United States General Accounting Office

GAO 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

G O A

years

1921 - 1996

GAO/GGD-97-1

GAO United States

General Accounting Office

Washington, D.C. 20548

General Government Division

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 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.

Page 1 GAO/GGD-97-1 Private Pensions
B-271701 

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.

Results in Brief 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.

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.

Page 2 GAO/GGD-97-1 Private Pensions
B-271701 

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.

Scope and

Methodology

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

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.

Page 3 GAO/GGD-97-1 Private Pensions
B-271701 

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

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

4

Over half of the employers that sponsored pension plans had fewer than 25 employees.

Page 4 GAO/GGD-97-1 Private Pensions
B-271701 

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) 

Percentage of employers

0

10

20

30

40

50

60

70

80

90

100

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993

Calendar year

DB only

DC and DB

DC only

Pension plan

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

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.

Page 5 GAO/GGD-97-1 Private Pensions
B-271701 

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) 

Percentage of employers

0

10

20

30

40

50

60

70

80

90

100

2-9

10-24

25-49

50-99

100-249

250-499

500-999

1,000-2,499

2,500-4,999

5,000-9,999

10,000-19,999

20,000-49,999

Number of employees 50,000 or more

DB Only

DC and DB

DC Only

Pension plan

Source: DOL analysis of IRS Form 5500 data (see app. II, table II.3).

Page 6 GAO/GGD-97-1 Private Pensions
B-271701 

Figure 3: Percentage of Employers Offering Only DC, DC and DB, or Only DB Plans, by Employer Size (1993) 

Percentage of employers

0

10

20

30

40

50

60

70

80

90

100

2-9

10-24

25-49

50-99

100-249

250-499

500-999

1,000-2,499

2,500-4,999

5,000-9,999

10,000-19,999

20,000-49,999

Number of employees 50,000 or more

DB Only

DC and DB

DC Only

Pension plan

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.

Page 7 GAO/GGD-97-1 Private Pensions
B-271701 

Table 1: Number of Employers That

Sponsored Pension Plans and

Percentage of Employers That

Sponsored Only DC Plans, by Industry

(1984 and 1993) 

Number of

employers that

sponsored pension

plans

Percentage of

employers that

sponsored only

defined contribution

plans

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 183,908 268,533 70.5 92.5

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.

6

Papke, L.E. “Does 401(k) Introduction Affect Defined Benefit Plans?” Abstract, 1996.

Page 8 GAO/GGD-97-1 Private Pensions
B-271701 

Table 2: Percentage of Employers That

Offered Only DC, DC and DB, or Only

DB Plans, by Employer Size (1984 and

1993) Defined

contribution

only

Defined

contribution

and defined

benefit

Defined benefit

only

Type of pension plan(s) offered

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)

Trends in the Ratios

of Employer-toEmployee

Contributions to

Pension Plans

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

Page 9 GAO/GGD-97-1 Private Pensions
B-271701 

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) 

Ratio

0

5

10

15

20

25

30

35

40

45

50

55

60

1988 1989 1990 1991 1992 1993

Calendar year

DC only

DB only

DC (employers also offer DB)

DB (employers also offer DC)

Pension plan

Source: DOL analysis of IRS Form 5500 data (see app. II, tables II.5 and II.6).

Trends in

Administrative

Expenses for Private

Pensions

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

Page 10 GAO/GGD-97-1 Private Pensions
B-271701 

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.

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.

Page 11 GAO/GGD-97-1 Private Pensions
B-271701 

Figure 5: Average Administrative

Expense per Participant for Pension

Plans, by Type of Plan Employers

Offered (1988-1993) 

Dollars spent

0

25

50

75

100

125

150

175

1988 1989 1990 1991 1992 1993

Calendar year

DC only

DB only

DC (employers also offer DB)

DB (employers also offer DC)

Pension plan

Source: DOL analysis of IRS Form 5500 data (see app. II, table II.7).

Possible Explanations

of the Growth in DC

Plans Provided by the

Literature

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

Page 12 GAO/GGD-97-1 Private Pensions
B-271701 

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

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.

10Since 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.

Page 13 GAO/GGD-97-1 Private Pensions
B-271701 

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.

