women 53.397 11.407 7.3 6.9 19.2 15.3 17.9 21.5

White Nonwhite

Table 6.4: Types of Retirement Plan Coverage Among Women by Marital Status and Race, 2003 (Percent of All Working Women Age 16 and Older Who Have a Job/Business)

Working Women by Marital Status


DB or CB- Only Plan (%)

DC or 401(k)-Only Plan (%)

DB/CB and DC/401(k) Plan (%)

White Nonwhite White Nonwhite White Nonwhite

34

Figure 6.4: Types of Retirement Plan Coverage Among Men and Women by Race, 2003 (Percent of All Working Men and Women Age 16 and Older Who Have a Job/Business)

6.5 7.2

21.4

17.319.5 19.9

7.3 6.9

19.2

15.3

17.9

21.5

0.0

5.0

10.0

15.0

20.0

25.0

M en Women M en Women M en Women

DB or CB-Only Plan DC or 401(k)-Only Plan DB/CB and DC/401(k) Plans

Perc

ent

MenWomen

(Pension plan percentages are calculated for men and women separately.)

As mentioned earlier, nonwhite unmarried working women had higher rates of current pension coverage than their white counterparts (page 30). Here Table 6.4 shows that nonwhite unmarried working women also had higher rates of DB-only coverage and much higher rates of dual coverage than their white counterparts. However, white working women in all categories of marital status had higher rates of DC-only coverage than nonwhites.

35

7. Pension Plan Coverage from Previous Employment by Socio-Demographic Characteristics, 2003 Pension plan coverage from previous employment varied with socio-demographic characteristics. College graduates had higher rates of coverage from previous employment than individuals with less education. Previous pension coverage also increased with levels of income. Men and whites had higher rates of previous pension coverage than women and nonwhites, respectively. In all, 40.9 million persons had pension coverage from previous employment. Chart 7.1 and Figure 7.1 summarize the sources of retirement coverage.

Table : contd.

Persons 185.0 40.870 22.1Age Unionized 15.425 2.708 17.6Post-boomers: age 25-37 51.357 7.763 15.1 Younger boomers: age 38-47 45.003 8.946 19.9 Education Older boomers: age 48-57 37.222 8.266 22.2 Less than high school 27.439 2.989 10.9Pre-retirees: age 58-64 17.371 4.998 28.8 High school 54.958 10.194 18.5Retirees: age 65 and older 34.094 10.896 32.0 Some College 53.221 12.300 23.1Gender College 49.430 15.387 31.1Men 88.423 21.449 24.3 Women 96.625 19.421 20.1 Income Race Less than $20,000 103.739 22.978 22.2White 155.041 36.404 23.5 $20,000 to $39,999 42.431 8.158 19.2Nonwhite 30.007 4.465 14.9 $40,000 to $59,999 19.379 4.474 23.1Marital Status $60,000 to $79,999 10.072 2.499 24.8Married 114.101 27.295 23.9 $80,000 to $99,999 4.151 1.207 29.1Widowed/separated/divorced 43.675 9.568 21.9 $100,000 or more 5.275 1.553 29.4Never married 27.272 4.006 14.7 * Data on pension coverage from previous job(s) begins

at age 25

Persons with Previous Pensions

Percent Millions

Table 7.1: Pension Coverage from Previous Employment by Socio-Demographic Characteristics, 2003 (Percent of All Persons Age 25 and Older)*

Characteristics

Number of Persons

MillionsCharacteristics

Number of Persons

Persons with Previous Pensions

Millions Millions Percent

36

Chart 7.1: Flow Chart of Previous Pension Plan Coverage, 2003

Figure 7.1: Sources of Pension Plan Coverage, 2003(Percent of All Workers Age 16 and Older Who Have a Job/Business)

58.8

54.4

45.7

9.6

8.0

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0

Any Coverage (including IRAs)

During career

From current employment only

From both current andprevious employment

Previous employement only(no current coverage)

Percent

Current pension coverage only = 63.4 million

Previous and current pension coverage = 13.3 million

Previous pension coverage only = 11.1 million

Previous pension coverage = 16.4 million

All previous pensions plans (age 25 and older) = 40.8 (13.3+11.1+16.4) million

All persons (age 25 and older) = 185 million Labor force (age 16 and older) = 138.6 million

