Since the end of the recession more people are working for employers that offer retirement plans, and plan participation is up, according to a new report from the nonprofit Employee Benefit Research Institute — but most workers still have no retirement plan.
The data in the report is from the U.S. Census Bureau's latest Survey of Income and Program Participation (SIPP) on retirement plan participation, covering December 2011 to March 2012.
Some key takeaways are:
- 61 percent of all workers over age 16 had an employer that sponsored a pension or retirement plan for employees in 2012, up from 59 percent in 2009.
- Workers participating in a plan increased to 46 percent in 2012, up slightly from 2009 (45 percent) but below 2003 (48 percent).
- The vesting rate (the percentage of workers who say they were entitled to some pension benefit or lump-sum distribution if they left their job) stood at 43 percent in 2012, up from 24 percent in 1979.
- This change is largely due to the increased number of workers participating in defined contribution retirement plans (such as 401(k) plans), where employee contributions are immediately vested, and faster vesting requirements in private-sector pension plans.
- 401(k)-type plans were considered the primary plan by 78 percent of workers with a plan. Defined benefit (pension) plans were the primary plan for 21 percent of workers.
Take a look at notes from the Retirement Plan Participation: Survey of Income and Program Participation (SIPP) Data, 2012.
Last week, there was a Kodak moment that all of the company's employees and retirees could be proud of.
On Tuesday, Eastman Kodak Co., known for its iconic film business, ended a 20 month bankruptcy proceeding with its two pension plans intact. That means the nearly 63,000 people covered by those plans will have a more secure retirement.
When companies seek bankruptcy protection it doesn't automatically mean that plans will be shut down and come to us. During Kodak's bankruptcy, we were on the unsecured creditors committee and we worked with them to ensure the plans would continue.
A secure retirement is every worker's dream, but successful retirement planning is what makes that dream a reality.
There are many tools and resources to help make the process a lot simpler and less daunting.
For instance, the U.S. Department of Labor, Employee Benefits Security Administration (EBSA) has a great online publication complete with interactive worksheets to help you with the process of retirement planning.
Taking the Mystery Out of Retirement Planning is available online and can also be requested in print.
We hope this resource is helpful!
From Phyllis C. Borzi, Assistant Secretary of Labor for Employee Benefits Security:
Women have made enormous strides over the past three decades, in the workplace and beyond – and it's important to reflect on the men and women who fought for the changes that have led to greater gender equality. One of those changes was introduced 29 years ago: The Retirement Equity Act became law, ushering in important protections for America's workers and their families.
As the assistant secretary for the Employee Benefits Security Administration, one of my chief responsibilities is to oversee the administration and enforcement of Title I of the Employee Retirement Income Security Act of 1974, which sets minimum standards for pension plans.
ERISA was and is an important law that protects the retirement savings of America's workers, but the law's original text had some significant shortcomings, and those shortcomings disproportionately affected women.
ERISA has strict prohibitions against the "alienation of benefits," so that creditors could not claim an employee's pension benefits. But as written in 1974, this also meant that divorced women were unable to obtain their fair share of their ex-husband's retirement benefits – even if a woman had forfeited a career of her own in order to support a husband or raise the couple's children.
For more than 100 years, every Labor Day, America has celebrated working people's contributions. Labor Day is observed and celebrated in different ways all across the country by people in every walk of life. It constitutes a yearly national tribute to the contributions workers have made to the strength, prosperity, and well-being of our country.
And after our working lives, we can continue to contribute to the country's strength and prosperity through secure retirements. When retirees can rely on their own secure retirement income, the economy wins, and that means workers win too.
PBGC wishes every American a safe and happy Labor Day. We reaffirm our commitment to protecting the more than 40 million American workers in private pension plans, to paying benefits for a million and a half people whose companies could not, and to fighting for American retirement security as part of every worker's American dream.
For a more in-depth look at the meaning of Labor Day, visit DOL's Labor Day 2013 webpage.