Private Pensions: Most Employers That Offer Pensions Use Defined
Contribution Plans (Letter Report, 10/03/96, GAO/GGD-97-1).
Pursuant to a congressional request, GAO provided information on the:
(1) numbers and types of pension plans sponsored by private employers
from 1984 to 1993; (2) proportions of total contributions made to these
plans; (3) average administrative expense for these plans; and (4)
reasons employers sponsor certain types of pension plans.
GAO found that: (1) 88 percent of private employers with single-employer
pension plans sponsored defined contribution plans in 1993; (2) the
percentage of employers that offered defined contribution plans
exclusively decreased from 24 to 9 percent during 1984 to 1993, and the
employers offering both defined contribution and defined benefit plans
decreased from 8 to 3 percent during that same period; (3) the
percentage of employers with 2,500 or more employees sponsoring both
types of pension plans increased during this period and nearly half of
these employers continued to sponsor defined benefit plans in 1993; (4)
most private employers did not require their employees to contribute to
defined benefit plans; (5) employers were willing to provide a greater
proportion of total contributions for employees that only participated
in defined contribution plans; (6) the average administrative expense
per participant was lower for employers that offered only defined
contribution plans; and (7) private employers prefer defined
contribution plans because they offer fewer complex government
regulations, are less likely to be terminated for capital assets, and
allow employees' to retain their pension benefits if they change jobs.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: GGD-97-1
TITLE: Private Pensions: Most Employers That Offer Pensions Use
Defined Contribution Plans
DATE: 10/03/96
SUBJECT: Federal employee retirement programs
Retirement pensions
Federal employees
Retirement benefits
Administrative costs
Employee retirement plans
Non-government enterprises
Civil service pensions
IDENTIFIER: Social Security Program
Civil Service Retirement System
Federal Employees Retirement System
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Cover
================================================================ COVER
Report to the Chairman, Subcommittee on Civil Service, Committee on
Government Reform and Oversight, House of Representatives
October 1996
PRIVATE PENSIONS - MOST EMPLOYERS
THAT OFFER PENSIONS USE DEFINED
CONTRIBUTION PLANS
GAO/GGD-97-1
Private Pensions
(410033)
Abbreviations
=============================================================== ABBREV
DB - defined benefit
DC - defined contribution
DOL - Department of Labor
EBRI - Employee Benefit Research Institute
ERISA - Employee Retirement Income Security Act of 1974
IRS - Internal Revenue Service
Letter
=============================================================== LETTER
B-271701
October 3, 1996
The Honorable John L. Mica
Chairman, Subcommittee on Civil Service
Committee on Government Reform and Oversight
House of Representatives
Dear Mr. Chairman:
In accordance with your interest in considering possible future
changes to the structure of federal employee retirement plans, you
asked that we develop information on the approaches private employers
are using to provide retirement benefits to their employees and the
extent to which these approaches may be changing.
As agreed with the Subcommittee, this report is the first in a series
of reports that we will be preparing to respond to your request.
This report describes (1) the numbers and types of pension plans
sponsored nationwide by private employers during 1984 to 1993, (2)
the proportions of total contributions made to these plans by
employers and employees, (3) the average administrative expense for
the plans, and (4) the explanations provided in retirement literature
on why employers might decide to sponsor a particular type of pension
plan. We plan to report separately on our efforts to determine the
average employer cost of pension benefits, expressed as a percentage
of salary, and the specific features of pension plans in the private
sector.
BACKGROUND
------------------------------------------------------------ Letter :1
Employer-sponsored pension plans, in combination with Social Security
and personal savings, provide millions of retirees and their families
with retirement income. Employers can provide these benefits using
two basic types of plans--defined benefit (DB) or defined
contribution (DC) pension plans.
For a DB plan, the employer determines retirement benefit amounts for
individual employees using specific formulas that consider certain
factors, such as age, years of service, and salary levels. Employers
bear the full responsibility and risk of providing sufficient funding
to guarantee that the benefits promised by the formulas will be paid.
The amount an employer must contribute to a DB plan can vary from
year-to-year depending on changes in areas such as workforce
demographics or investment earnings.
For a DC plan, the employer establishes an individual account for
each eligible employee and generally promises to make a specified
contribution to that account each year. Employee contributions are
also often allowed or required. The employee's retirement benefits
depend on the total of employer and employee contributions to the
account as well as the investment gains and losses that have
accumulated at the time of retirement. Therefore, the employee bears
the risk of whether the funds available at retirement will provide a
sufficient level of retirement income.
Private employers are not required to provide their employees with
pension benefits; however, those employers that do so must meet
certain minimum legal standards. The Employee Retirement Income
Security Act of 1974 (ERISA) requires that private employers manage
pension plan funds prudently and in the best interests of
participants and their beneficiaries, that participants be informed
of their rights and obligations, and that there be adequate
disclosure of the plan's terms and activities.\1 For DB plans only,
ERISA created a federal insurance program financed primarily by
employer-paid premiums to guarantee the payment of pension benefits
when an underfunded DB plan is terminated.\2
Administrative expenses for pension plans include fees for plan
design, payroll deductions, recordkeeping, trustee services,
regulatory compliance, investment management, and employee
communications.
--------------------
\1 Participants include current employees, retirees (or their
beneficiaries) who are receiving benefits, and former employees who
will be eligible to receive benefits at some future date.
\2 Although public pension plans are exempt from most of ERISA's
provisions, in 1978, Congress enacted a law that extended ERISA's
financial and actuarial reporting standards to federal pension plans
(31 U.S.C. 9503). State and local pension plans are subject to
standards contained in state trust laws and regulations as well as
provisions of the Internal Revenue Code.
RESULTS IN BRIEF
------------------------------------------------------------ Letter :2
Using a computerized database of reports employers have filed with
the Internal Revenue Service (IRS), we found that in 1993, 88 percent
of private employers with single-employer pension plans sponsored
only DC plans. This represented a sizable increase over 1984 when 68
percent of private employers reported they had only DC plans. From
1984 to 1993, the percentage of employers that offered only DB plans
decreased from 24 to 9 percent, and those employers offering both DC
and DB plans decreased from 8 to 3 percent. The growth in DC plans
occurred across all employer sizes and industries. However, the
percentage of employers with 2,500 or more employees that sponsored
both DC and DB plans increased over the same period and nearly half
of these employers continued to sponsor a DB plan in 1993.
The data showed that private employers generally did not require
employees to contribute to DB plans. They also showed that employers
provided a greater proportion of total contributions to DC plans that
were the only plan offered to employees compared with DC plans that
supplemented a DB plan.
From 1988 to 1993, administrative expenses remained fairly constant
for both DC and DB plans.\3 Furthermore, the average reported
administrative expense per participant was the lowest for employers
that offered only DC plans.
Our review of retirement literature revealed a variety of possible
explanations for why employers might prefer DC over DB plans if they
decide to sponsor only one type of plan. These factors included
increasingly complex government regulations for DB plans, a surge in
the number of employers terminating DB plans to acquire capital
assets, and employees' growing preference for pension benefits that
they can retain when they change jobs. The literature also noted
that an employment shift has occurred away from industries in which
employers traditionally favored DB plans toward industries in which
employers favored DC plans. Because the literature primarily
addressed factors that influence private sector decisionmaking on
pension plan design, these factors may or may not be relevant to the
federal government and other public employers.