Agency Comments

and Our Evaluation

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

11Funds 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.

Page 14 GAO/GGD-97-1 Private Pensions
B-271701 

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.

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

Page 15 GAO/GGD-97-1 Private Pensions
Contents

Letter 1

Appendix I 

Objectives, Scope,

and Methodology

18

Appendix II 

IRS Form 5500

Analysis Results

22

Appendix III 

Major Contributors to

This Report

35

Bibliography 36

Tables Table 1: Number of Employers That Sponsored Pension Plans

and Percentage of Employers That Sponsored Only DC Plans, by

Industry (1984 and 1993)

8

Table 2: Percentage of Employers That Offered Only DC, DC and

DB, or Only DB Plans, by Employer Size (1984 and 1993)

9

Table I.1: Number of Employers With Incomplete Form 5500 Data

(1984-1993)

20

Table II.1: Number of Private Sector Employers, by Type of

Pension Plan Offered (1984-1993)

22

Table II.2: Number of Participants Covered by Private Pension

Plans, by Type of Plan Offered (1984-1993)

23

Table II.3: Number of Private Sector Employers, by Employer

Size and Type of Pension Plan Offered (1984-1993)

24

Table II.4: Number of Private Sector Employers, by Industry and

Type of Pension Plan Offered (1984-1993)

28

Table II.5: Average Employer and Employee Contributions to

Pension Plans for Employers Offering Only DC or Only DB Plans

(1988-1993)

32

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)

33

Page 16 GAO/GGD-97-1 Private Pensions
Contents

Table II.7: Average Administrative Expense per Participant for

Pension Plans, by Type of Plan Offered (1988-1993)

34

Figures Figure 1: Percentage of Employers Offering Only DC, DC and DB,

and Only DB Plans (1984-1993)

5

Figure 2: Percentage of Employers Offering Only DC, DC and DB,

or Only DB Plans, by Employer Size (1984)

6

Figure 3: Percentage of Employers Offering Only DC, DC and DB,

or Only DB Plans, by Employer Size (1993)

7

Figure 4: Ratio of Employer-to-Employee Contributions to

Pension Plans, by Type of Plan Sponsored (1988-1993)

10

Figure 5: Average Administrative Expense per Participant for

Pension Plans, by Type of Plan Employers Offered (1988-1993)

12

Abbreviations

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

Page 17 GAO/GGD-97-1 Private Pensions
Appendix I 

Objectives, Scope, and Methodology

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

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.

Page 18 GAO/GGD-97-1 Private Pensions
Appendix I 

Objectives, Scope, and Methodology

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.

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.

Page 19 GAO/GGD-97-1 Private Pensions
Appendix I 

Objectives, Scope, and Methodology

Table I.1: Number of Employers With

Incomplete Form 5500 Data

(1984-1993) 

Number of employers with

incomplete dataa

Year

Number of

employers

included in

analyses

Employer size

not reported

Industry not

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

aFor 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

Page 20 GAO/GGD-97-1 Private Pensions
Appendix I 

Objectives, Scope, and Methodology

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.

Page 21 GAO/GGD-97-1 Private Pensions
Appendix II 

IRS Form 5500 Analysis Results

Table II.1: Number of Private Sector Employers, by Type of Pension Plan Offered (1984-1993) 

Defined contribution only

Defined contribution and

defined benefit Defined benefit only

Type of pension plan(s) offered

Year

Number of

employers

Percentage

of total

Number of

employers

Percentage

of total

Number of

employers

Percentage

of total

Total

number of

employers

1984 308,352 67.7 37,884 8.3 109,035 23.9 455,271

1985 327,854 68.8 36,015 7.6 112,561 23.6 476,430

1986 397,639 72.8 34,691 6.4 113,551 20.8 545,881

1987 427,935 75.4 31,540 5.6 108,169 19.1 567,644

1988 443,954 78.1 26,694 4.7 97,690 17.2 568,338

1989 444,474 80.9 24,953 4.5 80,208 14.6 549,635

1990 450,564 83.7 18,779 3.5 69,210 12.9 538,553

1991 458,791 84.9 16,708 3.1 64,694 12.0 540,193

1992 487,979 87.2 16,781 3.0 55,080 9.8 559,840

1993 498,901 88.4 14,903 2.6 50,792 9.0 564,596

Note: This table includes only those employers that sponsored single-employer pension plans.

