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. ***