--------------------
\3 We limited our review of contribution rates and administrative
expenses to 1988 through 1993 because the available data collected
before 1988 were not edited by IRS and were, therefore, less
reliable.
SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :3
To provide the requested information, we used a research database of
computerized IRS Form 5500 reports that is maintained by the
Department of Labor (DOL). ERISA requires all private employers that
sponsor pensions, regardless of their size or industry, to annually
file a separate Form 5500 report for each of their pension plans.
Each report is to include financial, participant, and actuarial data.
Unlike other studies that tended to concentrate on the total number
of each type of plan in existence, our study focused on the number of
employers that used either or both types of pension plans.
We did not independently verify the accuracy of the research
database; however, both IRS and DOL check the data for accuracy and
consistency. It is important to note that these checks cannot
substitute for reviewing each employer's original records--the data
were accurate only to the extent that employers exercised appropriate
care in completing their Form 5500 reports.
As agreed with your office, we limited the scope of our review to
include Form 5500 data for 1984 through 1993--the 10 most recent
years for which the necessary data were available. The research
database did not contain information on employers that did not offer
any type of pension plan. We included only single-employer plans in
our analyses, since the database did not indicate the number of
companies that participated in multiemployer plans. For employers
that offered both DC and DB plans, we could not determine whether
these plans covered the same or different groups of employees. It is
also important to recognize that the contribution and administrative
expense data presented in this report are averages for large groups
of employers. Thus, the data do not represent any individual
employer's pension plan arrangements or practices nor do they
represent the maximum allowable employee and employer contribution
rates for DC plans. Also, pension plan experiences in the entire
private sector may not be generalizable to the federal government.
Appendixes I and II provide more detailed information on our analyses
of the Form 5500 data and the results obtained, respectively.
To obtain insights on what factors employers may consider in deciding
what types of pension plans to provide their employees, we reviewed
the retirement-related literature included in the bibliography at the
end of this report.
We obtained written comments on a draft of this report from DOL
officials. These comments are discussed at the end of this letter.
We did our review in Washington, D.C., from February 1996 to July
1996 in accordance with generally accepted government auditing
standards. Appendix I contains a more detailed discussion of our
objectives, scope, and methodology.
TRENDS IN THE TYPES OF PENSION
PLANS OFFERED BY PRIVATE
EMPLOYERS FROM 1984 TO 1993
------------------------------------------------------------ Letter :4
From 1984 to 1993, the number of private employers that sponsored
single-employer pension plans increased from approximately 455,000 to
almost 565,000.\4 Over this same period, the percentage of all
employers that offered only DC pension plans increased from 68 to 88
percent. The percentage of employers that offered only DB plans
decreased from 24 to 9 percent, and the percentage that offered both
DC and DB plans decreased from 8 to 3 percent.\5 Figure 1 shows the
change in the percentage of employers offering each combination of
pension plans from 1984 to 1993.
Figure 1: Percentage of
Employers Offering Only DC, DC
and DB, and Only DB Plans
(1984-1993)
(See figure in printed
edition.)
Source: DOL analysis of IRS Form 5500 data (see app. II, table
II.1).
The increase in the percentage of employers sponsoring only DC plans
occurred across companies of all sizes. In 1984, the majority of
employers with fewer than 500 employees offered only DC plans, while
the majority of employers with 500 or more employees sponsored DB
plans--either alone or in combination with a DC plan. By 1993, the
only employment-size categories where DB plans continued to be
offered by the majority of companies were employers with 10,000 to
19,999 employees and 20,000 to 49,999 employees. Figures 2 and 3
show the percentage of employers offering the various types of
pension plans by employer size for 1984 and 1993, respectively.
Figure 2: Percentage of
Employers Offering Only DC, DC
and DB, or Only DB Plans, by
Employer Size (1984)
(See figure in printed
edition.)
Source: DOL analysis of IRS Form 5500 data (see app. II, table
II.3).
Figure 3: Percentage of
Employers Offering Only DC, DC
and DB, or Only DB Plans, by
Employer Size (1993)
(See figure in printed
edition.)
Source: DOL analysis of IRS Form 5500 data (see app. II, table
II.3)
The increase in the percentage of employers offering only DC plans
occurred across all industries. For example, the number of employers
in the services industry that sponsored pension plans increased from
183,908 in 1984 to 268,533 in 1993, and the percentage of those
employers that offered only DC plans increased from 71 to 93 percent.
Table 1 shows the numbers of employers that sponsored pension plans
and the proportion of those employers that sponsored only DC plans by
industry for 1984 and 1993.
Table 1
Number of Employers That Sponsored
Pension Plans and Percentage of
Employers That Sponsored Only DC Plans,
by Industry (1984 and 1993)
Industry 1984 1993 1984 1993
-------------------------------------- ------ ------ ------ ------
Agriculture 7,364 9,272 77.9 88.2
Mining 4,041 3,141 64.0 82.4
Construction 29,412 36,286 72.2 92.3
Manufacturing 65,651 71,149 56.8 82.5
Transportation 6,235 7,663 63.1 88.5
Communications and utilities 3,460 5,691 44.6 71.1
Wholesale trade 39,630 41,861 68.7 89.7
Retail trade 44,088 50,571 72.8 93.4
Finance, insurance, and real estate 33,358 41,850 61.7 83.4
Services 183,90 268,53 70.5 92.5
8 3
Tax-exempt organizations 11,391 26,721 44.9 58.2
----------------------------------------------------------------------
Source: DOL analysis of IRS Form 5500 data (see app. II, table
II.4).
The DOL database was not readily amenable to tracking the pension
plans of individual employers over the 1984 to 1993 time period.
Accordingly, we did not determine the extent to which individual
employers may have terminated and replaced their DB plans with DC
plans. However, one study examined 11,950 employers that sponsored
DB plans in 1985. For the 6,974 of these employers that filed a Form
5500 report in 1992, the study found that 1,449 (or about 21 percent)
of the employers had terminated their DB plans and adopted or
retained DC plans.\6
Larger employers continued to use DB plans more extensively than
smaller employers. From 1984 to 1993, an increasing proportion of
the employers with 2,500 or more employees offered both DC and DB
plans. In 1993, nearly half of these employers included a DB plan as
part of their retirement package--with or without a supplementary DC
plan. Table 2 shows the percentage of employers that offered only
DC, DC and DB, or only DB plans by employer size for 1984 and 1993.
Table 2
Percentage of Employers That Offered
Only DC, DC and DB, or Only DB Plans, by
Employer Size (1984 and 1993)
Number of employees 1984 1993 1984 1993 1984 1993
---------------------------------- ---- ---- ---- ---- ---- ----
2-9 69.0 88.8 7.9% 1.2% 23.2 10.0
% % % %
10-24 73.6 91.2 6.7 1.3 19.7 7.5
25-49 71.1 91.6 7.4 1.7 21.5 6.7
50-99 67.8 91.8 8.6 2.0 23.6 6.2
100-249 58.4 88.9 9.3 4.2 32.3 6.9
250-499 51.7 84.1 11.3 8.2 37.0 7.6
500-999 40.7 78.7 17.0 13.1 42.2 8.2
1,000-2,499 27.2 62.4 23.5 22.6 49.3 15.0
2,500-4,999 24.4 52.6 25.3 26.3 50.2 21.2
5,000-9,999 12.6 52.0 30.7 37.9 56.7 10.1
10,000-19,999 18.2 47.4 35.0 37.9 46.8 14.6
20,000-49,999 13.5 33.5 23.3 49.6 63.2 17.0
50,000 or more 12.0 54.7 20.3 32.0 67.7 13.3
----------------------------------------------------------------------
Source: DOL analysis of IRS Form 5500 data (see app. II, table
II.3)
--------------------
\4 Over half of the employers that sponsored pension plans had fewer
than 25 employees.
