Skip to main content

You are here

Advertisement

A Matter of Perspective

Technical Resources

Many argue that retirement plan participation is not where it should be. And some warn that not only is it far below what’s needed, it’s also getting worse. But the American Enterprise Institute’s (AEI) Andrew Biggs is not one of them.

Biggs,  a resident scholar at AEI and former principal deputy commissioner and the deputy commissioner for policy at the Social Security Administration, suggests that the problem, at least with such assessments, lies in what data is used in arriving at a conclusion about general retirement readiness and how it is interpreted.

In a recent column appearing in Forbes, Biggs discusses a Schwartz Center for Economic Policy Analysis (SCEPA) article warning of a drop in retirement coverage at all income levels. Biggs is not impressed. “So what happened? Well, what didn’t happen is that employers abandoned retirement plans in droves,” Biggs writes. Rather, he says, “What actually happened has very little to do with pension coverage and a lot to do with how we measure pension coverage.”

Biggs notes that SCEPA bases its findings on data from the Current Population Survey, which is jointly conducted by the Bureau of Labor Statistics and the Census Bureau. He reports that in 2014, the CPS redesigned how it asks households about retirement plan coverage and their retirement from those plans. Further, he notes that the Employee Benefit Research Institute (EBRI) has warned that the recent CPS data erroneously suggests that the percentage of employees participating in retirement plans is dropping. “Consequently, unless modifications are made to the CPS, continuing to use it for estimating the participation in employment-based retirement plans will provide misleading and inaccurate estimates and conclusions about these plans," says Biggs.

Why is Biggs so confident that the SCEPA and the CPS got it wrong? For one thing, he writes, a similar decline has not shown up in other data from the government. And, he adds, “We can also look at the Bureau of Labor Statistics National Compensation Survey, which is a survey of employers rather than of employees. The NCS data show no real change in retirement plan participation in recent years.”

While Biggs says that “it doesn’t appear that the decline of defined benefit pensions in the private sector meant the end of retirement plans,” he does suggest that there is room for improvement in the use and effects of automatic enrollment. Still, he concludes, “Nevertheless, the truth remains: there hasn’t been a dramatic decline in pension coverage or participation in recent years, in contrast to the SCEPA article’s conclusions. And that’s good news.”