A Data and Chart Book. August by Retirement Plan Coverage of Boomers: Analysis of 2003 SIPP Data. Satyendra K. Verma. Satyendra K.

A Data and Chart Book by Retirement Plan Coverage of Boomers: Analysis of 2003 SIPP Data Satyendra K. Verma by Satyendra K. Verma August 2006

August 2006 Components Retirement Retirement Plan Coverage Plan Coverage of Boomers: in 1998: Analysis of 1998 SIPP Data Analysis of 2003 SIPP Data by by Satyendra K. Verma 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

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 selfexplanatory. 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

TABLE OF CONTENTS 1. Distribution of Workers by Age, Income, and Tenure, 2003 1 1A. Age Distribution of Workers 1 Table 1.1 Age Distribution of All Workers Age 16 and Older Who Have a Job or Own a Business (Job/Business), 2003 2 Figure 1.1 Age Distribution of All Workers Age 16 and Older Who Have a Job/Business, 2003 2 1B. Income Distribution of Workers 3 Table 1.2 Income Distribution of All Workers Age 16 and Older Who Have a Job/Business, 2003 3 Figure 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 4 Figure 1.3 Percent Distribution of All Workers Age 16 nad Older by Age and Tenure, 2003 4 Table 1.3 Distribution of Workers by Current Primary Job, 2003 4 2. Retirement Plan Coverage by Socio-Demographic Characteristics, 2003 5 2A. Retirement Plan Coverage by Age 6 Table 2.1 Retirement Plan Coverage of All Workers at Current Primary Job by Age, 2003 6 Table 2.2 Retirement Plan Coverage of All Persons at Current Job, Second Job, Previous Job(s), and IRAs by Age, 2003 6 Figure 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 9 Table 2.3 Retirement Plan Coverage by Age and Gender, 2003 9 Table 2.4 Retirement Plan Coverage by Age and Tenure, 2003 9 Table 2.5 Retirement Plan Coverage by Age and Race, 2003 10 Table 2.6 Retirement Plan Coverage by Marital Status and Race, 2003 10 2C. Retirement Plan Coverage by Education and Income 11 Table 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 12 Figure 2.3 Retirement Plan Coverage at Current Job, During Career, Any Coverage, and IRAs by Income, 2003 12 iii

3. Types of Pension Plans, 2003 13 Chart 3.1 Types of Current Pension Plans, 2003 13 Table 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 15 Table 3.2 Types of Pension Plans by Socio-Demographic Characteristics, 2003 15 3B. DB and DC Plan Coverage by Age, Gender, and Race 17 Table 3.3 Types of Pension Plans by Age and Race, 2003 17 Table 3.4 Types of Pension Plans by Age and Gender, 2003 17 3C. DB and DC Plan Coverage by Age, Income, and Education 18 Table 3.5 Types of Pension Plans by Age and Income, 2003 18 Table 3.6 Types of Pension Plans by Age and Education, 2003 18 4. Employer Sponsored (DC and 401(k)) Plans by Type Contributions, 2003 19 Table 4.1 Participants in Tax-Deferred Plans Through Payroll Deductions by Age, 2003 19 Table 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 21 Table 4.3 Frequency Distribution in Tax-Deferred Plan Where Only Employer Contributes, 2002 22 Table 4.4 Frequency Distribution Total Value Accumulated in Tax Deferred Plans, 2003 22 Table 4.5 Frequency Distribution of Employee Contributions in All Tax-Deferred Plans (February-May, 2003) 22 Table 4.6 Frequency Distribution of Employee and Employer Contributions in All Tax-Deferred Plans (February-May 2003 22 Table 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 24 Figure 4.1 Frequency Distribution of Investment Receiving Largest Share from Current Employee Contributions by Type, 20 24 5. IRAs by Socio-Demographic Characteristics, 2003 25 Table 5.1 IRA Ownership Among All Persons and All Workers by Age, 2003 25 Table 5.2 IRA Ownership Among All Workers by Age, Gender, and Race, 2003 25 Figure 5.1 IRA Ownership Among All Workers by Marital Status and Race, 2003 26 Figure 5.2 IRA Ownership Among All Workers by Age and Race, 2003 26 Figure 5.3 IRA Ownership Among All Workers by Age, 2003 27 Table 5.3 IRA Ownership and Current Pension Coverage by Socio-Demographic Characteristics, 2003 28 iv

