DC Plans Not Universal, BLS Says

It’s conventional wisdom that defined contribution plans are widespread. They may be more prolific than other retirement plans, but they are nowhere near universal — at least according to a recent report by the Department of Labor’s Bureau of Labor Statistics (BLS).

In “Defined contribution retirement plans: Who has them and what do they cost?,” the BLS’ December 2016 “Beyond the Numbers” report, the BLS provides a look at who is participating in employer-provided DC plans, what they offer and what they cost.

“Defined contribution retirement plans are the most prevalent type of employer-sponsored retirement benefit in today’s economy,” says the BLS. It reports that in 2016, 44% of private-industry workers overall participated in DC plans.

Participation

Participation in DC plans was not uniform in 2016, the BLS says. As of March 2016, it stood as follows:

• all workers: 44%

• management, professional and related workers: 63%

• service sector workers: 19%

• sales and office workers: 46%

• workers in the natural resources, construction and maintenance sector: 41%

• workers in the production, transportation and material-moving sector: 44%

• workers in goods-producing industries: 53%

• workers in service-providing industries: 42%

• workers whose employers have 1-99 workers: 34

• workers whose employers have 100 or more workers: 57%

Types of DC Plans

And what kinds of DC plans do the private-sector employees who participated in DC plans take part in? The BLS reports that in 2015, for all employees it studied, the vast majority of such employees who participated in DC plans took part in savings and thrift plans, the most traditional and prevalent kind of DC plan, and the one that most often springs to mind. More specifically:

• all workers: 74%

• management, professional and related workers: 73%

• service sector workers: 79%

• sales and office workers: 79%

• workers in the natural resources, construction and maintenance sector: 59%

• workers in the production, transportation and material-moving sector: 75%

• workers in goods-producing industries: 70%

• workers in service-providing industries: 76%

• workers whose employers have 1-99 workers: 66%

• workers whose employers have 100 or more workers: 81%

Between 14% and 20% of employees in these sectors took part in deferred profit sharing plans and money purchase pension plans, and small percentages participated in employee stock ownership plans (ESOPs) and savings incentive match plans (SIMPLE plans).

Employer Costs

Employers in the management/professional and goods-producing sectors, as well as those with 100 or more employees, spent the most per hour worked on DC plans. Employer costs broke down thus:

• all workers: $0.70

• management, professional and related workers: $1.52

• service sector workers: $0.15

• sales and office workers: $0.46

• workers in the natural resources, construction and maintenance sector: $0.62

• workers in the production, transportation and material-moving sector: $0.52

• workers in goods-producing industries: $0.94

• workers in service-providing industries: $0.65

• workers whose employers have 1-99 workers: $0.45

• workers whose employers have 100 or more workers: $1.01