Long-term consistent growth makes the U.S. retirement system look stable, but numbers mask underlying turnover of thousands of plans and outflow of billions of dollars, according to the Retirement Plan Landscape Report from Morningstar's Center for Retirement Studies.

The defined-contributed system saw the first year-over-year decline in plans added to the system in at least a decade at the beginning of the COVID-19 pandemic, according to the report. After the pandemic accelerated plan closings and dampened plan creation, the report reveals that only 2,090 employers cover 50% of workers with retirement plan, placing a heavy burden on small employers.

However, overall coverage of the system rebounded to pre-pandemic levels in 2021. The report noted the importance of new employers creating new plans to replace the plans that close each year – between 2012 and 2021, more than 377,000 plans closed in the U.S., according to Morningstar. In other words, the U.S. defined contribution system relies on new employers to create, on average, 44,000 plans per year to compensate for the plans that closed during that time.