Source: DOL analysis of IRS Form 5500 data.

Page 22 GAO/GGD-97-1 Private Pensions
Appendix II 

IRS Form 5500 Analysis Results

Table II.2: Number of Participants Covered by Private Pension Plans, by Type of Plan Offered (1984-1993) 

Defined contribution only

Defined contribution and

defined benefit Defined benefit only

Type of pension plan(s) offered

Participant numbers in thousands

Year

Number of

participants

Percentage

of total

Number of

participants

Percentage

of total

Number of

participants

Percentage

of total

Total number

of participants

1984 8,661 26.8 15,160 46.9 8,498 26.3 32,319

1985 9,954 29.6 15,903 47.3 7,739 23.0 33,596

1986 11,158 31.9 16,502 47.2 7,303 20.9 34,963

1987 12,140 34.0 16,480 46.2 7,084 19.8 35,704

1988 13,765 36.8 16,810 44.9 6,857 18.3 37,432

1989 14,996 38.5 17,652 45.3 6,327 16.2 38,975

1990 15,731 40.8 16,710 43.4 6,073 15.8 38,514

1991 16,558 41.9 17,452 44.1 5,551 14.0 39,561

1992 18,914 44.7 18,163 42.9 5,279 12.5 42,356

1993 19,874 45.1 18,854 42.7 5,375 12.2 44,103

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.

Page 23 GAO/GGD-97-1 Private Pensions
Appendix II 

IRS Form 5500 Analysis Results

Table II.3: Number of Private Sector Employers, by Employer Size and Type of Pension Plan Offered (1984-1993) 

Defined contribution only

Defined contribution and

defined benefit Defined benefit only

Type of pension plan(s) offered

Number of

employees Year

Number of

employers

Percentage

of total

Number of

employers

Percentage

of total

Number of

employers

Percentage

of total

Total

number of

employersa

2-9 1984 143,029 69.0 16,321 7.9 48,031 23.2 207,381

1985 146,070 69.3 13,284 6.3 51,506 24.4 210,860

1986 189,393 74.9 11,022 4.4 52,615 20.8 253,030

1987 203,216 77.1 9,973 3.8 50,364 19.1 263,553

1988 210,749 80.3 7,725 2.9 44,129 16.8 262,603

1989 206,589 82.2 7,095 2.8 37,769 15.0 251,453

1990 178,724 84.4 4,155 2.0 28,915 13.7 211,794

1991 174,450 86.6 2,944 1.5 24,053 11.9 201,447

1992 174,171 87.7 3,356 1.7 21,113 10.6 198,640

1993 174,923 88.8 2,398 1.2 19,620 10.0 196,941

10-24 1984 70,791 73.6 6,484 6.7 18,941 19.7 96,216

1985 77,356 73.2 6,985 6.6 21,278 20.1 105,619

1986 86,401 75.4 7,053 6.2 21,128 18.4 114,582

1987 89,461 77.3 5,685 4.9 20,554 17.8 115,700

1988 99,757 80.5 5,031 4.1 19,110 15.4 123,898

1989 102,326 83.8 4,626 3.8 15,098 12.4 122,050

1990 95,770 85.8 2,573 2.3 13,245 11.9 111,588

1991 97,274 85.6 2,902 2.6 13,459 11.8 113,635

1992 105,479 89.9 2,171 1.9 9,640 8.2 117,290

1993 109,185 91.2 1,519 1.3 9,039 7.5 119,743

25-49 1984 35,449 71.1 3,701 7.4 10,710 21.5 49,860

1985 37,655 72.8 4,097 7.9 9,956 19.3 51,708

1986 39,973 75.1 4,000 7.5 9,256 17.4 53,229

1987 44,496 78.1 2,674 4.7 9,780 17.2 56,950

1988 48,653 80.3 3,006 5.0 8,925 14.7 60,584

1989 52,746 84.5 2,522 4.0 7,122 11.4 62,390

1990 48,343 86.4 1,702 3.0 5,908 10.6 55,953

1991 51,240 88.4 1,227 2.1 5,466 9.4 57,933

1992 59,043 90.6 1,365 2.1 4,767 7.3 65,175

1993 61,934 91.6 1,117 1.7 4,531 6.7 67,582

50-99 1984 21,347 67.8 2,707 8.6 7,442 23.6 31,496

1985 24,481 70.6 2,567 7.4 7,613 22.0 34,661

1986 26,900 72.6 3,020 8.2 7,124 19.2 37,044

(continued)