\5 From 1984 to 1993, the number of participants covered by
single-employer pension plans (1) increased from 8.7 million to 19.9
million for employers that sponsored only DC plans, (2) increased
from 15.2 million to 18.9 million for employers that sponsored both
DC and DB plans, and (3) decreased from 8.5 million to 5.4 million
for employers that sponsored only DB plans. Overall, the majority of
pension plan participants in each year were covered by DB plans in
some manner.
These statistics include only those participants covered by
employers' primary plans. This limitation prevents double- counting
of participants covered by more than one plan; however, it also
undercounts the number of participants covered when employers offer
multiple plans to different groups of employees.
\6 Papke, L.E. "Does 401(k) Introduction Affect Defined Benefit
Plans?" Abstract, 1996.
TRENDS IN THE RATIOS OF
EMPLOYER-TO-EMPLOYEE
CONTRIBUTIONS TO PENSION PLANS
------------------------------------------------------------ Letter :5
In 1993, the average ratio of employer-to-employee contributions for
employers that sponsored only DC plans was 1.8 (that is, employers
contributed $1.80 for each $1.00 contributed by employees). The
average ratio for employers that sponsored only DB plans was 19.7.
For employers that sponsored both DC and DB plans, the ratios were
0.6 and 58.8, respectively. These results suggest that most private
employers did not require employees to contribute to their DB plans.
Furthermore, employers contributed proportionately more to DC plans
that were designed to provide primary pension benefits than they did
to DC plans that supplemented the benefits of a DB plan.
From 1988 to 1993, employers provided a declining proportion of the
total contributions for DC plans and an increasing proportion of the
total contributions for DB plans, regardless of whether they offered
one or both types of plans. The ratio of employer- to-employee
contributions decreased from approximately 3.8 to 1.8 for employers
that sponsored only DC plans and, with considerable fluctuation
during the intervening years, increased from 19.1 in 1988 to 19.7 in
1993 for employers that sponsored only DB plans. Similarly, for
employers that sponsored both DC and DB plans, the ratio decreased
from 0.8 to 0.6 for the DC plans and increased from 20.1 to 58.8 for
the DB plans. Figure 4 shows these ratios by the type of plans
sponsored from 1988 to 1993.
Figure 4: Ratio of
Employer-to-Employee
Contributions to Pension Plans,
by Type of Plan Sponsored
(1988-1993)
(See figure in printed
edition.)
Source: DOL analysis of IRS Form 5500 data (see app. II, tables
II.5 and II.6).
TRENDS IN ADMINISTRATIVE
EXPENSES FOR PRIVATE PENSIONS
------------------------------------------------------------ Letter :6
In 1993, the average reported administrative expense per plan
participant was $103 for employers that sponsored only DC plans and
$157 for employers that sponsored only DB plans. For employers that
sponsored both DC and DB plans, the administrative expense per
participant was $71 and $125, respectively. Therefore, a retirement
benefits package that consisted of only a DC plan was the least
expensive to administer, on average. These results also suggest that
employers that sponsor both DC and DB plans may experience some
administrative efficiencies compared with employers that offer only
one type of pension plan. Although we did not analyze administrative
expenses by employer size, the literature indicates that larger
companies incur lower administrative expenses because of considerable
economies of scale.
From 1988 to 1993, the average reported administrative expense per
participant remained fairly constant for both DC and DB plans.\7
Consequently, growth in administrative expenses did not appear to
explain why employers that already had a DB plan would shift to a DC
plan. However, the lower administrative expense associated with DC
versus DB plans might have been an influential factor for employers
designing a retirement benefits package for the first time. Figure 5
shows the average administrative expense per participant for pension
plans by the type(s) of plans employers offered from 1988 to 1993.
Figure 5: Average
Administrative Expense per
Participant for Pension Plans,
by Type of Plan Employers
Offered (1988-1993)
(See figure in printed
edition.)
Source: DOL analysis of IRS Form 5500 data (see app. II, table
II.7).
--------------------
\7 The administrative expense amounts reported for each year are in
current dollars. Thus, in "real dollars" (adjusted for inflation),
average administrative expenses for each type of plan actually
decreased somewhat over the 1988 to 1993 period.
POSSIBLE EXPLANATIONS OF THE
GROWTH IN DC PLANS PROVIDED BY
THE LITERATURE
------------------------------------------------------------ Letter :7
The literature suggested various factors that may explain why
employers might prefer to offer only DC plans to their employees.
These factors included (1) changes in pension regulations and tax
policy that may favor DC plans over DB plans, (2) increases in the
stock and bond markets that may encourage employers to terminate DB
plans to capture retirement fund assets that exceed plan liabilities,
and (3) changes in workers' preferences that are based on their
expectations of short tenures with several employers.
Since its enactment in 1974, Congress has passed many laws that
amended ERISA and increased the complexity of pension regulations.
For example, employers must comply with certain minimum funding
requirements and maximum funding limits, limits on plan participation
by highly compensated individuals or owners, and time limits on how
long employees must work before being entitled to pension benefits.
Since ERISA was enacted, the plan termination insurance premiums paid
by employers with DB plans have increased from $1 to $19 for each
plan participant and an additional variable premium is required for
underfunded plans. Some studies indicated that the increasing
complexity of pension regulations was more burdensome for DB plans
compared with DC plans--particularly for smaller employers.
Changes in tax policy may also have affected employers' choice of DC
plans over DB plans. For example, in 1978, Congress added section
401(k) to the IRS Tax Code that allowed employers to establish DC
plans to which employers and/or employees could contribute on a
pretax basis and could defer taxes on earnings until funds are
withdrawn from the plan. The number of 401(k) plans offered by
employers that sponsored only DC plans increased from 13,610 in 1984
to 155,384 in 1993.
During the 1980s, a strong stock market and higher long-term interest
rates contributed to an increase in the number of overfunded DB
plans.\8 Employers can terminate an overfunded plan by purchasing
annuities to satisfy the plan's current obligations and "reverting"
any excess assets back to the company.\9 Some employers use the
excess assets for nonpension purposes, such as investment in plant
and equipment or retirement of long-term debt.\10 The literature
indicated that employers frequently replace terminated DB plans with
either a new DB plan or DC plan; however, employers are not legally
required to do so. From 1975 to 1988, employers terminated an
average of 6,500 DB plans each year, although not all of these
terminations were the result of a reversion.
The rising stock and bond markets were also credited with enhancing
the popularity of DC plans with workers who saw their pension account
balances increase dramatically. Employees in DC plans are
immediately entitled to their own contributions and any earnings on
those contributions if they change employers. Moreover, employees in
DC plans are entitled to the contributions made by their employers as
well as the earnings on those contributions after a minimum period of
employment (no more than 7 years). The literature suggests that some
workers may prefer DC plans because they are easier to understand and
workers can take their pension benefits with them if they were to
change jobs.
