New Social Security papers from the Social Science Research Network

SOCIAL SECURITY, PENSIONS & RETIREMENT INCOME eJOURNAL

"Defined Contribution Pension Participation and Contributions by Earnings Levels Using Administrative Data" 
Social Security Bulletin, Vol. 71, No. 2, pp. 67-76, 2011

IRENA DUSHI, U.S. Social Security Administration
Email: irenad1@gmail.com
HOWARD IAMS, U.S. Social Security Administration
Email: Howard.m.iams@ssa.gov
CHRISTOPHER R. TAMBORINI, U.S. Social Security Administration
Email: Chris.Tamborini@ssa.gov

Many observers question how the shift from defined benefit (DB) to defined contribution (DC) retirement plans affects workers with different compensation levels. To advance the empirical basis for understanding pension outcomes, this article estimates DC plan participation and contribution rates in 2006 both by the worker's current earnings and by the annual average of real earnings over the 10-year period 1997–2006. Using earnings data from W-2 tax records linked to data from the Census Bureau's Survey of Income and Program Participation, we find that workers in the lower part of the earnings distribution are less likely to participate in a DC plan, and the contribution rates for those who do participate are lower than those for workers with higher earnings.

"Managing Independence: The Governance Components of the National Railroad Retirement Investment Trust" 
Social Security Bulletin, Vol. 71, No. 2, pp. 77-84, 2011

KEVIN WHITMAN, U.S. Social Security Administration
Email: Kevin.Whitman@ssa.gov

Congress created the National Railroad Retirement Investment Trust (NRRIT) in 2001 to invest assets from the federal Railroad Retirement program in equities, expecting to improve returns and help fund expanded benefits. In designing the NRRIT, Congress tried to address concerns raised by policymakers and theorists about potential political influence on investment decisions that could create conflicts, lower the program's performance, and interfere with private markets. Proposals to use centralized investment to improve Social Security's financing have recently raised similar concerns. This article reviews management and governance aspects of the NRRIT as they relate to its political independence by focusing on the Trust's legal status, mandate, governing board characteristics, investment policy, and oversight. If Social Security were to adopt such an investment policy, examining the NRRIT's design and experience in these areas could provide useful guidance.

"Women and the Social Security Earnings Test" 

TED FIGINSKI, University of California, Irvine - Department of Economics
Email: tffiginski@gmail.com

In 2000, in an effort to encourage older individuals to continue to work, Congress removed the Social Security earnings test, which beneficiaries view as a tax on benefits, for beneficiaries who attained the Normal Retirement Age. Previous analysis on the effects of the Social Security earnings test has not addressed the effect on women, who are a significant proportion of all benefit types – comprising 57 percent of all beneficiaries over 62, 49 percent of primary beneficiaries, and 99 percent of spousal beneficiaries. After the removal of the earnings test, female primary beneficiaries increase average earnings and labor force participation. Female spousal beneficiaries, however, do not increase their average earnings or labor force participation. In addition, the removal of the earnings test also encourages all women to claim benefits at an earlier age. As suggested by Gruber and Orszag (2003), the incentive to claim benefits at a younger age may have an effect on the welfare of Social Security beneficiaries, possibly increasing the poverty among older individuals.