Page 24 GAO/GGD-97-1 Private Pensions
Appendix II 

IRS Form 5500 Analysis Results

Defined contribution only

Defined contribution and

defined benefit Defined benefit only

Type of pension plan(s) offered

Number of

employees Year

Number of

employers

Percentage

of total

Number of

employers

Percentage

of total

Number of

employers

Percentage

of total

Total

number of

employersa

1987 28,911 75.9 2,926 7.7 6,265 16.4 38,102

1988 30,336 76.9 1,951 4.9 7,150 18.1 39,437

1989 33,821 82.7 1,736 4.2 5,330 13.0 40,887

1990 33,882 87.2 1,000 2.6 3,954 10.2 38,836

1991 34,933 88.1 976 2.5 3,737 9.4 39,646

1992 38,388 90.5 882 2.1 3,134 7.4 42,404

1993 39,757 91.8 865 2.0 2,691 6.2 43,313

100-249 1984 13,461 58.4 2,132 9.3 7,451 32.3 23,044

1985 16,212 64.0 1,989 7.9 7,126 28.1 25,327

1986 16,802 65.4 2,131 8.3 6,751 26.3 25,684

1987 18,396 70.4 2,272 8.7 5,463 20.9 26,131

1988 21,152 73.7 1,848 6.4 5,712 19.9 28,712

1989 23,400 78.6 1,975 6.6 4,399 14.8 29,774

1990 22,442 84.4 1,302 4.9 2,829 10.6 26,573

1991 24,192 86.5 1,087 3.9 2,680 9.6 27,959

1992 27,946 86.8 1,433 4.4 2,835 8.8 32,214

1993 29,695 88.9 1,394 4.2 2,310 6.9 33,399

250-499 1984 4,552 51.7 995 11.3 3,256 37.0 8,803

1985 5,355 56.8 1,158 12.3 2,920 31.0 9,433

1986 5,426 58.1 1,117 12.0 2,794 29.9 9,337

1987 6,140 59.7 1,302 12.7 2,843 27.6 10,285

1988 6,854 63.8 1,201 11.2 2,684 25.0 10,739

1989 7,753 70.6 1,166 10.6 2,063 18.8 10,982

1990 7,298 76.3 943 9.9 1,326 13.9 9,567

1991 7,529 78.7 938 9.8 1,095 11.4 9,562

1992 9,442 82.7 941 8.2 1,036 9.1 11,419

1993 9,969 84.1 976 8.2 906 7.6 11,851

500-999 1984 2,041 40.7 853 17.0 2,116 42.2 5,010

1985 2,568 47.7 960 17.8 1,861 34.5 5,389

1986 2,628 47.0 1,051 18.8 1,910 34.2 5,589

1987 2,721 49.8 987 18.1 1,753 32.1 5,461

1988 3,433 56.5 1,154 19.0 1,492 24.5 6,079

1989 3,624 59.1 1,177 19.2 1,332 21.7 6,133

1990 3,390 68.5 782 15.8 779 15.7 4,951

1991 3,598 73.0 762 15.5 570 11.6 4,930

(continued)