Some of the factors that may influence private employers to choose
one type of plan over another are not relevant to public employers,
including the federal government. For example, because governments
are not taxpaying entities, they are not influenced by opportunities
to reduce federal taxes on their revenues. Furthermore, governments
that finance their pension plans on a pay-as-you-go basis have no
opportunity to revert excess pension assets for other purposes.\11
Several studies suggested that the reduction in the number of
employers with DB plans was not related to any particular policy
considerations, but resulted largely because of shifts in the U.S.
labor market. Specifically, during the 1980s, employment grew in the
services industry where employers favored DC plans, while employment
declined in the manufacturing industry where employers traditionally
sponsored DB plans. Other studies indicate that many employers will
continue to use DB plans as a human resource tool to attract workers
with certain characteristics, reward long tenured employees, and
achieve desired employee retention patterns. Furthermore, as the
workforce ages and retirement becomes imminent for more older
workers, employees may begin to place more value on DB plans as they
evaluate the sufficiency of their DC accounts. In response to these
considerations, an increasing number of employers are adopting hybrid
retirement programs that combine the features of DC plans and DB
plans.
--------------------
\8 DB pension plans can be underfunded or overfunded in any given
year depending on the accuracy of actuarial assumptions used to
determine past contribution levels as well as the accumulated
investment earnings on contributed funds. In contrast, DC plans are
never underfunded or overfunded--they are fully funded by definition.
\9 When an employer terminates a pension plan, all of the plan's
participants immediately become fully "vested" and eligible to
receive immediate or deferred pension benefits.
\10 Since 1986, when Congress imposed excise taxes on reverted
assets, the number of reversions has diminished substantially. For
example, the Pension Benefit Guaranty Corporation reported that $28
million was reverted from pension plans in 1992 compared with $6.7
billion in 1985.
\11 Funds are maintained for federal employee DB plans, such as the
Civil Service Retirement System and the DB component of the Federal
Employees Retirement System. However, these funds are invested in
nonmarketable, special issue Treasury securities that represent
government obligations to pay future retirement annuities rather than
cash reserves.
AGENCY COMMENTS AND OUR
EVALUATION
------------------------------------------------------------ Letter :8
We requested comments on a draft of this report from the Secretary of
Labor or his designee. In a letter dated September 3, 1996, the
Assistant Secretary of Labor for Pension and Welfare Benefits
provided Labor's comments. The comments were of a technical nature
and suggested that we make it more prominently clear that our results
(1) reflect only those employers that sponsored single-employer
pension plans, (2) may overstate total employer contributions and
understate employee contributions as a result of inconsistent
reporting on the Form 5500, and (3) reflect only those administrative
expenses actually reported on the Form 5500. We clarified the report
where necessary to reflect these comments.
The Assistant Secretary also suggested that the report provide more
information on the number of participants covered by only DC, DC and
DB, or only DB plans. We agree that this information could be very
useful. However, our study was designed with the employer as the
unit of analysis and did not allow us to develop extensive
information on pension participants.
---------------------------------------------------------- Letter :8.1
We are sending copies of this report to the Ranking Minority Member
of the Subcommittee, the Chairman and Ranking Minority Member of the
Senate Governmental Affairs Committee, the Secretary of Labor, and
other interested parties. Copies will also be made available to
others upon request.
Major contributors to this report are listed in appendix III. If you
have any questions, please call me at (202) 512-7680.
Sincerely yours,
Timothy P. Bowling
Associate Director, Federal Management
and Workforce Issues
OBJECTIVES, SCOPE, AND METHODOLOGY
=========================================================== Appendix I
In June 1995, the Chairman, Subcommittee on Civil Service, House
Committee on Government Reform and Oversight, asked us to provide
information on the use of defined contribution pension plans in the
private sector.\1 He said that such information would assist
congressional decisionmakers as they consider the possible design of
a retirement system for new federal hires. The objectives of our
review were to determine
-- how many private employers offered a retirement program
consisting of (1) only defined contribution (DC) plans, (2) only
defined benefit (DB) plans, or (3) a combination of the two
types of plans;
-- the average employer and employee contributions to the plans;\2
-- the average administrative expenses charged to the plans; and
-- the factors that may influence private sector employers when
they decide to offer DC plans versus DB plans as a part of their
employees' retirement package.
To accomplish the first three objectives, we used a research database
of computerized IRS Form 5500 reports maintained by the Pension and
Welfare Benefits Administration of the Department of Labor (DOL).
Under the Employee Retirement Income Security Act of 1974, private
employers must annually file a separate Form 5500 report with the
Internal Revenue Service (IRS) for each of their pension plans. Each
report is to contain financial, participant, and actuarial data. We
did not independently verify the accuracy of the DOL database.
However, IRS edits the reports by checking addition and consistency
on financial and other record items and corresponds with filers to
obtain corrected data before providing the computerized data to DOL.
DOL further edits the Form 5500 data to identify problems, such as
truncated or incorrect entries, before constructing its research
database, which consists of (1) all plans with 100 or more
participants and (2) a 10-percent sample that is weighted to
represent the universe of all plans with fewer than 100 participants.
As agreed with your office, we limited the scope of our review to
include Form 5500 data for 1984 through 1993--the 10 most recent
years for which the DOL database was available. We were unable to
determine the number of current employees covered by plans with fewer
than 100 participants; therefore, our analyses do not address the
number of current employees covered by employers that sponsor only
DC, both DC and DB, or only DB plans. The data shown in this report
reflect averages for large groups of employers and do not represent
any individual employer's pension plan arrangements or practices.
Pension plan experiences of the entire private sector may not be
generalizable to the federal government. Moreover, there are no
obvious or agreed-upon criteria to determine which private-sector
industry type should be or is the most comparable to the federal
government. We relied on a DOL programmer with extensive knowledge
of the Form 5500 database to complete all of the analyses described
in this appendix.
To determine the number of employers that sponsored only DC plans,
only DB plans, or both types of plans, we sorted the data for each
year on the basis of (1) a unique employer identification number and
(2) the indicated plan type included on each Form 5500 report.
Because of incomplete data, we did not include "multiemployer" plans
in our study.\3 According to the Employee Benefit Research Institute
(EBRI), multiemployer plans are generally DB plans; they represented
0.4 percent of all plans for 1992.
We stratified our analyses by employer size and industry type using
the same category breakouts included in DOL's annual reports on
private sector pensions. When we stratified the data, we included
only those employers for which we could determine the number of
employees or the appropriate industry, respectively, from the
database. Table I.1 shows the number of employers with indeterminate
employer size or industry category for each year in our study.
Table I.1
Number of Employers With Incomplete Form
5500 Data (1984-1993)
Number of
employers Employer
included size Industry
in not not
Year analyses reported reported
--------------------------------- ---------- ----------- ----------
1984 455,271 22,639 26,711
1985 476,430 22,494 31,167
1986 545,881 36,051 40,808
1987 567,644 41,059 48,265
1988 568,338 24,568 7,095
1989 549,635 14,513 2,777
1990 538,553 72,403 3,105
1991 540,193 77,808 1,828
1992 559,840 78,715 1,502
1993 564,596 76,570 1,753
----------------------------------------------------------------------
\a For some employers, we could not determine either employer size or
industry category--these employers are counted in both columns.
Source: DOL analysis of IRS Form 5500 data.
According to the DOL programmer, IRS began editing the financial data
included on the Form 5500 database in 1988; thus, the financial data
for the years preceding 1988 were less reliable. Therefore, we only
included the data for 1988 through 1993 for our analyses of employer
and employee contributions and administrative expenses.