6. Retirement Plan Coverage Among Women, 2003 29 6A. 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 29 Table 6.1 Retirement Plan Coverage Among All Working Women by Age and Race, 2003 30 Table 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 31 Figure 6.2 IRA Ownership Among Working Women by Age and Race, 2003 31 Figure 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 33 Table 6.3 Types of Retirement Plan Coverage Among Women by Age and Race, 2003 33 Table 6.4 Types of Retirement Plan Coverage Among Women by Marital Status and Race, 2003 33 Figure 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 35 Table 7.1 Pension Plan Coverage from Previous Employment by Socio-Demographic Characteristics, 2003 35 Chart 7.1 Flow Chart of Previous Pension Plan Coverage, 2003 36 Figure 7.1 Sources of Pension Plan Coverage, 2003 36 7A. Pension Plan Coverage from Previous Employment by Age, Gender, Race, and Marital Status 37 Table 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 38 Figure 7.2 Pension Plan Coverage from Previous Employment by Marital Status and Race, 2003 38 7B. Lump-Sum Distributions (LSDs) from Previous Pension Plans 39 Chart 7.2 Flow Chart of LSDs and Rollovers, 2003 40 7C. LSDs and Survivor s Benefits by Age, Gender, and Race 41 Table 7.4 LSD Recipients Among Those Who Have Pension Plan Coverage From Previous Employment 41 by Age, Gender, and Race, 2003 Figure 7.3 Percent Distribution of LSD Recipients by Amounts of LSD Received, 2003 42 Figure 7.4 Percent Distribution of LSD Recipients by Amounts of LSD Received and Gender, 2003 42 v

7D. LSDs and Their Uses 43 Table 7.5 Percent of All Recipients by LSD Amounts and Rollover Decisions, 2003 43 Table 7.6 All LSD Recipients and Recipients Who Rolloed Over by Age, 2003 43 Table 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 45 Chart 8.1 Flow Chart of Pensions and Retirement Lump-Sums, 2003 46 8A. Amount of Monthly Pension 47 Table 8.1 Percent Distribution of Monthly Pension Amounts from Worker's Own Job by Age, Gender, and Race, 2003 47 Figure 8.1 Percent Distribution of Monthly Pension Amounts from Worker's Own Job by Gender, 2003 48 References 50 vi

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. 1

Table 1.1: Age Distribution of All Workers Age 16 and Older Who Have a Job/ Business, 2003 Number of Workers by Age Birth Year Workers (Millions) Percent Post-boomers: age 16-37 1966-87 58.749 42.4 Boomers: 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 20.7 Pre-retirees: age 58-64 1939-45 9.844 7.1 Retirees: age 65 and older 1933 or before 4.975 3.6 All workers 138.643 100.0 Figure 1.1: Age Distribution of All Workers Age 16 and Older Who Have a Job/Owned a Business, 2003 Younger boomers: age 38-47 18% Boomers: age 38-57 32% Older boomers: age 48-57 14% Pre-retirees: age 58-64 5% Retirees: age 65 and older 2% Post-boomers: age 16-37 29% 2

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. Table 1.2: Income Distribution of Workers Age 16 and Older Who Have a Job/ Owned a Business, 2003 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 3.8 Total 138.643 100.0 Percent 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 Figure 1.2: Income Distribution of Workers Age 16 and Older Who Have a Job/Owned a Business, 2003 37.9 Less than $20,000 33.4 $20,000 to $39,999 14.5 $40,000 to $59,999 7.4 $60,000 to $79,999 3.0 3.8 $80,000 to $99,999 $100,000 or more 3

