A widely relied upon source of retirement data continues to look pretty unreliable.
A new report by the nonpartisan Employee Benefit Research Institute (EBRI) notes that the annual Social and Economic Supplement to the Current Population Survey (CPS) – one of the most-cited sources of income data for those whose ages are associated with being retired – looks to be missing the mark.
The EBRI report notes that in 2014, the U.S. Census Bureau conducted a redesign of the CPS questionnaire in an effort to improve income estimates being reported from the survey. However, after this redesign – despite no changes to the retirement plan questions – the estimates of the percentage of workers who participated in an employment-based retirement plan decreased dramatically, from 64% under the old questionnaire to 58% for the same year under the redesigned one. Worse, those participation numbers have continued to decline, and now stand at 47%.
EBRI researcher Craig Copeland points out that not only is there a discrepancy between the pre- and post-redesign numbers, the declines shown by the CPS data do not match other government sources.
Specifically, the results from the redesigned questionnaire suggest three things.
- A lower overall percentage of workers participating in a retirement plan. EBRI notes that compared with the 2013 estimate before the questionnaire redesign, the 2016 estimate shows a reduction of 13.5 percentage points in the percentage of full-time, full-year wage and salary workers ages 21-64 participating in a retirement plan – from 54.5% before the questionnaire redesign to 41.0 % in 2016.
- Declines in participation among those most likely to participate. Since the redesign, EBRI explains, the survey has shown ongoing, substantial declines among full-time, full-year wage and salary workers with the highest likelihoods of participating in each of four important demographic groups. For example, among those ages 55-64, the percentage participating in a plan fell from 57.1% in 2013 (redesigned) to 48.1% in 2016.
- A higher percentage reporting pension income. The percentage of Americans ages 65 or older reporting they received pension/annuity income increased from 30.6% in 2013 before the redesign to 35.4% in 2014 and 2016.
There is evidence that the redesign at least partially achieved its primary objective – increasing the level of income being reported under the CPS to better match other sources, such as IRS data. Still, Copeland notes, when comparing CPS data to IRS administrative date, it is clear that the CPS redesign is still not able to capture all of the income being reported to the IRS. As such, it is important to be careful about coming to conclusions about the retirement system based solely on CPS data.
This not the first time the data has been questioned; most recently by the Investment Company Institute (ICI). Additionally, the same issue has been pointed out by EBRI previously.
Makes you wonder about the research based on those numbers…