To determine the average employer and employee contribution to plans
sponsored by employers with only DC plans, only DB plans, or both
types of plans, we divided the sum of all reported employer or
employee contributions by the sum of all participants covered by the
plans. We included only participants for those plans for which
employer or employee contributions were reported. According to a DOL
representative, plans that reported 100-percent employee
participation tended to be ones where employers make automatic
contributions to the plan on behalf of their employees. Therefore,
we did not include these plans when computing employee contribution
amounts. It is important to note that employers are not required to
make contributions to DB plans each year--contribution amounts are
determined on the basis of current actuarial assumptions and the
market value of fund assets.
To determine the average administrative expense per participant of
plans sponsored by employers with only DC plans, only DB plans, or
both types of plans, we divided the sum of all reported
administrative expenses by the sum of all participants covered by the
plans. We included only participants for those plans that employers
reported administrative expenses. According to DOL representatives,
employers generally report only those administrative expenses that
are actually charged to the plans and exclude expenses taken directly
out of employee contributions or investment returns. Therefore, the
administrative expenses may be underreported in these data.
To address the fourth objective--to identify factors that may
influence private employers to sponsor DC rather than DB plans--we
reviewed retirement-related literature that we identified using an
on-line business periodical system and bibliographies from EBRI and
Congressional Research Service publications.
--------------------
\1 A defined contribution pension plan is one in which retirement
benefits depend upon the amounts contributed to individual employee
accounts and the investment experience of that account up to the time
of retirement. In contrast, the retirement benefits for a defined
benefit pension plan are computed on the basis of a definite formula
generally reflecting years of service and/or a percentage of salary.
\2 For all analyses described in this appendix, the term "average"
refers to an arithmetic average, or mean. Another measure of central
tendency, such as the median, might have resulted in different
findings.
\3 A multiemployer plan is one to which more than one employer is
required to contribute pursuant to one or more collective bargaining
agreements. Only one Form 5500 is filed for each multiemployer plan,
using one of the sponsoring employers' identification numbers.
Therefore, we could not identify all of the participating employers.
IRS FORM 5500 ANALYSIS RESULTS
========================================================== Appendix II
Table II.1
Number of Private Sector Employers, by
Type of Pension Plan Offered (1984-
1993)
Total
Number Percentag Number Percentag Number Percentag number
Yea of e of e of e of
r employers of total employers of total employers of total employers
--- --------- --------- --------- --------- --------- --------- ---------
198 308,352 67.7 37,884 8.3 109,035 23.9 455,271
4
198 327,854 68.8 36,015 7.6 112,561 23.6 476,430
5
198 397,639 72.8 34,691 6.4 113,551 20.8 545,881
6
198 427,935 75.4 31,540 5.6 108,169 19.1 567,644
7
198 443,954 78.1 26,694 4.7 97,690 17.2 568,338
8
198 444,474 80.9 24,953 4.5 80,208 14.6 549,635
9
199 450,564 83.7 18,779 3.5 69,210 12.9 538,553
0
199 458,791 84.9 16,708 3.1 64,694 12.0 540,193
1
199 487,979 87.2 16,781 3.0 55,080 9.8 559,840
2
199 498,901 88.4 14,903 2.6 50,792 9.0 564,596
3
--------------------------------------------------------------------------------
Note: This table includes only those employers that sponsored
single-employer pension plans.
Source: DOL analysis of IRS Form 5500 data.
Table II.2
Number of Participants Covered by
Private Pension Plans, by Type of Plan
Offered (1984-1993)
(Participant numbers in thousands)
Total
number
Number of Percentag Number of Percentag Number of Percentag of
Ye participan e participan e participan e participan
ar ts of total ts of total ts of total ts
-- ---------- --------- ---------- --------- ---------- --------- ----------
19 8,661 26.8 15,160 46.9 8,498 26.3 32,319
84
19 9,954 29.6 15,903 47.3 7,739 23.0 33,596
85
19 11,158 31.9 16,502 47.2 7,303 20.9 34,963
86
19 12,140 34.0 16,480 46.2 7,084 19.8 35,704
87
19 13,765 36.8 16,810 44.9 6,857 18.3 37,432
88
19 14,996 38.5 17,652 45.3 6,327 16.2 38,975
89
19 15,731 40.8 16,710 43.4 6,073 15.8 38,514
90
19 16,558 41.9 17,452 44.1 5,551 14.0 39,561
91
19 18,914 44.7 18,163 42.9 5,279 12.5 42,356
92
19 19,874 45.1 18,854 42.7 5,375 12.2 44,103
93
-----------------------------------------------------------------------------------
Note: This table includes participants who were covered by
single-employer pension plans. Furthermore, only participants
covered by employers' primary plans are included to prevent
double-counting of those participants also covered by one or more
supplementary plans. These totals undercount participants when
employers offered multiple pension plans to different groups of
employees. Participants include current employees, retirees (or
their beneficiaries) who are receiving benefits, and former employees
who will be eligible to receive benefits at some future date.
Source: DOL analysis of IRS Form 5500 data.
Table II.3
Number of Private Sector Employers, by
Employer Size and Type of Pension Plan
Offered (1984-1993)
Total
Number Number Number Number number
of of Percentag of Percentag of Percentag of
employee Ye employ e employ e employ e employers
s ar ers of total ers of total ers of total \a
-------- -- ------ --------- ------ --------- ------ --------- ---------