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.) Percent 100.0 80.0 60.0 40.0 20.0 0.0 Figure 1.3: Percent Distribution of All Workers Age 16 and Older by Age and Tenure, 2003 25.5 74.5 Postboomers: age 16-37 57.7 42.3 Younger boomers: age 38-47 Job less than 5 yrs. 67.0 33.0 Older boomers: age 48-57 71.8 74.3 28.2 Pre-retirees: age 58-64 25.7 Retirees: age 65 and older Job 5 yrs. or more 47.6 52.4 All W orkers 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 Private Employees 100.358 81.5 State and Local 17.786 14.4 Federal 4.028 3.3 Others 1.030 0.8 Total* 123.203 100.0 * 15.4 million (138.6 less 123.2) reported not having a current job/business 4

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. 5

2A. Retirement Plan Coverage by Age 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) Workers Workers Offered Workers Participation in Plans at Current Job Workers by Age (W) Pension Plans One Plan Multiple Plans All Current Plans Millions Millions % of W Millions % of W Millions % of W Millions % of W Post-boomers: age 16-37 58.749 32.271 54.9 17.206 29.3 4.354 7.4 21.560 36.7 Younger boomers: age 38-47 36.441 23.124 63.5 15.580 42.8 2.549 7.0 18.128 49.7 Older boomers: age 48-57 28.633 18.059 63.1 12.223 42.7 5.682 19.8 17.905 62.5 Pre-retirees: age 58-64 9.844 5.724 58.1 3.845 39.1 0.995 10.1 4.840 49.2 Retirees: age 65 and older 4.975 1.778 35.7 0.776 15.6 0.215 4.3 0.991 19.9 All workers 138.643 80.956 58.4 49.629 35.8 13.795 9.9 63.424 45.7 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 Number of Persons Age 16 and Older Who Have Total Total Coverage from Various Sources (Millions) Number of Number of Plans from Plans from Persons Workers Current All Second Job/ Previous (Millions) (Millions) Primary Job IRAs Business Job(s)* Post-boomers: age 16-37 87.246 58.749 21.560 0.488 7.763 5.849 Younger boomers: age 38-47 45.003 36.441 18.128 0.705 8.946 7.437 Older boomers: age 48-57 37.222 28.633 17.905 0.528 8.266 8.058 Pre-retirees: age 58-64 17.371 9.844 4.840 0.120 4.998 4.564 Retirees: age 65 and older 34.094 4.975 0.991 0.005 10.896 6.754 All 220.937 138.643 63.424 1.845 40.870 32.662 * 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 6

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. Current pension coverage (63.424 million, 45.7%) Career pension coverage + Other Plans + Previous Plans (75.369 million, + IRAs 54.4%) Any coverage (81.587 million, 58.8%) 7

Figure 2.1: Retirement Plan Coverage of All Workers Age 16 and Older at Current Job, During Career, and Any Coverage by Age, 2003 Percent of current workers 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 42.2 44.6 36.7 Post-boomers: age 16-37 63.8 68.2 54.8 56.1 Younger boomers: age 38-47 66.1 Older boomers: age 48-57 71.8 72.0 49.2 63.3 Pre-retirees: age 58-64 19.9 43.1 Retirees: age 65 and older Current Pension Coverage Career Pension Coverage Any Coverage 58.0 58.8 54.4 45.7 All Workers 8