Not in labor forceIn labor force

37

7A. Pension Coverage from Previous Employment by Gender, Race, and Marital Status The question on pension coverage from previous employment was asked of those who were age 25 and older, while the question on current pension coverage was asked of those who were age 16 and older. If the post-boomer age group was adjusted from age 16 to 37 to age 25 to 37, the rate of coverage would increase from 5.1 percent to 7.6 percent (data not shown in the table). As expected, retirees had the highest rate of pension coverage (23 percent) from previous employment (Table 7.2). Pre-retirees and older boomers had higher rates in the category from Current and Previous Employment compared to other age groups. Table 7.3 shows that men overall had higher rates of previous plan coverage than women. Male retirees and female pre-retirees had the highest rates of previous plan coverage. Whites had higher rates of previous plan coverage than nonwhites in all age groups. Analysis of marital status and race (Figure 7.2) reveals that whites had higher rates of pension coverage from previous employment than their nonwhite counterparts in all categories.

Million Percent Million Percent Million Percent Post-boomers: age 16-37 58.749 21.560 36.7 3.348 5.7 2.971 5.1Younger boomers: age 38-47 36.441 19.963 54.8 4.433 12.2 3.014 8.3Older boomers: age 48-57 28.633 16.070 56.1 3.783 13.2 2.604 9.1Pre-retirees: age 58-64 9.844 4.840 49.2 1.326 13.5 1.342 14.0Retirees: age 65 and older 4.975 0.991 19.9 0.376 7.5 1.153 23.3All workers 138.643 63.424 45.7 13.266 9.6 11.084 8.0

Table 7.2: Pension Plan Coverage Among All Workers from Current and Previous Employment, 2003 (Percent of All workers Age 16 and Older Who Have a Job/Business)

Workers by AgeNumber of Workers (Million)

From Current Employement Only

(Age ≥16)

From Current and and Previous Employment

From Previous Employment only

(Age ≥ 25)

38

Number Percent Men Women White NonwhitePost-boomers: Age 16-37 * 51.357 7.763 15.1 14.2 16.0 16.1 11.1Younger boomers: Age 38-47 45.003 8.946 19.9 19.6 20.1 21.4 13.0Older boomers: Age 48-57 37.222 8.266 22.2 23.3 21.2 23.6 14.8Pre-retirees: Age 58-64 17.371 4.998 28.8 34.0 24.0 30.0 21.1Retirees: Age 65 and older 34.094 10.896 32.0 44.7 22.6 33.0 24.1All Persons 185.048 40.870 22.1 24.3 20.1 23.5 14.9* The question on pension coverage from previous employment is asked of those who are age 25 and older.

Table 7.3: Pension Coverage from Previous Employment by Age, Gender, and Race, 2003(Percent of All Persons Age 25 and older)

Persons by AgeNumber of Persons (Million)

By Gender By RacePercent CoveredAll Persons with

Previous Pensions

Figure 7.2: Pension Plan Coverage from Previous Employment by Marital Status and Race, 2003

(Percent of White and Nonwhite Persons Age 25 and Older) 25.0

17.0

24.2 24.3

17.916.2

23.5

16.8

9.3

15.817.8

12.2 10.614.9

0.05.0

10.015.020.025.030.0

Married,spousepresent

Married,spouseabsent

Widowed Divorced Separated Nevermarried

All women

Perc

ent

White Nonwhite

39

7B. Lump-Sum Distributions (LSDs) from Previous Pension Plans Even though previous pension coverage included all persons at age 25, the lump-sum payments, which included survivor’s benefits and some LSD cash-outs or direct rollovers, could begin as early as age 21. Of 40.9 million persons age 25 and older who had coverage from previous employment, 16 million (39 percent) received benefits in the form of non-retirement LSDs. Most (14.8 million) received LSDs from their own plans, but a small portion (1.2 million) received an LSD as a survivor’s benefit from someone else’s plan. Those who received LSDs from previous plans (16 million), 9.6 million (60 percent of LSD recipients) cashed out their LSDs, and the remaining 6.4 million (40 percent) rolled over their LSDs directly into another plan on their job, into an annuity, or into an IRA. Of those who cashed out LSDs, 8.6 million (or 54 percent of all LSD recipients) spent it all, and the remaining individuals (less than 1 million persons or 6 percent of all LSD recipients) rolled it back into some retirement plan. Thus, 7.4 million (6.4 + 0.9 million) or 46 percent of all LSD recipients rolled over all or part of their distributions into retirement plans such as IRAs or annuities. Among those who rolled over their LSDs, a majority (70 percent) invested in IRAs. Individuals who had previous pension plans without non-retirement LSDs, 24.9 million (40.9 million less 16 million) would receive retirement benefits for life. Those who had not received benefits (11.7 million) until the reference period of SIPP Wave 7 (February-May 2003), less than one-half had DB plans (5.4 million), and the rest had DC plans (6.3 million). About two-thirds (65 percent) of those who had DC plans had less than $25,000 in their account balances; 60 percent of them could withdraw their benefits immediately, while 40 percent would have to wait until the required age of retirement (see Table A in Chart 7.2).

