Access to Retirement Benefits Stagnates

Only four major industries are creating a significant number of new traditional pensions.


Thousands of new retirement plans were created by employers between 2003 and 2007. But most of these newly formed private sector retirement plans were offset by other plan terminations, according to a recent Government Accountability Office report. The proportion of workers who have access to 401(k)s or pensions at work has remained about 50 percent of the private sector workforce for most of the past two decades.

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While employers created more than 179,000 new retirement plans over the 5-year period, the total number of plans climbed only slightly from 697,000 plans in 2003 to 705,000 plans in 2007, according to Department of Labor estimates. Some plan formations and terminations are linked because sponsors terminate plans due to company mergers or acquisitions and then cover the participants in other plans, GAO found.

Almost all (92 percent) of the new retirement plans created were 401(k)s or similar types of retirement accounts. Only about 8 percent of all new retirement plans were traditional pensions, which generally had fewer participants than 401(k)s. New traditional pension plans had a median of four participants, compared to a median of eight members in 401(k)s. Most of the new retirement plans private employers created were also small. Some 96 percent of the new plans had fewer than 100 participants. Only about 6,000 of the 179,000 new plans had 100 or more members.

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Workers at large companies are much more likely to have retirement benefits than people at small firms. Some 79 percent of workers at companies with 100 or more employees were offered a retirement plan in 2008, compared to less than half (45 percent) of workers at smaller firms, according to the Bureau of Labor Statistics. And only 8 percent of the new retirement plans at small employers were traditional pensions.

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Many of the new traditional pensions were sponsored by just four kinds of professional businesses—doctor’s offices, dentist’s offices, lawyer’s offices, and other professional services firms. These four types of firms sponsored 43 percent of new traditional pension plans with fewer than 100 participants. And about 62 percent of new plan sponsors from these four business types also offered a 401(k) or other retirement account. “Most new defined-benefit plans were started by highly paid, middle-aged professionals who run small businesses and were looking for ways to put as much tax-deferred income aside for retirement as possible,” according to the GAO report. Doctor’s offices alone created 2,900 new traditional pension plans between 2003 and 2007.

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