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). Workers by Age Table 2.3: Retirement Plan Coverage by Age and Gender, 2003 (Percent of All Workers Age 16 and Older Who Have a Job/Business) Number of Workers (Millions) Current Pension Coverage (%) Career Pension Coverage (%) Men Any Coverage (%) Women Men Women Men Women Men Women Post-boomers: age 16-37 31.385 27.364 38.2 35.0 43.2 41.2 45.5 43.5 Younger boomers: age 38-47 19.377 17.064 56.9 52.4 64.8 62.7 69.1 67.2 Older boomers: age 48-57 14.894 13.739 57.4 54.8 66.9 65.3 72.5 71.2 Pre-retirees: age 58-64 5.330 4.514 48.8 49.6 64.6 61.7 72.4 71.7 Retirees: age 65 and older 2.854 2.122 19.2 20.9 46.6 38.4 62.0 52.7 All workers 73.840 64.803 47.0 44.3 55.3 53.3 59.7 57.9 Career pension coverage includes current job, current second job and previous jobs. Any coverage include pension plans during career or IRAs or both. Table 2.4: Retirement Plan Coverage by Age and Tenure, 2003 ( Percent of All Workers Age 16 and Older Who Have a Job/Business) Number of Workers Current Pension Career Pension Any Coverage (%) (Millions) Coverage (%) Coverage (%) Workers by Age Job Less Job 5 Yrs. Job Less Job 5 Yrs. Job Less Job 5 Yrs. Job Less Job 5 Yrs. than 5 Yrs. or More than 5 Yrs. or More than 5 Yrs. or More than 5 Yrs. or More Post-boomers: age 16-37 43.739 15.010 29.2 58.5 35.4 62.1 37.6 64.9 Younger boomers: age 38-47 14.236 18.919 40.6 65.3 54.8 70.4 59.4 74.7 Older boomers: age 48-57 10.633 21.285 40.7 63.8 58.8 69.7 64.7 75.4 Pre-retirees: age 58-64 2.780 7.064 35.2 54.7 60.3 64.4 68.9 73.3 Retirees: age 65 and older 1.278 3.698 13.1 22.3 40.9 43.9 53.8 59.5 All workers 72.666 65.977 33.1 59.7 43.6 66.2 47.2 71.6 9

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 Workers by Age Table 2.5: Retirement Plan Coverage by Age and Race, 2003 (Percent of All Workers Age 16 and Older Who Have a Job/Business) Number of Workers (Millions) Current Pension Coverage (%) Career Pension Coverage (%) White Nonwhite White Nonwhite White Nonwhite Any Coverage (%) Post-boomers: age 16-37 48.687 10.062 36.7 36.7 42.5 41.2 45.0 42.3 Younger boomers: age 38-47 30.353 6.089 55.5 50.7 65.1 57.1 69.9 59.5 Older boomers: age 48-57 24.539 4.094 56.8 51.8 67.3 58.6 73.8 60.1 Pre-retirees: age 58-64 8.549 1.295 48.8 51.2 63.2 63.5 72.9 66.5 Retirees: age 65 and older 4.418 0.558 18.9 28.0 42.9 44.3 59.0 50.0 All workers 116.545 22.098 46.1 44.0 55.1 50.2 60.2 52.0 White Nonwhite 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) Number of Workers Current Pension Career Pension Any Coverage (%) (Millions) Coverage (%) Coverage (%) Workers by Marital Status White Nonwhite White Nonwhite White Nonwhite White Nonwhite Married, spouse present 68.674 10.439 52.5 50.1 62.9 57.1 69.0 59.4 Married, spouse absent 1.168 0.542 35.0 39.3 41.2 42.3 41.4 42.3 Widowed 2.377 0.538 40.9 41.2 54.6 50.9 64.0 53.4 Divorced 13.422 2.325 49.7 53.9 61.4 62.1 65.6 64.0 Separated 2.406 0.858 39.0 43.5 48.1 51.1 52.1 51.5 Never married 28.498 7.395 30.4 32.8 34.7 37.2 37.3 38.3 All workers 116.545 22.098 46.1 44.0 55.1 50.2 60.2 52.0 10

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. Workers 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 Millions Current Pension Coverage Millions Percent Millions Career Pension Coverage* Percent Millions Percent Millions Percent All workers 138.643 63.424 42.2 75.369 50.9 23.083 18.6 81.588 56.9 By Education Less than high school 15.866 3.430 21.6 3.931 24.8 0.546 3.4 4.199 26.5 High school 38.848 15.993 41.2 18.825 48.5 4.154 10.7 20.371 52.4 Some college 44.167 19.870 45.0 23.967 54.3 6.458 14.6 25.923 58.7 College 39.763 24.131 60.7 28.646 72.0 11.926 30.0 31.094 78.2 By Income Less 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. IRAs Any Coverage 11