SIPP has made a distinction between non-retirement lump-sums and retirement lump-sums. Retirement lump-sum payments were classified as EGI Code 39 while non-retirement lump-sum payments were not classified as EGI Code 39.

40

Chart 7.2: Flow Chart of LSDs and Rollovers, 2003

Source of LSD payments: Private = 12.9 million (81%) Federal/military= 0.5 million (3%) State and local = 2.2 million (14%) Other = 0.4 million (2%) Total = 16.0 million (100%)

Cashed-out LSDs = 9.6 million (60% of LSD recipients)

Rolled over LSDs directly into other tax-qualified plans = 6.4million (40% of LSD recipients)

Rolled over all or part = 7.4 million (46% of LSD recipients)

IRA = 5.2 mil (70%) Plan on job = 0.9 mil (13%) Annuity = 0.5 mil (7%) Other plans = 0.7 mil (10%) Total = 7.4 mil (100%)

Spent it all = 8.6 million (54% of LSD recipients)

Rolled over into some plan:

Entirely = 0.7 million (4%) Partly = 0.3 million (2%)

Total = 0.9 million (6%)

Population (age 25 and older) = 185 million Previous plan coverage = 40.9 million

Spent it all = 54% Rolled over entirely or partly = 46%

Received LSDs from previous plans = 16.0 million (39% of previous pensions) From previous plans = 14.8 million Survivor’s benefits = 1.2 million LSD withdrawal: 62% voluntary; 38% mandatory

Millions Percent$10,000 to $24,999 1.704 26.8$25,000 to $49,999 0.761 12.0$50,000 to $99,999 0.843 13.3$100,000 to $199,999 0.368 5.8$200,000 or more 0.230 3.6Total 6.348 100.060% can withdraw now; 40% will have to wait until the required age.

Expected Number of Recipients Total Balance

Table A: Total Balance in DC Plans

Benefits not yet received from previous plans = 11.7 million DB plans = 5.4 million; DC plans = 6.3 million

(Percentages in italics add to 100%)

41

7C. LSDs and Survivor’s Benefits by Age, Gender, and Race The percentage of LSD recipients declined with age, from 52.5 percent among post-boomers to 20 percent among retirees. Among LSD recipients, women outnumbered men in all age groups. Also, more whites (36.9 percent) than nonwhites (31.4 percent) received LSDs (Table 7.4).

Millions Millions Percent Men Women White NonwhitePost-boomers: Age 25-37 * 7.763 4.072 52.5 47.3 48.2 48.9 40.8Younger boomers: Age 38-47 8.946 4.310 48.2 42.7 49.3 46.8 41.1Older boomers: Age 48-57 8.266 3.734 45.2 40.2 45.4 43.1 40.0Pre-retirees: Age 58-64 4.998 1.716 34.3 29.4 37.1 34.3 19.0Retirees: Age 65 and older 10.896 2.176 20.0 16.5 17.5 17.7 9.2All Recipients 40.870 16.007 39.2 33.4 39.6 36.9 31.4

* The question on previous pension plan coverage was asked only of those age 25 and older, but the question on LSDs and rollovers was asked of those age 21 and older because some workers may have received survivor's benefits or direct rollovers or cashout

Previous Coverage

LSD Recipients

Table 7.4: LSD Recipients Among Those Who Have Pension Plan Coverage From Previous Employment by Age, Gender and Race, 2003

Receipients By Age All Persons Percent by Gender Percent by Race

Among those who received LSDs, about 41 percent received less than $5,000; 11 percent received more than $50,000; and less than 5 percent received $100,000 or more (Figure 7.3). Gender differences also existed in the amounts received as seen in Figure 7.4. More women than men received LSDs of less than $10,000, whereas more men than women received LSDs of $25,000 or more. The modal amount received by both men and women was between $1,000 and $5,000. The distribution was even more skewed at the higher end of LSD amounts. For example, 19 percent of men received lump-sum payments of $50,000 or more compared with 8 percent of women, and 10 percent of men received $100,000 or more s compared with 3 percent of women.

