Wednesday, December 12, 2018

Social Security Bulletin, Vol. 78, No. 4

Social Security Totalization Agreements

by Brent W. Jackson and Scott Cash

Since the 1970s, U.S. negotiators have concluded bilateral agreements with 28 important trading partners to coordinate social security coverage and benefit provisions for individuals who live and work in more than one country in their working lives. Known as “totalization agreements,” they are similar in function and structure to treaties and are legally classified as congressional-executive agreements concluded pursuant to statute. The agreements have three main purposes: to eliminate double taxation on earnings, to provide benefit protections for workers who have divided their careers between the United States and another country, and to permit unrestricted payment of benefits to residents of the two countries. This article briefly describes totalization agreements, relates their history, and considers proposals to modernize and enhance them.

When Every Dollar Counts: Comparing Reported Earnings of Social Security Disability Program Beneficiaries in Survey and Administrative Records

by David C. Wittenburg, Jeffrey Hemmeter, Holly Matulewicz, Lindsay Glassman, and Lisa Schwartz

This article examines differences between survey- and administrative data–based estimates of employment and earnings for a sample of Social Security Administration (SSA) disability program beneficiaries. The analysis uses linked records from SSA's National Beneficiary Survey and administrative data from the agency's Master Earnings File. The authors find that estimated employment rates and earnings levels based on administrative data are higher than those based on survey data for beneficiaries overall and by sociodemographic subgroup. In proportional terms, the differences between survey and administrative data tend to be greater among subgroups with survey-reported employment rates that are lower than that of beneficiaries overall.

Social Security Administration Payments to State Vocational Rehabilitation Agencies for Disability Program Beneficiaries Who Work: Evidence from Linked Administrative Data

by Jody Schimmel Hyde and Paul O'Leary

This article's authors use linked administrative data from the Social Security Administration (SSA) and the Department of Education's Rehabilitation Services Administration to evaluate SSA's investment in services provided by the federal-state Vocational Rehabilitation (VR) program. A unique data resource permits a comparison of the value of SSA payments to state VRagencies for services provided to disability program beneficiaries who find and maintain a substantial level of work with the value of the cash benefits those beneficiaries forgo because of work. The authors find that the value of cash benefits forgone by beneficiaries after applying for VR services is substantially greater than the value of SSA payments to state VR agencies for those services, although the portion of the difference that is attributable to VR services cannot be determined.

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New papers from the NBER

The Effect of Economic Conditions on the Disability Insurance Program: Evidence from the Great Recession
Nicole Maestas, Kathleen J. Mullen, and Alexander Strand #25338
Abstract:
We examine the effect of cyclical job displacement during the Great Recession on the Social Security Disability Insurance (SSDI) program. Exploiting variation in the severity and timing of the recession across states, we estimate the effect of unemployment on SSDI applications and awards. We find the Great Recession induced nearly one million SSDI applications that otherwise would not have been filed, of which 41.8 percent were awarded benefits, resulting in over 400,000 new beneficiaries who made up 8.9 percent of all SSDI entrants between 2008-2012. More than one-half of the recession-induced awards were made on appeal. The induced applicants had less severe impairments than the average applicant. Only 9 percent had the most severe, automatically-qualifying impairments, 33 percent had functional impairments and no transferable skills, and the rest were denied for having insufficiently severe impairments and/or transferable skills. Our estimates imply the Great Recession in! creased claims processing costs by $2.960 billion during 2008-2012, and SSDI benefit obligations by $55.730 billion in present value, or $97.365 billion including both SSDI and Medicare benefits.

Annuity Pricing in Public Pension Plans: Importance of Interest Rates
Nino Abashidze, Robert L. Clark, Beth Ritter, and David Vanderweide #25343
Abstract:
There is little systematic information on the distribution options in public sector retirement plans and how annuity options are priced relative to the standard single life annuity. This study examines the distribution options of 85 large public retirement plans covering general state employees, teachers, and local government employees. An important component of the analysis is the construction of a data set presenting the annuity options offered by each of these plans and how the monthly benefits for these distribution options are priced. The analysis shows that interest rates used to price annuities vary considerably across the plans. As a result, retirees with the same monthly benefit if a single life benefit is chosen will have substantially different monthly benefits if they select the joint and survivor annuity offered by their retirement plan.

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Tuesday, December 11, 2018

Agenda for December 14th Technical Panel Meeting

2019 Technical Panel on Assumptions and Methods
Meeting Agenda

Friday, December 14th, 2018

The meeting will be held in the offices of the Social Security Advisory Board:
400 Virginia Avenue SW, Suite 625, Washington DC 20024

11:00am-12:30pm Mortality rate assumptions and methods
Gerard Anderson, Professor of Health Policy and Management and
Professor of International Health, Johns Hopkins University Bloomberg
School Public Health
David Cutler, Harvard College Professor, Otto Eckstein Professor of
Applied Economics, Harvard University
Greig Woodring, retired CEO, Reinsurance Group of America
Office of the Chief Actuary, Social Security Administration

12:30pm-1:00pm Lunch break

1:00pm-2:00pm Mortality rate assumptions and methods (continued)

2:00pm-5:00pm Disability assumptions and methods
Jeffrey Liebman, Malcolm Wiener Professor of Public Policy Kennedy
School of Government, Harvard University
Jeffrey L. Schuh, Vice President and Actuary, US Group Reinsurance,
Reinsurance Group of America
Richard Leavitt, Senior Vice President Actuarial, Smith Group
Office of the Chief Actuary, Social Security Administration

Attendees who require a reasonable accommodation,
please call 202-475-7700 at least three days before the meeting date.