90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 Figure 2.2: Retirement Plan Coverage at Current Job, During Career, and Any Coverage by Education, 2003 21.6 41.2 45.0 60.7 48.5 54.3 72.0 24.8 26.5 Current Pension Coverage Career Pension Coverage Any Coverage 52.4 58.7 78.2 Less than high school High school Some college College 100.0 Figure 2.3: Retirement Plan Coverage at Current Job, During Career, Any Coverage, and IRAs by Income, 2003 80.0 Percent 60.0 40.0 20.0 0.0 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 or more Current Pension Coverage Career Pension Coverage Any Coverage IRAs 12

3. Types of Pension Plans, 2003 Chart 3.1: Types of Current Pension Plans, 2003 DB: Defined benefit plans DC: Defined contribution plans CB: Cash balance plans Number of workers age 16 and older = 138.6 million Number of workers age 16 and older who were offered employer-sponsored pension plans = 80.956 million (58.4% of workers) Additional taxdeferred 401(k)- type plans offered ** =12.448 million DB-only plans = 8.838 million (6.4 %) (a) (No DC or 401(k) plans) CB-only plans* = 0.728 million (0.5%) (b) (No DC or 401(k) plans) DC/401(k)-only = 27.391 million (19.7%) (c) (No DB or CB 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) Those who participated = 7.066 million (5.1%) 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. 13 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%)

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. Table 3.1: Reasons for Not Participating in Employer-Provided Primary Pension Plans by Gender, 2003 Number of Cases Percent "Yes" by Reasons (n = 14.728 million) Gender 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 8.0 2. Do not work enough hours, weeks, months per year 4.286 2.520 1.766 26.6 18.8 3. Have not worked long enough 4.154 2.001 2.153 21.1 22.9 4. Started job too close to retirement 0.115 0.074 0.042 0.8 0.4 5. Too Young 0.452 0.237 0.215 2.5 2.3 6. Cannot afford to contribute 2.797 1.404 1.393 14.8 14.8 7. Do not want to tie up money 1.709 0.697 1.012 7.3 10.8 8. Employer doesn't contribute or contribute enough 0.271 0.121 0.151 1.3 1.6 9. Do not plan to be in job long enough 0.392 0.229 0.162 2.4 1.7 10. Do not need it 0.236 0.114 0.122 1.2 1.3 11. Have an IRA or other pension coverage 0.308 0.147 0.161 1.6 1.7 12. Spouse has pension plan 0.186 0.136 0.050 1.4 0.5 13. Haven't thought about it 0.969 0.461 0.508 4.9 5.4 14. Some other reason 1.646 0.748 0.898 7.9 9.6 All 18.878 9.490 9.388 100.0 100.0 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. 14