2-9 19 143,02 69.0 16,321 7.9 48,031 23.2 207,381
84 9
19 146,07 69.3 13,284 6.3 51,506 24.4 210,860
85 0
19 189,39 74.9 11,022 4.4 52,615 20.8 253,030
86 3
19 203,21 77.1 9,973 3.8 50,364 19.1 263,553
87 6
19 210,74 80.3 7,725 2.9 44,129 16.8 262,603
88 9
19 206,58 82.2 7,095 2.8 37,769 15.0 251,453
89 9
19 178,72 84.4 4,155 2.0 28,915 13.7 211,794
90 4
19 174,45 86.6 2,944 1.5 24,053 11.9 201,447
91 0
19 174,17 87.7 3,356 1.7 21,113 10.6 198,640
92 1
19 174,92 88.8 2,398 1.2 19,620 10.0 196,941
93 3
10-24 19 70,791 73.6 6,484 6.7 18,941 19.7 96,216
84
19 77,356 73.2 6,985 6.6 21,278 20.1 105,619
85
19 86,401 75.4 7,053 6.2 21,128 18.4 114,582
86
19 89,461 77.3 5,685 4.9 20,554 17.8 115,700
87
19 99,757 80.5 5,031 4.1 19,110 15.4 123,898
88
19 102,32 83.8 4,626 3.8 15,098 12.4 122,050
89 6
19 95,770 85.8 2,573 2.3 13,245 11.9 111,588
90
19 97,274 85.6 2,902 2.6 13,459 11.8 113,635
91
19 105,47 89.9 2,171 1.9 9,640 8.2 117,290
92 9
19 109,18 91.2 1,519 1.3 9,039 7.5 119,743
93 5
25-49 19 35,449 71.1 3,701 7.4 10,710 21.5 49,860
84
19 37,655 72.8 4,097 7.9 9,956 19.3 51,708
85
19 39,973 75.1 4,000 7.5 9,256 17.4 53,229
86
19 44,496 78.1 2,674 4.7 9,780 17.2 56,950
87
19 48,653 80.3 3,006 5.0 8,925 14.7 60,584
88
19 52,746 84.5 2,522 4.0 7,122 11.4 62,390
89
19 48,343 86.4 1,702 3.0 5,908 10.6 55,953
90
19 51,240 88.4 1,227 2.1 5,466 9.4 57,933
91
19 59,043 90.6 1,365 2.1 4,767 7.3 65,175
92
19 61,934 91.6 1,117 1.7 4,531 6.7 67,582
93
50-99 19 21,347 67.8 2,707 8.6 7,442 23.6 31,496
84
19 24,481 70.6 2,567 7.4 7,613 22.0 34,661
85
19 26,900 72.6 3,020 8.2 7,124 19.2 37,044
86
19 28,911 75.9 2,926 7.7 6,265 16.4 38,102
87
19 30,336 76.9 1,951 4.9 7,150 18.1 39,437
88
19 33,821 82.7 1,736 4.2 5,330 13.0 40,887
89
19 33,882 87.2 1,000 2.6 3,954 10.2 38,836
90
19 34,933 88.1 976 2.5 3,737 9.4 39,646
91
19 38,388 90.5 882 2.1 3,134 7.4 42,404
92
19 39,757 91.8 865 2.0 2,691 6.2 43,313
93
100-249 19 13,461 58.4 2,132 9.3 7,451 32.3 23,044
84
19 16,212 64.0 1,989 7.9 7,126 28.1 25,327
85
19 16,802 65.4 2,131 8.3 6,751 26.3 25,684
86
19 18,396 70.4 2,272 8.7 5,463 20.9 26,131
87
19 21,152 73.7 1,848 6.4 5,712 19.9 28,712
88
19 23,400 78.6 1,975 6.6 4,399 14.8 29,774
89
19 22,442 84.4 1,302 4.9 2,829 10.6 26,573
90
19 24,192 86.5 1,087 3.9 2,680 9.6 27,959
91
19 27,946 86.8 1,433 4.4 2,835 8.8 32,214
92
19 29,695 88.9 1,394 4.2 2,310 6.9 33,399
93
250-499 19 4,552 51.7 995 11.3 3,256 37.0 8,803
84
19 5,355 56.8 1,158 12.3 2,920 31.0 9,433
85
19 5,426 58.1 1,117 12.0 2,794 29.9 9,337
86
19 6,140 59.7 1,302 12.7 2,843 27.6 10,285
87
19 6,854 63.8 1,201 11.2 2,684 25.0 10,739
88
19 7,753 70.6 1,166 10.6 2,063 18.8 10,982
89
19 7,298 76.3 943 9.9 1,326 13.9 9,567
90
19 7,529 78.7 938 9.8 1,095 11.4 9,562
91
19 9,442 82.7 941 8.2 1,036 9.1 11,419
92
19 9,969 84.1 976 8.2 906 7.6 11,851
93
500-999 19 2,041 40.7 853 17.0 2,116 42.2 5,010
84
19 2,568 47.7 960 17.8 1,861 34.5 5,389
85
19 2,628 47.0 1,051 18.8 1,910 34.2 5,589
86
19 2,721 49.8 987 18.1 1,753 32.1 5,461
87
19 3,433 56.5 1,154 19.0 1,492 24.5 6,079
88
19 3,624 59.1 1,177 19.2 1,332 21.7 6,133
89
19 3,390 68.5 782 15.8 779 15.7 4,951
90
19 3,598 73.0 762 15.5 570 11.6 4,930
91
19 4,481 75.9 860 14.6 559 9.5 5,900
92
19 5,246 78.7 871 13.1 550 8.2 6,667
93
1,000- 19 1,122 27.2 969 23.5 2,037 49.3 4,128
2,499 84
19 1,375 31.3 1,159 26.4 1,862 42.4 4,396
85
19 1,469 35.2 1,240 29.7 1,464 35.1 4,173
86
19 1,570 36.4 1,158 26.9 1,584 36.7 4,312
87
19 2,165 43.2 1,242 24.8 1,609 32.1 5,016
88
19 2,235 46.7 1,265 26.4 1,289 26.9 4,789
89
19 1,917 55.0 926 26.6 643 18.4 3,486
90
19 2,138 58.0 946 25.7 602 16.3 3,686
91
19 2,593 62.7 963 23.3 577 14.0 4,133
92
19 2,730 62.4 988 22.6 654 15.0 4,372
93
2,500- 19 495 24.4 513 25.3 1,017 50.2 2,025
4,999 84
19 600 29.3 582 28.4 865 42.3 2,047
85
19 697 33.8 598 29.0 768 37.2 2,063
86
19 680 36.1 569 30.2 636 33.7 1,885
87
19 597 29.2 641 31.3 810 39.6 2,048
88
19 785 35.9 678 31.0 723 33.1 2,186
89
19 645 48.4 444 33.3 244 18.3 1,333
90
19 670 47.9 494 35.3 236 16.9 1,400
91
19 899 53.4 485 28.8 300 17.8 1,684
92
19 987 52.6 493 26.3 398 21.2 1,878
93
5,000- 19 170 12.6 414 30.7 764 56.7 1,348
9,999 84
19 186 14.4 488 37.7 619 47.9 1,293
85
19 247 20.0 453 36.6 538 43.5 1,238
86
19 385 27.7 429 30.9 575 41.4 1,389
87
19 482 34.5 486 34.8 430 30.8 1,398
88
19 439 32.3 504 37.1 417 30.7 1,360
89
19 412 47.9 308 35.8 141 16.4 861
90
19 403 46.2 324 37.2 145 16.6 872
91
19 411 51.8 308 38.8 74 9.3 793
92
19 468 52.0 341 37.9 91 10.1 900
93
10,000- 19 158 18.2 304 35.0 407 46.8 869
19,999 84
19 204 16.3 367 29.4 677 54.2 1,248
85
19 202 14.5 348 25.0 840 60.4 1,390
86
19 172 16.5 375 36.0 496 47.6 1,043
87
19 330 26.5 395 31.8 519 41.7 1,244
88
19 317 26.4 442 36.8 441 36.8 1,200
89
19 184 36.2 239 47.0 85 16.7 508
90
19 282 45.8 270 43.8 64 10.4 616
91
19 331 46.7 232 32.7 146 20.6 709
92
19 295 47.4 236 37.9 91 14.6 622
93
20,000- 19 209 13.5 361 23.3 981 63.2 1,551
49,999 84
19 118 11.2 304 28.8 634 60.0 1,056
85
19 253 18.3 337 24.4 791 57.3 1,381
86
19 206 17.1 324 26.9 674 56.0 1,204
87
19 249 23.6 378 35.8 429 40.6 1,056
88
19 371 32.9 339 30.1 416 36.9 1,126
89
19 174 41.6 144 34.4 100 23.9 418
90
19 154 36.3 185 43.6 85 20.0 424
91
19 195 42.4 183 39.8 82 17.8 460
92
19 150 33.5 222 49.6 76 17.0 448
93
50,000 19 108 12.0 182 20.3 607 67.7 897
or more 84
19 90 10.0 265 29.5 543 60.5 898
85
19 260 23.9 284 26.1 546 50.1 1,090
86
19 129 22.8 179 31.7 257 45.5 565
87
19 142 14.9 188 19.7 624 65.4 954
88
19 176 22.2 232 29.2 386 48.6 794
89
19 154 54.6 84 29.8 44 15.6 282
90
19 119 43.4 92 33.6 63 23.0 274
91
19 166 54.2 103 33.7 37 12.1 306
92
19 169 54.7 99 32.0 41 13.3 309
93
--------------------------------------------------------------------------------
\a This table includes only those employers that sponsored
single-employer pension plans for which we could determine the number
of employees.
