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June 13, 1994 01:00 AM

401(K) PARTICIPATION BALLOONS SINCE '83

By Patricia B. Limbacher
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    WASHINGTON - Employees have increased participation in 401(k) plans by nearly 45 percentage points in 10 years, and female employees' pension coverage has increased, a newly released Department of Labor survey showed.

    Meanwhile, more people are saving lump-sum distributions rather than spending it, the survey said.

    The survey, based on a special supplement to the April Current Population Survey conducted by the Census Bureau, said 401(k) participation for full-time private wage and salary workers jumped to 47% in 1993, from 3% in 1983.

    Ted Benna, president of the 401(k) Association, Langhorne, Pa., said the participation rate may be lower. He said some smaller companies have set up other kinds of defined contribution plans that they mistakenly call 401(k)s.

    The survey noted that 5% of employees in firms with fewer than 10 workers were offered 401(k) plans, but these employees took advantage of the retirement plan more often than their counterparts in companies with 1,000 or more employees.

    In addition, 401(k) plans still seem to be more popular with older workers, said Richard Hinz, director of research and economic analysis at the Labor Department. According to the survey, only 17% of workers under 25 participated in 401(k) plans last year, whereas 40% of workers ages 30 to 54 took advantage of 401(k) plans.

    As a supplement to the April 1993 Current Population Survey, 27,000 workers were questioned on their employee benefits.

    Overall, pension coverage rates for private wage and salary workers increased one percentage point to 43% in 1993 from 42% in 1988. But pension coverage for full-time workers in the private sector increased to 50% in 1993 from 48% in 1988. This reversed a trend between 1979 and 1988, when pension coverage for full-time workers dropped from 50% to 48%, the Labor Department said.

    Meanwhile, full-time female employees reported their coverage rate increased to 48% in 1993, from 44% in 1988. But despite the marked increase, women still lagged behind the coverage rate for men, which remained unchanged for 1993 at 51%, the survey said.

    Even though women represented less than 50% of the work force in 1993, more women could take advantage of retirement plans because they held 55% of the pension-covered service industry jobs, said Dan Beller, an economist at the Labor Department. Conversely, men's coverage rate still was lower than it was in 1979. The decrease was mostly due to the fact that men held about 72% of jobs in manufacturing industries, which saw a reduction in the work force, Mr. Beller said.

    More employees say they are saving their lump-sum distributions. According to the study, only 23% of the employees who received lump-sum distributions between 1987 and 1993 spent the money; 32% of the employees who received lump sums between 1980 and 1986 spent it. Before 1980, 48% of lump-sum distribution recipients spent the money, the survey said.

    In contrast, 27% of the employees receiving lump sums between 1987 and 1993 were putting it into a retirement savings plan, such as an individual retirement plan, and 11% put it into other savings plans, such as a personal savings plan.

    This upward savings trend is due to the graying of the baby boomers, the Labor Department's Mr. Hinz said.

    "Now (baby boomers) are getting to a point where they are more aware of their need to save for retirement," Mr. Hinz said.

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