For more information on the 2019 Technical Panel, click here.

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Monday, November 19, 2018

New papers from the NBER

A Lifetime of Changes: State Pensions and Work Incentives at Older Ages in the UK, 1948-2018
James Banks and Carl Emmerson #25261
Abstract:
We describe the history of state pension policy in the UK since 1948 and calculate summary measures of the generosity of the system over time and the degree to which the it created implicit taxes on, or subsidies to, work at older ages. The time series of these measures, calculated separately for ’example-type’ individuals of different birth cohorts, education and sexes, are then related to the time-series of employment rates at older ages for the equivalent types of individual. The generosity of the system rose over the period as whole but has fallen in recent years, and in contrast to many countries there were generally never large implicit taxes on work arising from the state pension system. What implicit subsidies there were in the years immediately before the State Pension Age have been gradually eliminated and the system is now broadly neutral with regard to work incentives. Exploiting variation in pension wealth and work incentives across different cohort-educatio! n-sex groups, created by the timing and phasing of pension reforms, we show that both pension wealth and the implicit work disincentives in the pension system are correlated with employment outcomes for men, with the expected negative sign.

Social Security Programs and Retirement Around the World: Reforms and Retirement Incentives – Introduction and Summary
Axel H. Börsch-Supan and Courtney Coile #25280
Abstract:
This is the introduction and summary to the ninth phase of an ongoing project on Social Security Programs and Retirement Around the World. This project, which compares the experiences of a dozen developed countries, was launched in the mid 1990s, following decades of decline in the labor force participation rate of older men. The first several phases of the project document that social security program provisions can create powerful incentives for retirement that are strongly correlated with the labor force behavior of older workers. Subsequent phases have explored how disability program provisions affect retirement, whether there is a link between older employment and youth unemployment, and whether older individuals are healthy enough to work longer. In the two decades since the project began, the dramatic decline in men’s labor force participation has been replaced by sharply rising participation rates. Older women’s participation has increased dramatically as well. Over this same period, countries have undertaken numerous reforms of their social security programs, disability programs, and other public benefit programs available to older workers. In this ninth phase of the project, we explore how the financial incentive to work at older ages has evolved from 1980 to the present. We highlight the important role of reforms in these changing incentives and examine how changing incentives may have affected retirement behavior.

The Evolution of Retirement Incentives in the U.S.
Courtney Coile #25281
Abstract:
Employment rates of older men and women in the U.S. have been rising for the past several decades. Over the same period, there have been significant changes in Social Security and private pensions, which may have contributed to this trend. In this study, we examine how the financial incentive to work at older ages has evolved since 1980 as a result of changes in Social Security and private pensions. We find that the implicit tax on work after age 65 has dropped by about 15 percentage points for a typical worker as a result of Social Security reforms; incorporating the change in private pensions, the decline is larger. We provide suggestive evidence that the evolution of retirement incentives has affected retirement behavior.

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Tuesday, November 13, 2018

New papers from the National Bureau of Economic Research

Social Security Programs and the Elderly Employment in Japan
by Takashi Oshio, Akiko S. Oishi, Satoshi Shimizutani  -  #25243 (AG)

Abstract:
We examine how the change in the trend of the elderly's
employment rates has been associated with changes in incentives
of social security and its related programs in Japan since the
1980s.  We compute the tax force to retire early, using the
institutional parameters and synthetic earnings profiles, and
juxtapose the tax force measures and the elderly employment rates
during 1980 and 2016.  Our results suggest that a reduction in
the tax force to retire early due to a series of social security
reforms has been associated with the recent recovery of the
employment rates for men aged 60 years and over as well as the
increasing upward trend in the employment rates for women aged
55-64 years.
http://papers.nber.org/papers/w25243?utm_campaign=ntw&utm_medium=email&utm_source=ntwg2

Social Security Programs and Employment at Older Ages in the Netherlands, by Klaas de Vos, Arie Kapteyn, Adriaan Kalwij  -  #25250 (AG)

Abstract:
There have been a vast number of social security reforms aimed at
increasing employment at older ages over the last two decades in
the Netherlands.  These reforms mainly lead to more stringent
eligibility criteria for, and reduced generosity of, social
security programs.  Our empirical evidence suggests that these
reforms are likely to have contributed to individuals working
longer, but it is difficult to pinpoint which reforms have been
most effective.  Furthermore, we show that the recent increase in
the state pension eligibility age is likely to further increase
employment at older ages.
http://papers.nber.org/papers/w25250?utm_campaign=ntw&utm_medium=email&utm_source=ntwg2

