The Effect of the Current Population Survey Redesign on Retirement-Plan Participation Estimates

The Annual Social and Economic Supplement to the Census Bureau’s Current Population Survey (CPS) is one of the most-cited sources of income data for retirement-age Americans. The Census Bureau redesigned the income questions starting in 2014 in response to findings that this survey has misclassified and generally underreported income (in particular, sources of retirement income). In addition to the income questions, the March CPS includes two questions about workers working for an employer sponsoring a pension plan and whether the worker was included in the plan. The Employee Benefit Research Institute (EBRI) has done annual reports on pension participation among workers based on this data. While the redesign of the survey did capture more income, especially pension income, it also significantly lowered the survey’s estimates of retirement plan participation among those most likely to participate. Furthermore, these new CPS participation results trended downward in contrast to other surveys on retirement plan participation. However, the most recent changes in the questionnaire have led to some significant anomalies in the time series of the estimated level of participation by workers in an employment-based retirement plan. This paper examines the estimates of pension -- used by the Census Bureau to mean any employment-based retirement plan -- participation from both the traditional questionnaire and the redesigned questionnaire used to address the underreporting of income against each other and with the trend in the estimates of retirement plan participation prior to the redesign years. It also compares the CPS results to another widely cited survey on employment-based retirement plan participation and discusses the growing issues surrounding this and other household surveys. The unexplainable decreases in the participation level after the CPS redesign and the conflicting time series of the participation levels in CPS relative to other surveys raise doubts about the use of CPS data to assess future retirement plan coverage policies.