Assessment of Retirement Plan Coverage by Firm Size Using W-2 Tax Records

Abstract

We use data from a Census survey merged with W-2 tax records to examine the extent of respondents' reporting error regarding retirement plans among private-sector workers by firm size. We find substantial reporting error with respect to both offer and participation rates in a retirement plan. About 14 percent of workers who self-reported nonparticipation in a defined contribution (DC) plan had contributed as indicated by W-2 records, whereas 9 percent of workers self-reported participation in a DC plan when W-2 records indicated no contributions. There is little difference in reporting error by firm size, however. Interestingly, although substantial differences exist in pension coverage and participation by firm size, employees in small firms are not that different with respect to take-up of pension plans than their counterparts in large firms. Finally, after correcting for reporting error, a substantially larger proportion of workers in small firms have access to some type of pension than commonly believed based on survey reports.

Keywords: Retirement Pension coverage, Measurement error

JEL Classification: C2, J32