Statistics

23 Pension Statistics That Show The Power of Labor Unions

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Authentikos Research Team

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July 30, 2021

When it comes to pensions and understanding what they are and how they work, it’s important to start with the basic fundamentals. First, a pension is a passive income and part of a larger retirement plan. The monthly income helps fund the golden years and it’s up to the employer to bear all of the risk and responsibility. However, pensions are not offered by all employers, but organizations such as the government do. Pensions are determined by a formula, and will dictate how much a person will receive in retirement. 


Pensions can come off as a convoluted asset, but diving into pension statistics, educational pieces, data and history, you’ll have a better understanding of it. 


Key Pension Stats:

  • Less than 13% of Americans have pensions — though as recently as 25 years ago, that figure was 38% 
  • Revenue for the Retirement and Pension Plans industry is anticipated to decline 6.9% in 2020.
  • As of December 31, 2020, state and local government retirement systems held assets of approximately $5.1 trillion. 
  • Nearly a quarter of people have retirement accounts, and of those it’s only 22% that have pensions.
  • 14.9% have no income from a pension, savings or Social Security.

Pension Basics 

  1. Only 6.8 % receive income from Social Security, a defined benefit pension, and a defined contribution plan.

Source: NIRS


Social security is a helpful benefit for retirees. It is a form of income for those of a certain age. More and more people rely on social security during retirement, but it does not cover all the necessary expenses, and should also have other retirement resources in conjunction with it. For example, a defined benefit pension and defined contribution plan are great supplement options. When examining the pension database to see just how many people have all three contributions, only 6.8 % receive income from Social Security, a defined benefit pension, and a defined contribution plan. 

  1. From 1980 through 2008, the proportion of private wage and salary workers participating in defined benefit pension plans fell from 38% to 20%.

Source: Social Security Administration


Over the years, pension numbers have gone through a rollercoaster pattern - some highs, and some lows. Over the course of 28 years, starting in 1980, the proportion of private wage and salary workers participating in defined benefit pension plans fell from 38% to 20%. Why did these numbers dip so much? Well, a number of factors could have contributed to this including not limited to changes in the workforce and economy, and the pension industry as a whole. 

  1. Less than 13% of Americans have pensions — though as recently as 25 years ago, that figure was 38%. 

Source: MyBudget360


If someone was to ask you to name what percent of American workers have a pension, how would you answer? Unless you said 13% or less, or are vastly familiar with the pension industry you’d be gravely surprised by the number. It’s important to note that this number wasn’t always so low, as recently as 25 years ago, that number was 38%. If pensions continue with this pattern, in the next decade, the number of people with pensions would be minimal.  

  1. 77% of Americans agree that all workers, not just those working for state and local government, should have a pension.

Source: NIRS Online


Pensions aren’t available to everyone in the workforce, and is often a hot topic of contention. Employees want a pension, and people tend to take a position at a company that offers a pension over one that doesn’t. Based on general pension statistics and surveying people in regards to accessibility, 77% of Americans agree that all workers, not just those working for state and local government, should have a pension.

  1. Revenue for the retirement and pension plans industry is anticipated to decline 6.9% in 2020.

Source: IBIS World


Similar to other financial related industries, the retirement and pension plans sector also feels the ebbs and flows of the economy’s impact. Pension numbers show that revenue for the retirement and pension plans industry is anticipated to decline 6.9% in 2020. The pandemic wreaked havoc and resulted in a massive loss of asset values. This is not an ideal situation for younger generations in the workforce and raises the question on whether pensions will be available for the generations to come? 

  1. Returns on pension assets account for more than 60 cents of every dollar available to pay promised benefits. 

Source: PEW Trusts


Speaking of the decline in revenue for the retirement and pension plans industry, there’s a looming cloudy question of “What is the average return on a pension?”  Well, unfortunately that number is equally disappointing. The returns on pension assets account for more than 60 cents of every dollar available to pay promised benefits. The types of assets that see this type of return include but are not limited to stocks and alternative investments, including private equities, hedge funds, real estate, and commodities.

  1. As of December 31, 2020, state and local government retirement systems held assets of approximately $5.1 trillion. 

Source: NASRA


After a tumultuous year with the onslaught of economy downturns brought on by the pandemic, pension stats depict that state and local government retirement systems held assets of approximately $5.1 trillion, as of December 31, 2020. The assets that fall within this $5.1T are mostly held in trusts and/or invested to pre‐fund the cost of pension benefits. Being able to fund a pension benefit requires a number of things including projections based on demographic and economic.


