It’s been almost a year since Employee Benefit Research Institute first questioned 401k participation rates and data from a popular and widely-cited government source. Now it says confusion and discrepancies have only increased in the time since.
At issue is the Annual Social and Economic Supplement to the Census Bureau’s findings in its Current Population Survey, one of the most-cited aggregates of data for retirement-age Americans. The Census Bureau redesigned its income questions in a 2014 survey in response to reports that the survey has misclassified and generally under-reported income.
The redesign of the questionnaire resulted in much lower estimates of the percentages of workers who participate in an employment-based retirement plan. For example, EBRI notes:
- The percentage of full-time, full-year wage and salary workers ages 21 – 64 participating in a retirement plan was more than 11 percentage points lower in 2015 after the redesign relative to the 2013 estimate. This translates to more than 9 million fewer individuals participating in an employment-based retirement plan.
- The groups of workers most affected were those with the highest likelihoods of participation—older, higher earners, and employees of larger employers.
“Unless modifications are made to the CPS, using the CPS for estimating the participation in pension and other retirement plans will provide misleading and inaccurate estimates and conclusions,” it says. “The support for this assessment includes the much lower level of participation found under the redesigned questionnaire estimates … and the inconsistent time series in the participation levels in CPS relative to other federal government surveys.”
“Rather modest modifications” could be made within the CPS questionnaire to improve the retirement plan participation estimates, EBRI argues.
“Until that time, any person or organization using the data or those reading analyses from the data need to be aware of the issues with the CPS data on pension and retirement plan participation. The estimates from the most recent surveys could easily be misconstrued as an erosion in coverage, as opposed to an issue with the data.”