Setting the Plan Access Record Straight

The Administration in its preface to its Automatic IRA proposal indicated that 78 million working Americans - half the workforce- lack access to employer provided retirement plans. This is misleading. We know that number is derived by multiplying the civilian labor force (155 million) by the often stated 50% coverage statistic. However, the BLS National Compensation Survey tells us that 67% of all private sector employed workers are covered by an employer provided retirement plan. Further, 76% of all full-time private sector workers are covered according to the report. This includes workers, age 16 -20, waiting to meet service requirements, etc. So we know that the coverage of the “eligible” workforce is well above 67% and the coverage of “eligible” full-time workers is higher than 76%.

The civilian labor force is currently 155 million, but with a 10% unemployment rate only 139 million are actually employed. Then there are ten million self-employed who should not be in the employer provided retirement plan coverage calculations. That leaves 129 million as the maximum for workers that potentially could be covered by an employer plan. There are 22 million government workers, and practically all are covered by an employer provided retirement plan. That leaves a maximum of 107 million potential private sector wage and salary workers that could be covered by a nongovernmental employer plan. 67% or 72 million workers in this group this group are covered under a plan using the BLS findings. This leaves 35 million private sector workers (this includes young workers, temporary workers, etc.) uncovered. That is a far cry from 78 million and a significantly higher percentage with coverage than the 50% constantly reported. By the way the DOL reports that 2007 Form 5500 data indicates there were 66.9 million active participants in private employer sponsored DC plans.

Everyone should recognize the success of the private employer retirement system. Then let's work together to come up with solutions to bring coverage to more of those in the one quarter (not one half) of the private sector workforce that does not have access to a plan, as well as work together to increase the percentage of those eligible who are participants.

David