3A. DB and DC Plan Coverage by Socio-Demographic Characteristics 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) Both DB/CB and All DB/CB All DC/ All DB or CB-Only DC or 401(k)-Only Characteristics All Workers DC/401(k) Plans Plans 401(k) Plans Millions Millions Percent Millions Percent Millions Percent Percent Percent Percent a 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 45.7 Age Post-boomers: age 16-37 58.749 2.959 5.0 10.147 17.3 8.455 14.4 19.4 31.7 36.7 Younger boomers: age 38-47 36.441 3.033 8.3 8.522 23.4 8.408 23.1 31.4 46.5 54.8 Older boomers: age 48-57 28.633 2.622 9.2 6.234 21.8 7.215 25.2 34.4 47.0 56.1 Pre-retirees: age 58-64 9.844 0.717 7.3 2.104 21.4 2.019 20.5 27.8 41.9 49.2 Retirees: age 65 and older 4.975 0.237 4.8 0.384 7.7 0.370 7.4 12.2 15.2 19.9 Gender Men 73.840 4.883 6.6 15.364 20.8 14.452 19.6 26.2 40.4 47.0 Women 64.803 4.684 7.2 12.027 18.6 12.014 18.5 25.8 37.1 44.3 Race White 116.545 8.012 6.9 23.797 20.4 21.889 18.8 25.7 39.2 46.1 Nonwhite 22.098 1.555 7.0 3.594 16.3 4.577 20.7 27.7 37.0 44.0 Firm Size and Tenure Employees: less than 100 68.279 2.954 4.3 10.020 14.7 7.184 10.5 14.8 25.2 29.5 Employees: 100 and more 70.364 6.613 9.4 17.371 24.7 19.282 27.4 36.8 52.1 61.5 Worked less than 5 years 72.666 3.280 4.5 11.571 15.9 9.173 12.6 17.1 28.5 33.1 Worked 5 years or more 65.977 6.287 9.5 15.820 24.0 17.293 26.2 35.7 50.2 59.7 Education Less than high school 15.866 0.637 4.0 1.514 9.5 1.279 8.1 12.1 17.6 21.6 High school 38.848 2.855 7.3 7.109 18.3 6.029 15.5 22.9 33.8 41.2 Some college 44.167 3.012 6.8 8.665 19.6 8.193 18.6 25.4 38.2 45.0 College 39.763 3.063 7.7 10.104 25.4 10.964 27.6 35.3 53.0 60.7 Marital Status Married 79.114 6.150 7.8 17.729 22.4 17.391 22.0 29.8 44.4 52.2 Widowed/separated/divorced 23.636 1.789 7.6 4.614 19.5 4.646 19.7 27.2 39.2 46.7 Never married 35.893 1.628 4.5 5.048 14.1 4.429 12.3 16.9 26.4 30.9 15

Table 3.2 contd. All Both DB/CB and All All DC/ DB or CB-Only DC or 401(k)-Only Characteristics Workers DC/401(k) Plans DB/CB 401(k) All Plans Millions Millions Percent Millions Percent Millions Percent Percent Percent Percent a b c=b/a d e=d/a f g=f/a (c+g) (d+g) (c+e+g) Income Less 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 39.9 State and Local 17.786 6.454 36.3 2.798 15.7 1.518 8.5 44.8 24.3 60.6 Federal 4.028 1.256 31.2 0.762 18.9 0.552 13.7 44.9 32.6 63.8 Family 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. 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. 16

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. 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 Number of Workers (Millions) DB or CB-Only (%) White Nonwhite White Nonwhite DC or 401(k)-Only (%) White Nonwhite White Both DB/CB and DC/401(k) Plans (%) Nonwhite Post-boomers: age 16-37 48.687 10.062 4.9 5.5 17.7 15.1 14.0 16.0 Younger boomers: age 38-47 30.353 6.089 8.0 9.3 24.6 17.5 22.9 24.2 Older boomers: age 48-57 24.539 4.094 9.5 7.2 22.4 18.0 25.0 26.7 Pre-retirees: age 58-64 8.549 1.295 7.1 8.5 21.8 18.6 19.9 24.2 Retirees: age 65 and older 4.418 0.558 4.6 6.4 7.9 6.2 6.4 15.4 All workers 116.545 22.098 6.9 7.0 20.4 16.3 18.8 20.7 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) Number of Workers DC or 401(k)-only Both DB/CB and DB or CB only (%) (Millions) (%) DC/401(k) Plans (%) Workers by Age Men Women Men Women Men Women Men Women Post-boomers: age 16-37 31.385 27.364 5.2 4.8 18.1 16.3 14.8 13.9 Younger boomers: age 38-47 19.377 17.064 7.9 8.5 25.2 21.3 23.6 22.4 Older boomers: age 48-57 14.894 13.739 8.1 10.4 23.1 20.3 26.3 24.0 Pre-retirees: age 58-64 5.330 4.514 6.7 7.9 21.4 21.3 20.7 20.3 Retirees: age 65 and older 2.854 2.122 4.8 4.7 7.3 8.3 7.1 7.9 All workers 73.840 64.803 6.6 7.2 20.8 18.6 19.6 18.5 17