Source: DOL analysis of IRS Form 5500 data.
Table II.4
Number of Private Sector Employers, by
Industry and Type of Pension Plan
Offered (1984-1993)
Total
Number Number Number number
of Percentag of Percentag of Percentag of
Ye employ e employ e employ e employers
Industry ar ers of total ers of total ers of total \a
-------- -- ------ --------- ------ --------- ------ --------- ---------
Agricult 19 5,736 77.9 368 5.0 1,260 17.1 \7,364
ure 84
19 5,172 69.3 361 4.8 1,934 25.9 7,467
85
19 6,825 69.4 268 2.7 2,741 27.9 9,834
86
19 8,445 80.3 321 3.1 1,750 16.6 10,516
87
19 8,828 81.6 347 3.2 1,645 15.2 10,820
88
19 7,296 84.9 140 1.6 1,154 13.4 8,590
89
19 8,177 88.1 177 1.9 931 10.0 9,285
90
19 8,424 85.8 297 3.0 1,092 11.1 9,813
91
19 8,036 78.1 181 1.8 2,066 20.1 10,283
92
19 8,175 88.2 189 2.0 908 9.8 9,272
93
Mining 19 2,588 64.0 398 9.8 1,055 26.1 4,041
84
19 2,762 65.9 268 6.4 1,160 27.7 4,190
85
19 2,781 67.1 248 6.0 1,116 26.9 4,145
86
19 2,837 69.3 231 5.6 1,026 25.1 4,094
87
19 3,314 74.6 183 4.1 945 21.3 4,442
88
19 2,558 74.1 240 7.0 655 19.0 3,453
89
19 2,742 77.3 304 8.6 503 14.2 3,549
90
19 2,967 77.3 232 6.0 641 16.7 3,840
91
19 2,867 84.3 172 5.1 363 10.7 3,402
92
19 2,590 82.4 200 6.4 351 11.2 3,141
93
Construc 19 21,227 72.2 2,124 7.2 6,061 20.6 29,412
tion 84
19 23,437 75.7 2,134 6.9 5,385 17.4 30,956
85
19 26,771 78.8 1,668 4.9 5,520 16.3 33,959
86
19 29,109 80.1 1,421 3.9 5,795 16.0 36,325
87
19 31,439 82.5 1,546 4.1 5,130 13.5 38,115
88
19 30,828 85.1 1,231 3.4 4,179 11.5 36,238
89
19 32,988 87.2 879 2.3 3,984 10.5 37,851
90
19 30,982 87.3 720 2.0 3,776 10.6 35,478
91
19 32,530 91.6 630 1.8 2,355 6.6 35,515
92
19 33,485 92.3 761 2.1 2,040 5.6 36,286
93
Manufact 19 37,270 56.8 6,562 10.0 21,819 33.2 65,651
uring 84
19 38,634 60.1 6,504 10.1 19,093 29.7 64,231
85
19 40,737 61.7 6,399 9.7 18,930 28.7 66,066
86
19 41,939 64.5 5,914 9.1 17,139 26.4 64,992
87
19 48,760 68.2 5,778 8.1 16,930 23.7 71,468
88
19 49,226 72.0 5,588 8.2 13,590 19.9 68,404
89
19 49,689 75.5 4,932 7.5 11,152 17.0 65,773
90
19 51,204 76.9 4,812 7.2 10,599 15.9 66,615
91
19 57,457 82.0 4,226 6.0 8,400 12.0 70,083
92
19 58,724 82.5 4,301 6.0 8,124 11.4 71,149
93
Transpor 19 3,932 63.1 481 7.7 1,822 29.2 6,235
tation 84
19 4,123 67.8 365 6.0 1,594 26.2 6,082
85
19 4,606 70.4 415 6.3 1,525 23.3 6,546
86
19 4,944 76.0 369 5.7 1,193 18.3 6,506
87
19 5,138 74.5 307 4.4 1,454 21.1 6,899
88
19 5,853 81.3 314 4.4 1,028 14.3 7,195
89
19 5,352 83.7 223 3.5 820 12.8 6,395
90
19 6,337 83.4 247 3.3 1,014 13.3 7,598
91
19 7,087 89.7 231 2.9 581 7.4 7,899
92
19 6,780 88.5 235 3.1 648 8.5 7,663
93
Communic 19 1,543 44.6 516 14.9 1,401 40.5 3,460
ations 84
and
utiliti
es
19 1,950 49.6 672 17.1 1,309 33.3 3,931
85
19 2,341 53.8 696 16.0 1,317 30.2 4,354
86
19 2,722 60.1 695 15.4 1,109 24.5 4,526
87
19 2,878 62.8 462 10.1 1,240 27.1 4,580
88
19 3,153 65.9 580 12.1 1,054 22.0 4,787
89
19 3,061 71.7 602 14.1 606 14.2 4,269
90
19 3,487 71.3 530 10.8 874 17.9 4,891
91
19 4,130 69.7 950 16.0 843 14.2 5,923
92
19 4,049 71.1 872 15.3 770 13.5 5,691
93
Wholesal 19 27,208 68.7 3,714 9.4 8,708 22.0 39,630
e trade 84
19 30,476 72.9 2,798 6.7 8,533 20.4 41,807
85
19 30,683 72.8 3,114 7.4 8,375 19.9 42,172
86
19 29,235 74.3 2,283 5.8 7,835 19.9 39,353
87
19 38,223 79.7 2,177 4.5 7,565 15.8 47,965
88
19 35,652 80.8 2,528 5.7 5,935 13.4 44,115
89
19 33,702 83.4 1,588 3.9 5,100 12.6 40,390
90
19 36,437 85.6 1,198 2.8 4,929 11.6 42,564
91
19 35,837 87.7 1,401 3.4 3,642 8.9 40,880
92
19 37,532 89.7 1,124 2.7 3,205 7.7 41,861
93
Retail 19 32,109 72.8 2,943 6.7 9,036 20.5 44,088
trade 84
19 32,596 72.6 2,964 6.6 9,341 20.8 44,901
85
19 43,855 78.5 2,566 4.6 9,457 16.9 55,878
86
19 36,543 78.8 2,413 5.2 7,410 16.0 46,366
87
19 38,522 79.7 1,959 4.1 7,872 16.3 48,353
88
19 47,085 85.1 1,582 2.9 6,634 12.0 55,301
89
19 45,957 88.1 1,343 2.6 4,839 9.3 52,139
90
19 44,601 89.1 1,004 2.0 4,458 8.9 50,063
91
19 47,010 92.0 769 1.5 3,341 6.5 51,120
92
19 47,216 93.4 643 1.3 2,712 5.4 50,571
93
Finance, 19 20,573 61.7 3,182 9.5 9,603 28.8 33,358
insuran 84
ce, and
real
estate
19 23,440 61.3 3,476 9.1 11,309 29.6 38,225
85
19 24,571 65.4 2,979 7.9 10,008 26.6 37,558
86
19 27,264 67.3 3,065 7.6 10,181 25.1 40,510
87
19 33,897 73.0 3,010 6.5 9,508 20.5 46,415
88
19 29,790 74.1 2,764 6.9 7,644 19.0 40,198
89
19 28,390 76.9 1,736 4.7 6,815 18.4 36,941
90
19 33,744 78.7 2,031 4.7 7,081 16.5 42,856
91
19 34,372 82.1 2,231 5.3 5,247 12.5 41,850
92
19 34,900 83.4 1,876 4.5 5,074 12.1 41,850
93
Services 19 129,69 70.5 16,389 8.9 37,828 20.6 183,908
84 1
19 132,85 71.9 14,109 7.6 37,758 20.4 184,717
85 0
19 171,10 76.4 13,374 6.0 39,403 17.6 223,883
86 6
19 192,22 79.3 12,189 5.0 37,898 15.6 242,313
87 6
19 213,58 82.3 9,801 3.8 36,191 13.9 259,580
88 8
19 216,34 84.8 8,857 3.5 29,985 11.8 255,189
89 7
19 225,37 87.2 6,338 2.5 26,655 10.3 258,366
90 3
19 225,42 89.2 4,808 1.9 22,405 8.9 252,639
91 6
19 240,52 91.8 4,663 1.8 16,835 6.4 262,023
92 5
19 248,37 92.5 3,558 1.3 16,605 6.2 268,533
93 0
Tax- 19 5,112 44.9 470 4.1 5,809 51.0 11,391
exempt 84
organiz
ations
19 7,845 41.9 1,103 5.9 9,776 52.2 18,724
85
19 9,572 46.4 1,573 7.6 9,493 46.0 20,638
86
19 11,351 47.8 1,418 6.0 10,969 46.2 23,738
87
19 12,985 57.4 1,037 4.6 8,585 38.0 22,607
88
19 14,338 61.3 1,001 4.3 8,050 34.4 23,389
89
19 12,504 61.2 515 2.5 7,417 36.3 20,436
90
19 13,496 61.5 823 3.8 7,627 34.8 21,946
91
19 16,981 57.9 1,230 4.2 11,121 37.9 29,332
92
19 15,558 58.2 1,073 4.0 10,090 37.8 26,721
93
--------------------------------------------------------------------------------
