What the Public Doesn’t Know About Social Security, Private Pension Plans and Other Private Retirement Plans, According to New Harris Poll

The nation is in the midst of a major debate about the future of Social Security and yet, according to a new Harris Poll, huge proportions of the public are misinformed or very poorly informed about the Social Security program and private sector retirement plans. The questions in the poll were inspired by Dr. Robert Butler, the president of the International Longevity Center, who recently asked similar questions of journalism and medical students

Harris Interactive asked these questions of a nationwide sample of 2,322 adults surveyed online between May 4 and May 10, 2005.

The results show that:-

• Only half of all adults know that Society Security guarantees payment for life.
• Only a quarter of adults know that Social Security guarantees protection against inflation.
• Only about half of all adults know that Social Security provides life and disability coverage for spouses or children of workers who die or are disabled.
• Only about one adult in every six know that Social Security has lower administrative costs than private pension and retirement plans.
• Almost half of adults do not know that Social Security has never failed to pay benefits.

In reviewing these findings, Dr. Robert Butler comments:

"Informed citizenship is the first office in a democracy. Yet despite the ongoing public debate about the future of Social Security, the American people remain poorly informed about this vital landmark program, while the Social Security Administration, political leaders, and the Democratic Party—from which Social Security evolved—put forth little serious effort into educating the public. Media coverage of the issues has been weak. Furthermore, young people are being inadequately trained to understand public policy issues that prepare them to make informed decisions as adults. With the likelihood of Congressional action regarding Social Security in the coming months there is an urgent need for an informed citizenry."

The specific findings of this Harris Poll include:

• Only 49 percent of all adults know that Social Security guarantees payment for life. Only 24 percent know that private pension plans also (usually) do this. And fully 22 percent believe, wrongly, that private "defined contribution" plans, such 401(K) plans, do this.
• Only 23 percent know that Social security provides guaranteed protection against inflation.
• Only 53 percent know that Social Security provides life and disability coverage for spouses or children of workers who die or are disabled.
• Few people (17 percent) know that Social Security has lower administrative costs than private sector pensions and other retirement plans.
• Only 56 percent know that Social Security has never failed to pay out.

Knowledge and ignorance are strongly correlated with age. The older people are, the more likely they are to be knowledgeable. Comparing people under 25 to those aged 65 who are well informed increase with age:-

• Those who know that Social Security guarantees payment for life, increase from 28 percent to 71 percent.
• Those who know that Social Security guarantees protection against inflation, increase from 11 percent to 42 percent (but only 42 percent, even people over 65).
• Those who know that Social Security provides disability insurance coverage, increase from 27 percent to 64 percent
• Those who know that Social Security has never failed to pay benefits, increase from 23 percent to 80 percent.

This poll also includes one question about the future. It found that by a large 64 percent to 20 percent most people do not expect that "the government will have to pay over 100 billion dollars to failed company pensions over the next few years" (as it did for following the Savings and Loans collapse). Some commentators believe this is likely, but the public does not think this will happen.

Base: All Adults

Note: Totals do not add to 100% because people could give up to three answers

Q. Which of the following provide guaranteed protection against inflation?

Base: All Adults

Note: Totals do not add to 100% because people could give up to three answers

TABLE 3

WHICH RETIREMENT PLANS PROVIDE LIFE AND DISABILITY COVERAGE FOR SPOUSES AND CHILDREN OF WORKERS WHO DIE OR ARE DISABLED

Base: All Adults

Note: Totals do not add to 100% because people could give up to three answers

TABLE 4

WHICH HAS LOWEST ADMINISTRATIVE COSTS?

Base: All Adults

Note: Totals do not add to 100% because people could give up to three answers

TABLE 5

WHICH HAS NEVER FAILED TO PAY OFF?

Base: All Adults

Note: Totals do not add to 100% because people could give up to three answers

Base: All Adults

Note: Totals do not add to 100% because people could give up to three answers

Methodology
The Harris Poll^® was conducted online within the United States between May 4 and 10, 2005 among a nationwide cross section of 2,322 adults (aged 18 and over). Figures for age, sex, race, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. Propensity score weighting was also used to adjust for respondents’ propensity to be online.

In theory, with probability samples of this size, one could say with 95 percent certainty that the results for the overall sample have a sampling error of plus or minus 2 percentage points. Unfortunately, there are several other possible sources of error in all polls or surveys that are probably more serious than theoretical calculations of sampling error. They include refusals to be interviewed (nonresponse), question wording and question order, and weighting. It is impossible to quantify the errors that may result from these factors. This online sample is not a probability sample.

J24152
Q705-725