Page 25 GAO/GGD-97-1 Private Pensions
Appendix II 

IRS Form 5500 Analysis Results

Defined contribution only

Defined contribution and

defined benefit Defined benefit only

Type of pension plan(s) offered

Number of

employees Year

Number of

employers

Percentage

of total

Number of

employers

Percentage

of total

Number of

employers

Percentage

of total

Total

number of

employersa

1992 4,481 75.9 860 14.6 559 9.5 5,900

1993 5,246 78.7 871 13.1 550 8.2 6,667

1,000-2,499 1984 1,122 27.2 969 23.5 2,037 49.3 4,128

1985 1,375 31.3 1,159 26.4 1,862 42.4 4,396

1986 1,469 35.2 1,240 29.7 1,464 35.1 4,173

1987 1,570 36.4 1,158 26.9 1,584 36.7 4,312

1988 2,165 43.2 1,242 24.8 1,609 32.1 5,016

1989 2,235 46.7 1,265 26.4 1,289 26.9 4,789

1990 1,917 55.0 926 26.6 643 18.4 3,486

1991 2,138 58.0 946 25.7 602 16.3 3,686

1992 2,593 62.7 963 23.3 577 14.0 4,133

1993 2,730 62.4 988 22.6 654 15.0 4,372

2,500-4,999 1984 495 24.4 513 25.3 1,017 50.2 2,025

1985 600 29.3 582 28.4 865 42.3 2,047

1986 697 33.8 598 29.0 768 37.2 2,063

1987 680 36.1 569 30.2 636 33.7 1,885

1988 597 29.2 641 31.3 810 39.6 2,048

1989 785 35.9 678 31.0 723 33.1 2,186

1990 645 48.4 444 33.3 244 18.3 1,333

1991 670 47.9 494 35.3 236 16.9 1,400

1992 899 53.4 485 28.8 300 17.8 1,684

1993 987 52.6 493 26.3 398 21.2 1,878

5,000-9,999 1984 170 12.6 414 30.7 764 56.7 1,348

1985 186 14.4 488 37.7 619 47.9 1,293

1986 247 20.0 453 36.6 538 43.5 1,238

1987 385 27.7 429 30.9 575 41.4 1,389

1988 482 34.5 486 34.8 430 30.8 1,398

1989 439 32.3 504 37.1 417 30.7 1,360

1990 412 47.9 308 35.8 141 16.4 861

1991 403 46.2 324 37.2 145 16.6 872

1992 411 51.8 308 38.8 74 9.3 793

1993 468 52.0 341 37.9 91 10.1 900

10,000-19,999 1984 158 18.2 304 35.0 407 46.8 869

1985 204 16.3 367 29.4 677 54.2 1,248

1986 202 14.5 348 25.0 840 60.4 1,390

(continued)

Page 26 GAO/GGD-97-1 Private Pensions
Appendix II 

IRS Form 5500 Analysis Results

Defined contribution only

Defined contribution and

defined benefit Defined benefit only

Type of pension plan(s) offered

Number of

employees Year

Number of

employers

Percentage

of total

Number of

employers

Percentage

of total

Number of

employers

Percentage

of total

Total

number of

employersa

1987 172 16.5 375 36.0 496 47.6 1,043

1988 330 26.5 395 31.8 519 41.7 1,244

1989 317 26.4 442 36.8 441 36.8 1,200

1990 184 36.2 239 47.0 85 16.7 508

1991 282 45.8 270 43.8 64 10.4 616

1992 331 46.7 232 32.7 146 20.6 709

1993 295 47.4 236 37.9 91 14.6 622

20,000-49,999 1984 209 13.5 361 23.3 981 63.2 1,551

1985 118 11.2 304 28.8 634 60.0 1,056

1986 253 18.3 337 24.4 791 57.3 1,381

1987 206 17.1 324 26.9 674 56.0 1,204

1988 249 23.6 378 35.8 429 40.6 1,056

1989 371 32.9 339 30.1 416 36.9 1,126

1990 174 41.6 144 34.4 100 23.9 418

1991 154 36.3 185 43.6 85 20.0 424

1992 195 42.4 183 39.8 82 17.8 460

1993 150 33.5 222 49.6 76 17.0 448

50,000 or more 1984 108 12.0 182 20.3 607 67.7 897

1985 90 10.0 265 29.5 543 60.5 898

1986 260 23.9 284 26.1 546 50.1 1,090

1987 129 22.8 179 31.7 257 45.5 565

1988 142 14.9 188 19.7 624 65.4 954

1989 176 22.2 232 29.2 386 48.6 794

1990 154 54.6 84 29.8 44 15.6 282

1991 119 43.4 92 33.6 63 23.0 274

1992 166 54.2 103 33.7 37 12.1 306

1993 169 54.7 99 32.0 41 13.3 309

aThis 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.