42

Figure 7.3: Percent Distribution of LSD Recipients by LSD Amounts Received (Including Survivor's Benefits), 2003

10.4

30.8

17.020.7

10.36.2 4.7

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Less than$1,000

$1,000 to$4,999

$5,000 to$9,999

$10,000 to$24,999

$25,000 to$49,999

$50,000 to$99,999

$100,00 ormore

Per

cent

0.0

Figure 7.4: Percent Distribution of LSD Recipients by Amounts Received and Gender, 2003 (Age 21 and Older, n = 16 million)

10

26.9

15.2

18.6

10.8

18.515.6

34.2

16.518.1

8.1 7.5

0

5

10

15

20

25

30

35

40

Less than $1,000 $1,000 to $4,999 $5,000 to $9,999 $10,000 to $24,999 $25,000 to $49,999 $50,000 and more

Per

cent

Men (7.6 million)Women (8.4 million)

43

7D. LSDs and Their Uses About 7.4 million (46 percent) LSD recipients rolled over their LSDs in 2003, while 54 percent spent it all. LSD recipients decreased with age except age 21-37 (Table 7.6), but those who rolled over LSDs directly increased with the amount received.

Entirely PartiallyLess than $1,000 76.7 18.1 4.8 0.4$1,000 to $4,999 65.6 29.7 3.5 1.1$5,000 to $9,999 56.8 39.3 2.3 1.6$10,000 to $24,999 47.6 44.7 4.3 3.5$25,000 to $49,999 35.8 58.1 4.0 2.1$50,000 to $99,999 24.6 65.8 8.7 0.8$100,00 or more 19.5 71.3 7.0 2.3Total 54.0 40.1 4.2 1.7All rows add to 100% 46 Percent

All RolloversDirect

Rollovers

Cashed Out and Spent All

Table 7.5: Percent of All Recipients by LSD Amounts and Rollover Decisions (N = 16.0 million)

From CashoutsLSD Amount Received

Millions Millions Percent Millions PercentPost-boomers: Age 21-37 * 7.763 4.072 52.5 1.543 37.9Younger boomers: Age 38-47 8.946 4.310 48.2 2.106 48.9Older boomers: Age 48-57 8.266 3.734 45.2 1.745 46.7Pre-retirees: Age 58-64 4.998 1.716 34.3 0.937 54.6Retirees: Age 65 and older 10.896 2.176 20.0 1.03 47.3All Persons 40.870 16.008 39.2 7.361 46.0

Table 7.6: All LSD Recipients and Recipients WhoRolled Over by Age, 2003 (Percent of All Those Who Hvae Pension Coverage from Previous Employment)

Receipients By AgePrevious Coverage LSD Recipients Recipients Who

Rolled Over

44

Of those who did not roll over their LSDs, a large proportion (56 percent) of them used it to pay their bills, loans, mortgages, and other debt; 30 percent spent it on various consumer items; and 15 percent invested it in time deposits and other forms of retirement savings (Table 7.7).

Categories Millions Percent

1.747 14.8

3.502 29.6

Invested in IRAs, time deposits, stocks, bonds, land, family businesses, or saved for education or retirement

Paid off mortgage, bills, loans, and other debts, moving or relocating expenses, taxes, and medical and dental bills

(n = 8.647 million)*

Table 7.7: Multiple Use of Cash-Outs by LSD Recipients (Who Did Not Roll Over) by Their Most Important Category, 2003

* Category totals do not equal the number of LSD recipients because some recipients might have spent in more than one category.

