US - Low income earners have a far higher likelihood of not saving for retirement and many of those currently entering the workforce face the prospect of having zero savings, according to a report by the US Government Accountability Office (GAO).
The report found that low income workers were less likely to participate in DC schemes, even when offered the opportunity to do so.
The most important finding of the report concerned projected retirement savings for the generation born in 1990. The report stated that by the time today's young workers reach retirement, over one third (37%) would have no pension plan savings of any kind.
Among the lower earners of this generation, the GAO projected almost two thirds (63%) would reach retirement age without any kind of pension savings.
As a contrast, in 2004, some 36% of private sector workers were members of defined contribution (DC) pension schemes, with a median average plan saving of US$22,800. For workers aged between 55-64, this level was $50,000, rising to $60,600 for workers aged 60-64.
The GAO said: "Our findings indicate that DC plans can provide for a meaningful contribution to retirement security for some workers but may not ensure the retirement security of lower-income workers."
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