Only 40% of Private Sector Workers Are in Retirement Plans

Data from the authoritative Employee Benefit Research indicates that only 48.8% of all private sector workers aged 21-64 worked for a company that sponsored a retirement plan, and just 39.6% participated in the plan. The rates vary considerably by age, income, and the size of the employer. For instance, the sponsorship rate for full-time, full-year employees in the private sector in this age group is 55.7%, and the participation rate 47.9%. The numbers for workers making $75,000 a year or more are 69.3% and 65.8%, falling to 14.6% for workers in the $10,000 to $20,000 per year group. In the size group of typical ESOP companies, 10-500 employees, 48.5% worked for a company with a plan and 38.7% participated in the plan.

The data again underline a key flaw in concerns about ESOPs as retirement plans, namely that they are insufficiently diversified compared to other plans. But ESOP companies usually have other retirement plans as well; cover all the eligible employees, not just those choosing to participate; and are much less skewed in the distribution of company contributions. Most employees in the private sector, it turns out, are also not diversified: they are entirely invested in nothing.