Pension Plans:

Characteristics of Persons in the Labor Force Without Pension Coverage

HEHS-00-131: Published: Aug 22, 2000. Publicly Released: Aug 22, 2000.

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Pursuant to a congressional request, GAO provided information on the: (1) portion of the labor force without pension coverage and how that proportion has changed over the past decade; (2) characteristics of workers in that labor force; and (3) proportion and characteristics of retired people who lack pension income or pension assets.

GAO noted that: (1) about 53 percent of the employed labor force lacked a pension plan in 1998, a decrease in those without coverage of 5 percentage points from 10 years earlier; (2) this improvement in pension coverage may stem from the economic expansion under way since 1991 that has encouraged firms to offer pensions as a part of their compensation packages and from an increased interest in pension coverage by persons in the labor force; (3) about 39 percent of the employed labor force lacked a pension plan because they worked for firms that did not sponsor a plan, while 14 percent lacked a plan because they were not eligible or chose not to participate in their firm's plan; (4) in 1998, about 85 percent of employees not in a firm's plan had one or more of the following characteristics: (a) they had relatively low income; (b) were employed part time or part of the year; (c) worked for a relatively small firm; or (d) were relatively young; (5) 22 percent of all employees worked for firms that had fewer than 25 employees, and 82 percent of them lacked pension coverage; (6) these characteristics appear to be associated with an employee's desire for, or ability to take advantage of, pension coverage and a firm's willingness or ability to provide coverage; (7) the per capita cost of sponsoring a pension plan may be higher for smaller firms than for larger firms; (8) GAO's analysis indicates that in the past, many workers failed to earn a pension benefit during their work lives; (9) retired people without pension income were more likely to be single, female, less educated, and Hispanic or not white; (10) additionally, retired persons who lacked pension income were more likely to be poor; and (11) about 21 percent of retired persons without pension income had incomes below the federal poverty threshold, compared with 3 percent with pension income.

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