Employer Retirement Plans Increase But Many Workers Still Left Out

Why It Matters

A Congressional Research Service report released this week reveals a fundamental shift in how American workers handle financial security for retirement. While employer-sponsored pension coverage has expanded overall among private sector workers, deep disparities persist by company size and worker classification, leaving roughly 28 percent of private sector workers with no access to any employer-sponsored retirement plan. The findings underscore both progress and persistent gaps in the nation's retirement infrastructure as Congress and the administration weigh competing policy priorities.

The Big Picture

Access to employer-sponsored retirement benefits among private sector workers increased from 65 percent in 2010 to 72 percent in 2025, according to the CRS analysis of approximately 127 million private industry workers. The gains reflect a deliberate legislative push over the past seven years to expand coverage through targeted incentives and regulatory changes.

The expansion has come primarily through Defined Contribution plans, where workers and employers contribute to tax-advantaged savings accounts used for retirement income. Access to DC plans rose from 59 percent in 2010 to 70 percent in 2025. The 401(k) plan remains the most common type of DC plan. This growth contrasts sharply with Defined Benefit plans, where workers receive monthly payments in retirement. Access to traditional DB plans declined from 20 percent in 2010 to 14 percent in 2025, representing a continuation of a 50-year shift away from traditional pensions in the private sector.

Congress has directly addressed retirement access through two major legislative packages. The SECURE Act, enacted in 2019, expanded the tax credit for small-employer pension plan startup costs and eliminated the commonality requirement for multiple employer plans. The law also included provisions requiring employers with DC plans to make specified part-time workers eligible for their plans. SECURE 2.0, enacted in 2022, further expanded the tax credit for small-employer pension plan startup costs and maintained part-time worker eligibility requirements.

Part-time workers have seen outsized gains from these measures. Their access to DC plans grew by 23 percent from 2019 to 2025, compared to a 7 percent increase for full-time workers during the same period. Small employers have also benefited from the legislative focus. Workers at firms with fewer than 50 employees saw a 23 percent increase in access to DC plans from 2010 to 2025. Workers at firms with 50-99 employees and firms with 100-499 employees each saw 19 percent increases over the same period.

Yet the data reveals persistent coverage gaps tied to employer size. Only 59 percent of workers in firms with fewer than 100 employees had access to retirement benefits in 2025, compared to 90 percent in firms with 500 or more employees. This disparity suggests that despite legislative efforts targeting small employers, the smallest firms remain underserved by the current policy framework.

Political Stakes

For the administration, the data validates the approach of using targeted tax credits and regulatory flexibility to expand access without imposing mandates. The bipartisan nature of both the SECURE Act and SECURE 2.0 suggests that retirement policy remains one area where Democrats and Republicans have found common ground.

For Democrats, the report highlights an unfinished agenda. The CRS notes there are limited policy proposals that directly address access rates among lower-wage workers, suggesting that future legislative efforts may need to focus more directly on the workers most likely to lack coverage. The upcoming transition of the Saver's Credit to a Saver's Match beginning in 2027 represents another Democratic-backed initiative aimed at boosting retirement savings among lower-income households.

Republicans have championed the small-business focus of recent legislation, and the data showing increased access at smaller firms validates that approach. However, the persistent gap between small and large firms may invite pressure to revisit whether current incentives are sufficient.

The public sector context adds another dimension. Full-time state and local government workers enjoyed 99 percent access to retirement benefits in 2025, with 88 percent participating in retirement plans. This disparity between public and private sector coverage may intensify calls for either raising private sector standards or reconsidering public sector pension obligations.

The Bottom Line

The private sector retirement landscape has shifted measurably toward broader access, but progress masks enduring inequities. The legislative strategy of using tax credits and regulatory flexibility to expand DC plan access, particularly for part-time workers and small employers, has produced measurable results.

Yet nearly 30 percent of private sector workers remain locked out of employer-sponsored coverage entirely. The concentration of benefits among large employers suggests that the current policy toolkit may have reached its limits in extending coverage downward. Congress and the administration will face mounting pressure to determine whether the next phase of retirement policy should focus on different incentives, new mandates, or alternative mechanisms for ensuring that workers at small firms and in lower-wage positions have meaningful access to retirement security.

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