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. 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) Number of Workers DC or 401(k)-only Both DB/CB and DB or CB only (%) (millions) (%) DC/401(k) Plans (%) Workers by Age Income < Income Income < Income Income < Income Income < Income $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 Post-boomers: age 16-37 46.406 12.344 4.6 6.5 13.6 30.9 11.1 26.8 Younger boomers: age 38-47 23.346 13.095 7.5 9.8 19.8 29.8 17.4 33.2 Older boomers: age 48-57 17.959 10.674 8.6 10.1 18.9 26.7 18.6 36.3 Pre-retirees: age 58-64 6.919 2.926 6.4 9.3 19.0 26.9 15.0 33.5 Retirees: age 65 and older 4.238 0.737 4.5 6.5 6.3 16.1 6.0 15.9 All workers 98.867 39.776 6.1 8.8 16.1 28.8 14.0 31.8 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) Number of Workers Both DB/CB and DB or CB only (%) DC or 401(k)-only (%) (Millions) DC/401(k) Plans (%) Workers by Marital Status Less than College College Less than College College Less than College College Less than College College Post-boomers: age 16-37 44.123 14.626 4.5 6.7 13.9 27.3 11.1 24.3 Younger boomers: age 38-47 25.189 11.252 8.6 7.8 21.6 27.4 19.2 31.8 Older boomers: age 48-57 19.124 9.509 8.7 10.0 21.3 22.8 22.0 31.6 Pre-retirees: age 58-64 6.903 2.941 7.4 6.9 20.0 24.6 19.4 23.1 Retirees: age 65 and older 3.540 1.435 5.4 3.3 7.0 9.5 6.3 10.1 All workers 98.880 39.763 6.6 7.7 17.5 25.4 15.7 27.6 18

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. 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) Number of Those Who Participate Those Who are Offered Those Who Contribute in Workers by Age Workers in All Current Plans DC or 401(k) Plans DC or 401(k) Plans Millions Millions Percent Millions Percent Millions Percent Post-boomers: age 16-37 58.749 21.560 36.7 23.752 40.4 18.601 31.7 Younger boomers: age 38-47 36.441 18.128 49.7 14.862 40.8 15.407 42.3 Older boomers: age 48-57 28.633 17.905 62.5 13.999 48.9 14.972 52.3 Pre-retirees: age 58-64 9.844 4.840 49.2 3.797 38.6 4.123 41.9 Retirees: age 65 and older 4.975 0.991 19.9 1.064 21.4 0.754 15.2 All workers 138.643 63.424 45.7 57.474 41.5 53.857 38.8 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 taxdeferred. 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. 19

Table 4.2: DC or 401(k)-Type Plan by Socio-Demographic Characteristics of Participants and Type of Contribution, 2003 p y Characteristics Number of Workers Only Employers Contribute Only Employees Contribute Employees' Contributions Millions Millions Percent Millions Percent Millions Percent All workers 138.643 6.097 4.4 47.172 34.0 39.511 28.5 Age, Gender and Race Post-boomers: age 16-37 58.749 1.947 3.3 16.318 27.8 13.800 23.5 Younger boomers: age 38-47 36.441 1.856 5.1 14.997 41.2 12.555 34.5 Older boomers: age 48-57 28.633 1.597 5.6 11.742 41.0 9.651 33.7 Pre-retirees: age 58-64 9.844 0.547 5.6 3.511 35.7 3.001 30.5 Retirees: age 65 and older 4.975 0.149 3.0 0.605 12.2 0.504 10.1 Gender Male 73.840 3.365 4.6 26.149 35.4 21.97 29.8 Female 64.803 2.732 4.2 21.023 32.4 17.541 27.1 Race White 116.545 5.349 4.6 39.895 34.2 33.203 28.5 Nonwhite 22.098 0.748 3.4 7.277 32.9 6.308 28.5 Firm Size and Tenure Employees: Less than 100 68.279 2.236 14.864 21.8 12.204 17.9 Employees: 100 and more 70.364 3.861 5.5 32.308 45.9 27.307 38.8 Worked less than 5 years 72.666 2.265 3.4 18.269 25.1 15.318 21.1 Worked 5 years or more 65.977 3.832 5.8 28.903 43.8 24.193 36.7 Education Less than high school 15.866 0.382 2.4 2.393 15.1 2.083 13.1 High school 38.848 1.452 3.7 11.485 29.6 9.836 25.3 Some college 44.167 1.813 4.1 14.712 33.3 12.489 28.3 College 39.763 2.450 6.2 18.582 46.7 15.102 38.0 Marital Status Married 79.114 3.899 4.9 30.739 38.9 25.490 32.2 Widowed/separated/divorced 23.636 1.076 4.6 8.133 34.4 6.975 29.5 Never married 35.893 1.122 3.1 8.300 23.1 7.046 19.6 Income 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 20

