Participation in and Contributions to Defined Contribution Retirement Plans in a Time of Crisis, 2007-2009

Howard Iams, U.S. Social Security Administration (SSA)
Irena Dushi, U.S. Social Security Administration (SSA)
Christopher R. Tamborini, U.S. Social Security Administration (SSA)

The U.S. economic downturn throughout 2008-2009 affected the retirement accounts of workers. Using longitudinal information from Social Security W-2 records matched to the Survey of Income and Program Participation, we investigate the change in workers’ participation and contribution amounts to DC pensions during the economic downturn (2007-2009) by characteristics. Among DC contributors, more (39 percent) experienced substantive decreases than increases (29 percent) in their contributions between 2007 and 2009, while about one-third were relatively stable. Multivariate regression analysis shows that location in the earnings distribution, and earnings change, influence the change in workers’ DC contributions between 2007 and 2009. Looking longitudinally at the same individuals, the change in contributions between 2005 and 2005 (before the recession) and between 2007 and 2007 (during the recession) were different.