Recent research shows that since the economic recession ended, a larger percentage of people are working for companies that provide better retirement plans. In addition to this, a much larger number of people are participating in these plans. In 2012, more than 60 percent of all employees who were 16 years of age or older were employed by a company or union sponsoring a retirement plan or pension for all employees. That number was up from less than 60 percent in 2009. The amount of workers using retirement plans increased to more than 45 percent in 2012, which was a slight increase from the percentage documented in 2009. However, it was almost three percent lower than the number recorded in 2003.
The amount of workers who said they were entitled to lump-sum distributions or pensions after leaving their jobs were at more than 40 percent in 2012, and this was an increase from about 25 percent in 1979. The larger number of participants now is due to more workers using defined contribution plans where their money is quickly vested. Almost 80 percent of respondents said that defined contribution plans were considered the primary plan among workers. Slightly more than 20 percent said that defined benefit or pension plans were the primary ones for workers.
Although worker participation rates have been increasing for salary reduction plans, most employee contributions to these plans dropped in 2012 from the numbers recorded in 2009 by a total of slightly more than one percent. This was partly due to the total number of 401(k) plans continuing to grow, and these types of plans are known to bring in more low-income participants who are new to retirement plans. However, the workers who enroll in these plans as a form of a first retirement plan usually start with a lower contribution rate.
With additional research showing that many Americans are not fully prepared for retirement, it is important for all working people to start considering their employers’ retirement benefits. Employers must also think about their benefits packages for optimizing their chances of attracting and maintaining good talent. As more workers learn the importance of searching for employers offering good retirement benefits when looking for jobs, employers can expect to see a greater demand for reasonable options. To learn more about these types of plans or for answers to any specific questions, call ACBI at 203-259-7580 or visit our website by clicking here.