Page 27 GAO/GGD-97-1 Private Pensions
Appendix II 

IRS Form 5500 Analysis Results

Table II.4: Number of Private Sector Employers, by Industry and Type of Pension Plan Offered (1984-1993) 

Defined contribution only

Defined contribution and

defined benefit Defined benefit only

Type of pension plan(s) offered

Industry Year

Number of

employers

Percentage

of total

Number of

employers

Percentage

of total

Number of

employers

Percentage

of total

Total

number of

employersa

Agriculture 1984 5,736 77.9 368 5.0 1,260 17.1 7,364

1985 5,172 69.3 361 4.8 1,934 25.9 7,467

1986 6,825 69.4 268 2.7 2,741 27.9 9,834

1987 8,445 80.3 321 3.1 1,750 16.6 10,516

1988 8,828 81.6 347 3.2 1,645 15.2 10,820

1989 7,296 84.9 140 1.6 1,154 13.4 8,590

1990 8,177 88.1 177 1.9 931 10.0 9,285

1991 8,424 85.8 297 3.0 1,092 11.1 9,813

1992 8,036 78.1 181 1.8 2,066 20.1 10,283

1993 8,175 88.2 189 2.0 908 9.8 9,272

Mining 1984 2,588 64.0 398 9.8 1,055 26.1 4,041

1985 2,762 65.9 268 6.4 1,160 27.7 4,190

1986 2,781 67.1 248 6.0 1,116 26.9 4,145

1987 2,837 69.3 231 5.6 1,026 25.1 4,094

1988 3,314 74.6 183 4.1 945 21.3 4,442

1989 2,558 74.1 240 7.0 655 19.0 3,453

1990 2,742 77.3 304 8.6 503 14.2 3,549

1991 2,967 77.3 232 6.0 641 16.7 3,840

1992 2,867 84.3 172 5.1 363 10.7 3,402

1993 2,590 82.4 200 6.4 351 11.2 3,141

Construction 1984 21,227 72.2 2,124 7.2 6,061 20.6 29,412

1985 23,437 75.7 2,134 6.9 5,385 17.4 30,956

1986 26,771 78.8 1,668 4.9 5,520 16.3 33,959

1987 29,109 80.1 1,421 3.9 5,795 16.0 36,325

1988 31,439 82.5 1,546 4.1 5,130 13.5 38,115

1989 30,828 85.1 1,231 3.4 4,179 11.5 36,238

1990 32,988 87.2 879 2.3 3,984 10.5 37,851

1991 30,982 87.3 720 2.0 3,776 10.6 35,478

1992 32,530 91.6 630 1.8 2,355 6.6 35,515

1993 33,485 92.3 761 2.1 2,040 5.6 36,286

Manufacturing 1984 37,270 56.8 6,562 10.0 21,819 33.2 65,651

1985 38,634 60.1 6,504 10.1 19,093 29.7 64,231

1986 40,737 61.7 6,399 9.7 18,930 28.7 66,066

(continued)