Saving Regret, by Axel H. Boersch-Supan, Tabea Bucher-Koenen, Michael D. Hurd, Susann Rohwedder  -  #25238 (AG LS)

Abstract:
We define saving regret as the wish in hindsight to have saved
more earlier in life.  We measured saving regret and possible
determinants in a survey of a probability sample of those aged
60-79.  We investigate two main causes of saving regret:
procrastination along with other psychological traits, and the
role of shocks, both positive and negative.  We find high levels
of saving regret but relatively little of the variation is
explained by procrastination and psychological factors.  Shocks
such as unemployment, health and divorce explain much more of the
variation.  The results have important implications for
retirement saving policies.

http://papers.nber.org/papers/w25238?utm_campaign=ntw&utm_medium=email&utm_source=ntwg2

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Wednesday, October 31, 2018

Social Security Advisory Board Announces 2019 Technical Panel

Social Security Advisory Board Announces 2019 Technical Panel

The Social Security Advisory Board (SSAB) has appointed an independent, expert panel to review the assumptions and methods used to develop the annual report of the Social Security Trustees on the financial status of the Old-Age, Survivors, and Disability Insurance trust funds. This 2019 Technical Panel on Assumptions and Methods is the sixth quadrennial panel the board has commissioned since 1999.

Policymakers and the public rely on the financial projections made by the Office of the Chief Actuary and published in the Trustees Report to understand the financial soundness of Social Security’s vital programs. The Panel will provide an independent assessment of the information used by the Trustees, the Chief Actuary, and program administrators to evaluate the program’s financial status.

To that end, the Panel, which consists of prominent actuaries, economists, and demographers, will analyze how economic and demographic trends will affect Social Security’s long-term solvency. The Panel will meet beginning in the fall of 2018, through the summer of 2019, at the SSAB office at 400 Virginia Ave. SW, Suite 625, Washington, DC. The Panel will issue a final report of its findings by September 2019. Additional information about the Technical Panel and upcoming meetings can be accessed at the Panel’s public information web page.

The 2019 Technical Panel on Assumptions and Methods is chaired by Robert M. Beuerlein, who has more than 40 years of experience in the life insurance industry working with the product and financial analysis of life, disability, and retirement insurance. He is a fellow of the Society of Actuaries, a member of the American Academy of Actuaries, and a Chartered Enterprise Risk Analyst. Mr. Beuerlein is a past president of the American Academy of Actuaries (2017) and the Society of Actuaries (2006).

The other members of the Panel include:

Ron Gebhardtsbauer, fellow of the Society of Actuaries, member of the American Academy of Actuaries, and professor emeritus in the Actuarial Science Program, Penn State University

Alexander Gelber, Ph.D., associate professor, Department of Economics and School of Global Policy and Strategy, University of California, San Diego

Joshua Goldstein, Ph.D., Chancellor’s Professor of Demography, University of California, Berkeley

Patricia L. (Tricia) Guinn, interim chief risk officer, Willis Towers Watson; fellow of the Society of Actuaries; member of the American Academy of Actuaries; Chartered Enterprise Risk Analyst; and previously managing director, Risk and Financial Services, Towers Watson

Kathleen Mullen, Ph.D., senior economist, RAND Corporation; director, RAND Center for Disability Research; and associate director, RAND Economics, Sociology and Statistics Department

Louise Sheiner, Ph.D., Robert S. Kerr Senior Fellow in Economic Studies, Brookings Institution, and policy director, Hutchins Center on Fiscal and Monetary Policy

Sita Nataraj Slavov, Ph.D., professor of public policy and director of the public policy Ph.D. program, Schar School of Policy and Government, George Mason University

Kent Smetters, Ph.D., Boettner Chair Professor, Wharton School, University of Pennsylvania, and Faculty Research Fellow, National Bureau of Economic Research

Tom Terry, fellow of the Society of Actuaries, member of the American Academy of Actuaries, fellow of the Conference of Consulting Actuaries, Enrolled Actuary, past president of the American Academy of Actuaries (2014) and the International Actuarial Association (2017); and CEO of the Terry Group, a healthcare, insurance and retirement consulting firm

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Retirement research funding opportunity: 2019 Sandell Grant and Dissertation Fellowship

Announcing the 2019 Sandell Grant and Dissertation Fellowship Programs

Sandell Grant Program

  • Sandell Grants provide the opportunity for junior or non-tenured scholars to pursue research on retirement or disability policy.  The program is open to scholars in all disciplines.
  • Up to three grants of $45,000 will be awarded for one-year projects.
  • Proposal guidelines are available online.

Dissertation Fellowship Program

  • Dissertation Fellowships support doctoral candidates studying retirement or disability policy.  The program is open to scholars in all disciplines.
  • Up to three fellowships of $28,000 will be awarded.
  • Proposal guidelines are available online.

The submission deadline for both programs is January 31, 2019.

The Sandell Grant and Dissertation Fellowship Programs
are funded by the U.S. Social Security Administration.

Center for Retirement Research at Boston College
258 Hammond Street, Chestnut Hill, MA 02467
(617) 552-1762 | fax: (617) 552-0191 | crr.bc.edu

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