  1. The Public Plans Database contains plan-level data from 2001 through 2020 for 200 pension plans: 118 administered at a state level and 82 administered locally. 

Source: Public Plans Database


The Public Plans Database contains plan-level data from 2001 through 2020 for 200 pension plans. It’s the “one stop shop” for public pension statistics that is essential for the industry. Within this database, there are 118 administered at a state level and 82 administered locally and covers 95% of the public pension membership and assets across the country. The plan was created as a carry-over from the Public Fund Survey (PFS), which included some of the largest plans such as New York City ERS and Chicago Teachers. 

 

The Pension Industry, and Retirement

  1. The market size of the retirement and pension plans industry is expected to increase 4.8% in 2021.

Source: IBI


As history shows, the pension industry has seen its challenges but there may be a light at the end of the tunnel (for now). Based on IBI’s world’s pension statistics, the market size of the retirement and pension plans industry is expected to increase 4.8% in 2021. Though a small increase, it’s a change of pace for the industry’s consistent decline and reduction in plans, assets and returns.  

  1. The average five year growth rate of the largest pension markets worldwide is 4.7%.

Source: Statista


2021’s expected increase for the market size of the retirement and pension plans industry is on par with the average five year growth rate. The average five year growth rate of the largest pension markets worldwide is 4.7%. This growth provides a positive potential for pension fund assets, their accumulation, performance and the way they are invested. Has the pandemic given the country a reset on the pension industry and rate increase? Only time will tell. 

  1. Nearly a quarter of people have retirement accounts, and of those it’s only 22% that have pensions.

Source: SmartAsset


If you’re wondering if you are on track for retirement and have a plan in place, including a pension, then you are mostly likely on the right path. However, you may be part of  the minority in this case because what percentage of U.S. workers have a pension?  Even though nearly a quarter of people have retirement accounts, only 22% of those have pensions. Pensions need to be more accessible and more commonly offered by employers and this number would not be as low. 

  1. 56% of workers participating in a workplace retirement plan.

Source: PensionRights

Workplace retirement plans help employees prepare for their golden years and are a critical puzzle in the plan for financial security. More often than not, employers provide a retirement plan resource, however it’s more common in larger companies. According to retirement plan statistics, 56% of workers participate in a workplace retirement plan. The more common retirement plan is a 401(k), as employers have moved away from traditional pensions. 

  1. 56% of U.S. retirees have income from a defined benefit plan. 

Source: Retirement Income Journal


As people approach the final years before retirement, there is a lot of planning that needs to happen. Soon-to-be retirees must meet with their fiduciary financial advisors to sort through their investments, life insurance, and overall financial plan. Once people make it to retirement, they then have all these items in place for a financially secure future. However, what percentage of retirees have pensions included in their retirement plan. According to pension stats, 56% of U.S. retirees have income from a defined benefit plan. 

  1. The median private pension benefit of individuals 65 and older was $9,827 a year. The median state or local government pension benefit was $22,546 a year.

Source: PensionRights


Pensions vary  on Industries and employers alike. For example, there are private and public pensions. Public pensions are available from federal, state and local government bodies and private pensions are less common. For those who do receive pensions, according to retirement planning statistics, the median private pension benefit of individuals 65 and older was $9,827 a year. The median state or local government pension benefit was $22,546 a year. 

  1. About a third of state and local government pension plans were less than 80% funded in 2006, and the share of underfunded plans increased to 46% with the 2008 stock market crash.

Source: Social Security Administration


On the tail of discussing private versus public pension plans, let’s further examine public pensions specifically. When researching pension stats, you’ll come across historical information surrounding the last market crash of 2008. For example, about a third of state and local government pension plans were less than 80% funded in 2006, and the share of underfunded plans increased to 46% with the 2008 stock market crash.

Global Pension Plans

  1.  At the end of 2019, Australia came in third for total assets in pension, amounting to $1.8T.

Source: OECD


Pensions are available all across the world. However,  pensions by country differ. There are different guidelines, standards, and commonalities between them all. What brings them all together is the  Organisation for Economic Co-operation and Development (OECD). The OECD was founded in 1961 and is an intergovernmental economic organisation with 37 member countries, and was built to stimulate economic progress and world trade. One the included countries is Australia. According to an OECD global pension statistic, at the end of 2019, Australia came in third for total assets in pension, amounting to $1.8T.

  1. Global institutional pension fund assets in the 22 largest major markets (the P22) continued to climb in 2020 despite the impact of the pandemic, rising 11% to $52.5 trillion at year-end.