Page 28 GAO/GGD-97-1 Private Pensions
Appendix II 

IRS Form 5500 Analysis Results

Defined contribution only

Defined contribution and

defined benefit Defined benefit only

Type of pension plan(s) offered

Industry Year

Number of

employers

Percentage

of total

Number of

employers

Percentage

of total

Number of

employers

Percentage

of total

Total

number of

employersa

1987 41,939 64.5 5,914 9.1 17,139 26.4 64,992

1988 48,760 68.2 5,778 8.1 16,930 23.7 71,468

1989 49,226 72.0 5,588 8.2 13,590 19.9 68,404

1990 49,689 75.5 4,932 7.5 11,152 17.0 65,773

1991 51,204 76.9 4,812 7.2 10,599 15.9 66,615

1992 57,457 82.0 4,226 6.0 8,400 12.0 70,083

1993 58,724 82.5 4,301 6.0 8,124 11.4 71,149

Transportation 1984 3,932 63.1 481 7.7 1,822 29.2 6,235

1985 4,123 67.8 365 6.0 1,594 26.2 6,082

1986 4,606 70.4 415 6.3 1,525 23.3 6,546

1987 4,944 76.0 369 5.7 1,193 18.3 6,506

1988 5,138 74.5 307 4.4 1,454 21.1 6,899

1989 5,853 81.3 314 4.4 1,028 14.3 7,195

1990 5,352 83.7 223 3.5 820 12.8 6,395

1991 6,337 83.4 247 3.3 1,014 13.3 7,598

1992 7,087 89.7 231 2.9 581 7.4 7,899

1993 6,780 88.5 235 3.1 648 8.5 7,663

Communications and

utilities 1984 1,543 44.6 516 14.9 1,401 40.5 3,460

1985 1,950 49.6 672 17.1 1,309 33.3 3,931

1986 2,341 53.8 696 16.0 1,317 30.2 4,354

1987 2,722 60.1 695 15.4 1,109 24.5 4,526

1988 2,878 62.8 462 10.1 1,240 27.1 4,580

1989 3,153 65.9 580 12.1 1,054 22.0 4,787

1990 3,061 71.7 602 14.1 606 14.2 4,269

1991 3,487 71.3 530 10.8 874 17.9 4,891

1992 4,130 69.7 950 16.0 843 14.2 5,923

1993 4,049 71.1 872 15.3 770 13.5 5,691

Wholesale trade 1984 27,208 68.7 3,714 9.4 8,708 22.0 39,630

1985 30,476 72.9 2,798 6.7 8,533 20.4 41,807

1986 30,683 72.8 3,114 7.4 8,375 19.9 42,172

1987 29,235 74.3 2,283 5.8 7,835 19.9 39,353

1988 38,223 79.7 2,177 4.5 7,565 15.8 47,965

1989 35,652 80.8 2,528 5.7 5,935 13.4 44,115

1990 33,702 83.4 1,588 3.9 5,100 12.6 40,390

(continued)