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. 21

Table 4.3: Frequency Distribution of Employer Contributions Only, 2002 Contributions* Primary Plans Secondary Plans 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 19.8 More Than $5,000 0.609 14.1 0.216 10.9 Total 4.307 100.0 1.978 100.0 * These contributions refer to the preceding year of the survey. Employee contributions are either zero or not tax-deferred. Table 4.4: Frequency Distribution of Total Value Accumulated in Tax Deferred Plans, 2003 Total Value* Primary Secondary 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 24.0 Total 4.307 100.0 1.978 100.0 * This value refers to plans where only employers contribute, employee contribution are either zero or not tax-deferred. Table 4.6: Frequency Distribution of Employee Contributions in All Tax-Deferred Plans (February - May 2003) Annual Employee Employees Contribution 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 6.7 More than $10,000 2.028 4.3 Total 47.172 100.0 Data on nonzero dollar contributions were available only for 22.5 million workers. Table 4.6: Frequency Distribution of Employee and Employer Contributions in all Tax-Deferred Plans (February-May, 2003) Employee Contribution Employer Contribution % of Salary Millions Percent % of Salary Millions Percent Up 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 23.1 5.0 to 9.9 9.747 39.6 3.0 to 4.9 8.047 34.0 10.0 to 14.9 2.582 10.5 5.0 to 9.9 5.090 21.5 15.0 or more 0.850 3.5 10.0 or more 1.548 6.5 Total 24.635 100.0 23.662 100.0 22

Table 4.7: Percent Distribution of Employee Contributions to All Tax-Deferred Plans by Socio-Demographic Characteristics, 2003 Characteristics $1 to $500 to $1,000 to $2,000 to $5,000 to $10,000 or $499 $999 $1,999 $4,999 $9,999 More Total All Workers 7.7 12.2 26.7 30.4 14.1 9.0 100.0 Age Post-boomers: age 16-37 8.3 14.7 31.9 27.8 12.8 4.4 100.0 Younger boomers: age 38-47 6.8 11.1 25.3 34.0 12.6 10.0 100.0 Older boomers: age 48-57 7.7 9.9 22.7 30.6 16.9 12.2 100.0 Pre-retirees: age 58-64 7.3 14.0 24.4 25.7 16.4 12.2 100.0 Retirees: age 65 and older 16.3 7.4 19.7 25.5 12.6 18.5 100.0 Education Less than high school 10.1 18.6 32.0 27.7 5.4 6.2 100.0 High school 10.0 16.4 31.7 25.6 10.9 5.4 100.0 Some college 8.3 13.8 29.5 30.8 12.3 5.2 100.0 College 5.7 8.1 21.3 33.0 18.0 13.9 100.0 Gender Men 5.9 8.0 25.4 31.6 17.7 11.4 100.0 Women 9.8 17.2 28.2 28.9 9.7 6.1 100.0 Race White 10.1 16.1 25.0 32.1 11.4 5.3 100.0 Nonwhite 7.3 11.6 26.9 30.1 14.5 9.6 100.0 Marital Status Married 7.1 10.5 25.9 31.9 14.4 10.2 100.0 Divorced/separated/widow 8.9 15.1 27.3 26.9 14.5 7.3 100.0 Never married 8.4 15.3 29.0 28.4 12.6 6.2 100.0 23