\a This table includes only those employers that sponsored
single-employer pension plans for which we could determine the
appropriate industry category.
Source: DOL analysis of IRS Form 5500 data.
Table II.5
Average Employer and Employee
Contributions to Pension Plans for
Employers Offering Only DC or Only DB
Plans (1988-1993)
Employer Employee Ratio Employer Employee Ratio
Year amount amount \a amount amount \a
---------------- -------- -------- ----- -------- -------- -----
1988 $1,708 $447 3.8 $1,315 $69 19.1
1989 2,239 484 4.6 1,379 50 27.6
1990 1,753 538 3.3 1,308 54 24.2
1991 1,642 612 2.7 1,555 46 33.8
1992 1,595 780 2.0 1,565 43 36.4
1993 1,597 889 1.8 1,736 88 19.7
----------------------------------------------------------------------
Note 1: This table includes only those employers that sponsored
single-employer pension plans. Furthermore, the average contribution
amounts were computed only for plans with reported employer and/or
employee contributions. It is important to note that employers are
not necessarily required to make contributions to DB plans each
year--contribution amounts are determined on the basis of current
actuarial assumptions and the market value of fund assets. Because
contribution amounts are averages across all plans, they do not
represent the maximum amounts employees are allowed to contribute nor
the maximum employer matching contributions allowed by the plans.
Note 2: Pension plan experiences of the entire private sector may
not be generalizable to the federal government. Moreover, there are
no obvious or agreed upon criteria to determine which private-sector
industry type should be or is the most comparable to the federal
government.
\a This column shows the ratio of the average employer contribution
divided by the average employee contribution.
Source: DOL analysis of IRS Form 5500 data.
Table II.6
Average Employer and Employee
Contributions to Pension Plans, by Type
of Plan for Employers Offering Both DB
and DC Plans (1988-1993)
Ye Employer Employee Ratio Employer Employee Ratio Employer Employee Ratio
ar amount amount \a amount amount \a amount amount \a
-- -------- -------- ----- -------- -------- ----- -------- -------- -----
19 $1,305 $65 20.1 $1,015 $1,276 0.8 $1,095 $1,404 0.8
88
19 1,169 70 16.7 1,147 1,307 0.9 1,003 1,331 0.8
89
19 1,176 54 21.8 1,027 1,369 0.8 1,175 1,411 0.8
90
19 1,675 62 27.0 1,102 1,551 0.7 1,297 1,575 0.8
91
19 2,187 53 41.3 1,132 1,710 0.7 1,073 1,797 0.6
92
19 3,468 59 58.8 1,165 1,841 0.6 1,372 1,804 0.8
93
-----------------------------------------------------------------------------------
Note 1: For employers that sponsored both DB and DC plans, the
database that we analyzed categorizes the DB plan as "primary" and
the DC plan as "supplementary," with very few exceptions. When more
than one DC plan is offered, the largest one is generally categorized
as the first supplementary plan.
Note 2: This table includes only those employers that sponsored
single-employer pension plans. Furthermore, the average contribution
amounts were computed only for plans with reported employer and/or
employee contributions. It is important to note that employers are
not necessarily required to make contributions to DB plans each
year--contribution amounts are determined on the basis of current
actuarial assumptions and the market value of fund assets. Because
contribution amounts are averages across all plans, they do not
represent the maximum amounts employees are allowed to contribute nor
the maximum employer matching contributions allowed by the plans.
Note 3: Pension plan experiences of the entire private sector are
not generalizable to the federal government. Moreover, there are no
obvious or agreed upon criteria to determine which private-sector
industry type should be or is the most comparable to the federal
government.
\a This column shows the ratio of the average employer contribution
divided by the average employee contribution.
Source: DOL analysis of IRS Form 5500 data.
Table II.7
Average Administrative Expense per
Participant for Pension Plans, by Type
of Plan Offered (1988-1993)
Defined
contributi Defined
on benefit
Year only DC DB only
---------------------- ---------- ---------- ---------- ----------
1988 $109 $45 $141 $137
1989 154 64 95 142
1990 105 45 118 147
1991 115 47 121 155
1992 103 54 118 155
1993 103 71 125 157
----------------------------------------------------------------------
Note: Administrative expenses include fees for accounting, contract
administration, investment advice and management, legal services,
valuations/appraisals, and trustee services. We computed average
administrative expense only for single-employer plans that reported
administrative expenses.
\a For employers that sponsored both DB and DC plans, the database
that we analzyed categorized the DB plan as "primary" and the DC plan
as "supplementary," with very few exceptions. Therefore, we included
the average reported administrative expense (1) for primary plans in
the DB column and (2) for supplementary plans in the DC column.
Source: DOL analysis of IRS Form 5500 data.
MAJOR CONTRIBUTORS TO THIS REPORT
========================================================= Appendix III
GENERAL GOVERNMENT DIVISION,
WASHINGTON, D.C.
Robert E. Shelton, Assistant Director, Federal Management and
Workforce Issues
Laura G. Shumway, Assignment Manager
Jennifer S. Cruise, Evaluator-in-Charge
Gregory H. Wilmoth, Senior Social Science Analyst
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*** End of document. ***