Page 29 GAO/GGD-97-1 Private Pensions
Appendix II 

IRS Form 5500 Analysis Results

Defined contribution only

Defined contribution and

defined benefit Defined benefit only

Type of pension plan(s) offered

Industry Year

Number of

employers

Percentage

of total

Number of

employers

Percentage

of total

Number of

employers

Percentage

of total

Total

number of

employersa

1991 36,437 85.6 1,198 2.8 4,929 11.6 42,564

1992 35,837 87.7 1,401 3.4 3,642 8.9 40,880

1993 37,532 89.7 1,124 2.7 3,205 7.7 41,861

Retail trade 1984 32,109 72.8 2,943 6.7 9,036 20.5 44,088

1985 32,596 72.6 2,964 6.6 9,341 20.8 44,901

1986 43,855 78.5 2,566 4.6 9,457 16.9 55,878

1987 36,543 78.8 2,413 5.2 7,410 16.0 46,366

1988 38,522 79.7 1,959 4.1 7,872 16.3 48,353

1989 47,085 85.1 1,582 2.9 6,634 12.0 55,301

1990 45,957 88.1 1,343 2.6 4,839 9.3 52,139

1991 44,601 89.1 1,004 2.0 4,458 8.9 50,063

1992 47,010 92.0 769 1.5 3,341 6.5 51,120

1993 47,216 93.4 643 1.3 2,712 5.4 50,571

Finance, insurance,

and real estate 1984 20,573 61.7 3,182 9.5 9,603 28.8 33,358

1985 23,440 61.3 3,476 9.1 11,309 29.6 38,225

1986 24,571 65.4 2,979 7.9 10,008 26.6 37,558

1987 27,264 67.3 3,065 7.6 10,181 25.1 40,510

1988 33,897 73.0 3,010 6.5 9,508 20.5 46,415

1989 29,790 74.1 2,764 6.9 7,644 19.0 40,198

1990 28,390 76.9 1,736 4.7 6,815 18.4 36,941

1991 33,744 78.7 2,031 4.7 7,081 16.5 42,856

1992 34,372 82.1 2,231 5.3 5,247 12.5 41,850

1993 34,900 83.4 1,876 4.5 5,074 12.1 41,850

Services 1984 129,691 70.5 16,389 8.9 37,828 20.6 183,908

1985 132,850 71.9 14,109 7.6 37,758 20.4 184,717

1986 171,106 76.4 13,374 6.0 39,403 17.6 223,883

1987 192,226 79.3 12,189 5.0 37,898 15.6 242,313

1988 213,588 82.3 9,801 3.8 36,191 13.9 259,580

1989 216,347 84.8 8,857 3.5 29,985 11.8 255,189

1990 225,373 87.2 6,338 2.5 26,655 10.3 258,366

1991 225,426 89.2 4,808 1.9 22,405 8.9 252,639

1992 240,525 91.8 4,663 1.8 16,835 6.4 262,023

1993 248,370 92.5 3,558 1.3 16,605 6.2 268,533

(continued)

Page 30 GAO/GGD-97-1 Private Pensions
Appendix II 

IRS Form 5500 Analysis Results

Defined contribution only

Defined contribution and

defined benefit Defined benefit only

Type of pension plan(s) offered

Industry Year

Number of

employers

Percentage

of total

Number of

employers

Percentage

of total

Number of

employers

Percentage

of total

Total

number of

employersa

Tax-exempt

organizations 1984 5,112 44.9 470 4.1 5,809 51.0 11,391

1985 7,845 41.9 1,103 5.9 9,776 52.2 18,724

1986 9,572 46.4 1,573 7.6 9,493 46.0 20,638

1987 11,351 47.8 1,418 6.0 10,969 46.2 23,738

1988 12,985 57.4 1,037 4.6 8,585 38.0 22,607

1989 14,338 61.3 1,001 4.3 8,050 34.4 23,389

1990 12,504 61.2 515 2.5 7,417 36.3 20,436

1991 13,496 61.5 823 3.8 7,627 34.8 21,946

1992 16,981 57.9 1,230 4.2 11,121 37.9 29,332

1993 15,558 58.2 1,073 4.0 10,090 37.8 26,721

aThis 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.

Page 31 GAO/GGD-97-1 Private Pensions
Appendix II 

IRS Form 5500 Analysis Results

Table II.5: Average Employer and

Employee Contributions to Pension

Plans for Employers Offering Only DC

or Only DB Plans (1988-1993) Defined contribution only Defined benefit only

Type of plan(s) offered

Year

Employer

amount

Employee

amount Ratioa

Employer

amount

Employee

amount Ratioa

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.

aThis column shows the ratio of the average employer contribution divided by the average

employee contribution.

Source: DOL analysis of IRS Form 5500 data.

Page 32 GAO/GGD-97-1 Private Pensions
Appendix II 

IRS Form 5500 Analysis Results

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) 

Defined benefit (primary)

Defined contribution (first

supplementary)

Defined contribution (second

supplementary)

Type of pension plan

Year

Employer

amount

Employee

amount Ratioa

Employer

amount

Employee

amount Ratioa

Employer

amount

Employee

amount Ratioa

1988 $1,305 $65 20.1 $1,015 $1,276 0.8 $1,095 $1,404 0.8

1989 1,169 70 16.7 1,147 1,307 0.9 1,003 1,331 0.8

1990 1,176 54 21.8 1,027 1,369 0.8 1,175 1,411 0.8

1991 1,675 62 27.0 1,102 1,551 0.7 1,297 1,575 0.8

1992 2,187 53 41.3 1,132 1,710 0.7 1,073 1,797 0.6

1993 3,468 59 58.8 1,165 1,841 0.6 1,372 1,804 0.8

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.

aThis column shows the ratio of the average employer contribution divided by the average

employee contribution.

Source: DOL analysis of IRS Form 5500 data.

Page 33 GAO/GGD-97-1 Private Pensions
Appendix II 

IRS Form 5500 Analysis Results

Table II.7: Average Administrative

Expense per Participant for Pension

Plans, by Type of Plan Offered

(1988-1993) Defined contribution (DC) and

defined benefit (DB)a

Type of plan(s) offered

Year

Defined

contribution

only DC DB

Defined

benefit 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.

aFor 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.

Page 34 GAO/GGD-97-1 Private Pensions
Appendix III 

Major Contributors to This Report

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

Page 35 GAO/GGD-97-1 Private Pensions
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