Pension Plans

About 53 percent of the employed labor force lacked a pension plan in 1998, a decrease of 5 percentage points from a decade earlier. The economic expansion since 1991 may have encouraged companies to offer pensions as part of their compensation packages and may have increased interest in pension coverage by persons in the labor force. About 39 percent of the employed labor force lacked a pension plan because their firms did not sponsor a plan, while 14 percent were ineligible or chose not to participate in their firm's plan. About 85 percent of those who do not have a pension plan had relatively low income, were employed part-time or part of the year, worked for a relatively small firm, or were relatively young. About 48 percent of retirees lacked pension income or annuities in 1998. These retirees were more likely to be single, female, less educated, and nonwhite. About 21 percent of retired persons without pension income had incomes below the federal poverty threshold, compared with three percent with pension income.

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.