6.581 55.6

Spent on vacations, consumer items, everyday expenses, other items, or gave to family members

45

8. Pensions and Retirement Lump-Sums, 2003

As seen in Chart 8.1, about 24 million persons age 16 and older received pensions from a company; a union; federal, state, or local government; military; or as a disability or survivor’s benefit. A majority of these pensioners (20.4 million) received pensions from their own plan, 3.7 million received them from a spouse’s plan, and 868,000 received them from other sources. Most of the benefits from a respondent’s primary plan were based on years of service rather than individual accounts. About 2.7 million of those age 55 and older received retirement benefits in the form of retirement lump-sums (EGI code 39)—a majority of them from their own jobs. Of 39 million workers aged 55 and older who had not received either pensions or retirement lump-sums in the reference period of SIPP Wave 7 (February-May 2003), 32 million (82 percent) were still in labor force, while 7.5 million (18 percent) had retired without receiving benefits but might receive benefits in future. About 41 percent of these retirees had retirement coverage from some source, but 4.4 million seem to have retired with no retirement coverage (not shown in chart).

46

Chart 8.1: Flow Chart of Pensions and Retirement Lump-Sums, 2003

Those Who Received Retirement Pensions (Age 16 and Older) Source: company, union, federal/state/local government, military or

National Guard, or payment for retirement disability or survivor’s benefit

Rest of life = 24.011 million Limited payments = 1.368 million = 25.734 million Single Lump-Sum = 0. 355 million

Pensions/Retirement Lump-Sums, 2003

Respondent’s job = 20.432 million Spouse’s former job = 3.668 million Other = 0.868 million All = 24.968 million

Respondent’s primary plan benefits based on: Years of service = 18.709 million (95%) Individual accounts = 1.074 million (5%) All = 19.783 million (100%) (Totals may not add up correctly because of missing information)

Those Who Received Pension/ Retirement Lump-Sums (Age > 54) Respondent’s job = 2.501 million Spouse’s former job = 0.008 million Other = 0.141 million Total = 2.650

Those Who Did Not Receive Either Pensions or Retirement Lump-Sums in the Reference Period (Feb.-May 2003) (Age > 54) Still in labor force = 31.718 million (82%) Retired ** = 7.490 million (18%) All = 39.208 million (100%)

** About 41 percent of these retirees had retirement coverage from some source.

47

8A. Amount of Monthly Pension The percent distribution of monthly pensions differs by gender. A larger proportion of women and nonwhites than men and whites received monthly pensions of less than $1,000 per month, while a large proportion of men and whites received pensions of $1,000 or more (Figure 8.1).

All Percent Men Women White Nonwhite Age 16-37 Age 38-57 Age 58-64 Age 65+

$1 to $99 5.8 3.7 9.7 6.0 4.7 4.8 2.2 7.5 5.8$100 to $199 11.2 8.2 16.5 10.9 13.6 7.9 4.8 14.2 11.2$200 to $499 13.3 10.6 18.1 13.2 14.4 21.2 4.0 16.9 13.3$500 to $999 22.7 21.8 24.2 22.1 26.9 23.6 18.3 25.2 22.7$1,000 to $1,999 26.4 29.9 20.1 26.7 24.4 32.6 39.3 22.3 26.4$2,000 to $2,999 12.0 14.1 8.2 12.3 9.2 17.7 8.1 12.0$3,000 or more 8.6 11.6 3.2 8.8 6.8 9.8 13.8 5.7 8.6Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Table 8.1: Percent Distribution of Monthly Pension Amonts from Worker's Own Job by Age, Gender, and Race, 2003

Amount By Gender By Race By Age Group

48

Figure 8.1: Percent Distribution of Recipients by Monthly Pension Amounts and Gender, 2003

3.7

8.210.6

21.8

29.9

14.111.6

9.7

16.518.1

24.2

20.1

8.2

3.2

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

$1 to $99 $100 to $199 $200 to $499 $500 to $999 $1,000 to$1,999

$2,000 to$2,999

$3,000 ormore

Perc

ent

MenWomen

49

This page intentionally left blank.

50

References

Purcell, Patrick, Participation in Retirement Plans: Findings from The Survey of Income and Program Participation, CRS, Library of Congress, Washington, DC, October 5, 2005. U.S. Bureau of the Census, “Retirement Expectations and Pension Plan Coverage,” 2003 Survey of Income and Program Participation (SIPP), [Italics added] Topical Module (Wave 7), 2002. For details, contact Satyendra K. Verma, Economics Team, Public Policy Institute, AARP. Phone: 202-434-6331 or [email protected]

satyendra k. verma · 2018. 8. 23. · a data and chart book by satyendra k. verma august 2006...

Documents