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Is Pension Inequality Growing?


  • Nadia Karamcheva
  • Geoffrey Sanzenbacher


Employer-sponsored pensions are an important source of retirement income and often make the difference between having a comfortable retirement and just scraping by. Over the past two decades, pension sponsorship and participation have remained relatively constant. At any given point in time, roughly half of private sector workers age 25-64 are covered by pension plans. This constancy, however, masks a growing inequality in pension participation by income that has become more pronounced with the shift from traditional defined benefit plans to defined contribution plans. This brief documents and explores trends in pension participation by income. The first section discusses the relative importance of private pensions as a source of retirement income. The second section examines trends in pension sponsorship and participation rates. The third section explores why some individuals choose not to participate. The final section concludes that the shift to defined contribution plans has been a significant factor in the drop in coverage for low earners.

Suggested Citation

  • Nadia Karamcheva & Geoffrey Sanzenbacher, 2010. "Is Pension Inequality Growing?," Issues in Brief ib2009-10-1, Center for Retirement Research, revised Jan 2010.
  • Handle: RePEc:crr:issbrf:ib2009-10-1

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    References listed on IDEAS

    1. Gur Huberman & Sheena Iyengar & Wei Jiang, 2007. "Defined Contribution Pension Plans: Determinants of Participation and Contributions Rates," Journal of Financial Services Research, Springer;Western Finance Association, vol. 31(1), pages 1-32, February.
    2. Alicia H. Munnell & Francesca Golub-Sass & Dan Muldoon, 2009. "An Update on 401(k) Plans: Insights From the 2007 SCF," Issues in Brief ib2009-9-5, Center for Retirement Research, revised Mar 2009.
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    Cited by:

    1. Karamcheva, Nadia S. & Sanzenbacher, Geoffrey, 2014. "Bridging the gap in pension participation: how much can universal tax-deferred pension coverage hope to achieve?," Journal of Pension Economics and Finance, Cambridge University Press, vol. 13(04), pages 439-459, October.
    2. Butrica, Barbara A. & Karamcheva, Nadia S, 2015. "Automatic Enrollment, Employer Match Rates and Employee Compensation in 401(k) Plans," IZA Discussion Papers 8807, Institute for the Study of Labor (IZA).

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