Source: Thinking Ahead Institute


The P22 is made up of the 22 largest major markets was deeply researched by The Global Pension Assets Study. As part of the final report, one of the pension statistics outlined that Global institutional pension fund assets in the P22 continued to climb in 2020 despite the pandemic, and ultimately rose 11% to $52.5T by the end of 2020. This may have been one of the more positive outcomes and increases in the financial realm for 2020, and hopefully sets the stage for years to come. 

  1. The Dutch pension system has won the highest score in the latest Global Pension Index report from Mercer with a score of 81.5.

Source: IPE


At the end of 2019, the U.S. was leading in the assets in pension, however, the latest european pension statistics show that the Dutch pension system has been dubbed with the highest score in the latest Global Pension Index report from Mercer with a score of 81.5. Mercer’s results includes commentary on the overall index value for the Dutch system and how it could be increased by reducing household debt and increasing the workforce participation rate at older ages as the life expectancy increases. 

  1. Over three-quarters (76%) of UK employees were members of a workplace pension scheme in 2018, up from 73% in 2017; this is a 29% increase compared with 2012, when automatic enrolment was introduced.

Source: ONS


Which country has the best pension?  It depends how you look at it. What works for one, may not work for another, making this question subjective. However, Workplace Pensions via the Office for National Statistics shows that over three-quarters (76%) of UK employees were members of a workplace pension scheme in 2018, up from 73% in 2017. Compared to 2012, this is an 29% increase and automatic enrollment is the root of the increase. These numbers far surpass that of the U.S., allowing the UK to take the title of best pension, or more accurately - the most utilized. 

  1. 14.9% have no income from a pension, savings or Social Security.

Source: CNBC


America has fallen short from time to time. When it comes to finances, this country is built differently than that of others, especially as it relates to retirement planning, resources, etc. 
U.S. pension statistics can sometimes tell an unfortunate story. For example, why does 14.9% have no income from a pension, savings or Social Security? There has to be better education and access to these types of financial resources to help Americans build a financially stable future. 

 

  1. The percent of adults below the state pension age actively contributing to a private pension increased from 43% in July 2010 to June 2012, to 53% in April 2016 to March 2018. 

Source: ONS


Research in pension statistics UK brings light that the percent of adults below the state pension age actively contributing to a private pension increased from 43% in July 2010 to June 2012, to 53% in April 2016 to March 2018. Unfortunately, the remaining portion of people who do not have an active private pension wealth may not qualify for it because they are self-employed, unemployed, economically inactive, chosen to opt-out, ended their membership or do not fulfil the automatic enrolment criteria. 

 

  1. Social pensions cover nearly 35 % of the 60+ population in OECD countries and in Europe and Central Asia, East Asia and Pacific, Latin America and the Caribbean, and South Asia regions.

Source: World Bank


The World Bank is involved in aiding pension reform nearly 100 countries and proactively  provides financial support to more than 70 countries to fund the reform.The World Bank Pension Database is vast, providing valuable data to help the reform. It concludes that social pensions cover nearly 35 % of the 60+ population in OECD countries and in Europe and Central Asia, East Asia and Pacific, Latin America and the Caribbean, and South Asia regions.


  1. Since 2002, the Government Pension Investment Fund of Japan has managed to keep its position as the largest fund in the world for a total of with $1.6T in AUM. 

Source: Willis Towers Watson


Though pensions by country vary, those that are high performing stand out tremendously. For example, the Asia Pacific regions’ assets under management funds are comparable to that of other high ranking countries. Since 2002, the Government Pension Investment Fund of Japan has managed to keep its position as the largest fund in the world for a total of $1.6T in AUM. 



SUMMARY

It’s never been more important than it is now to build a secure retirement and future. Thankfully, people are able to earn lifetime benefits by way of group pension plans, which are an instrumental aid during retirement and economic hardships. These pension statistics should bring to light the rhyme and reason for pensions and why they are so beloved by those who have them. They continue to be an economically efficient way to fund retirement and should be on everyone's radar. 

Sources:

  1. NIRS
  2. Social Security Administration (SSA)
  3. MyBudget360
  4. NIRS
  5. IBIS World
  6. PEW Trusts
  7. NASRA
  8. Public Plans Data
  9.  IBIS World
  10. Statista
  11. smartasset
  12. PensionRights
  13. Retirement Income Journal
  14. PensionRights
  15. Social Security Administration (SSA)
  16. OECD
  17. Thinking Ahead Institute
  18. IPE
  19. ONS
  20. CNBC
  21. ONS
  22. World Bank
  23. Willis Towers Watson

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