Retirement Plans: Workers’ Access & Support
The decline in the prevalence of defined benefit (DB) plans—and the decreasing likelihood that a worker will remain in one job long enough to qualify for DB benefits—make it increasingly important that workers have access to the portable benefits offered by defined contribution (DC) plans, such as 401(k) plans.
Workers widely acknowledge the value of DC plans: ICI studies consistently show that workers highly value both the incentives that encourage them to save and the ability of these plans to help them accumulate substantial savings for retirement.
A strong majority of US households disagree with changing the current tax treatment of retirement accounts.
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American Views on Defined Contribution Plan Saving, 2020 (pdf)
Feb 24, 2021
Access to Retirement Plans
Analysis of government survey data has found that, in 2011, nearly three-quarters of workers most likely to be focused on saving for retirement had access to a retirement plan—including defined benefit and defined contribution plans—through their own employer or their spouse’s employer, and that 93 percent of those with access participated.
More importantly, 81 percent of working households near retirement in 2010 had accrued benefits in employer-sponsored retirement plans, IRAs, or both.
Who Participates in Retirement Plans, 2017 (pdf)
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Mobile Workforce, Portable Benefits
American workers are mobile, moving from job to job or even from career to career. That puts a premium on retirement benefits that are “portable”—benefits that can travel with a worker and continue to grow throughout his or her lifetime. Defined contribution (DC) plans, such as 401(k) plans, provide this portability.
Taking into account the risks faced by retirement plan participants—for example, the investment risk faced by workers in DC plans and the job-turnover risk faced by workers in defined benefit (DB) plans—several studies have concluded that the majority of workers who have access only to DC plans during their working careers will be better off than if they had access only to DB plans.
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Workers Support & Value Retirement Benefits
Survey research consistently shows that solid majorities of US households have favorable impressions of defined contribution (DC) plan accounts, such as 401(k) plans.
Most households’ impressions are shaped by the ability of these accounts to accumulate significant savings, by the performance of retirement plan account investments, and by personal experience with such plans. DC account–owning households also appreciate the choice in, and control of, the investments provided by their retirement plan accounts.