Wednesday, October 28, 2015

CRFB estimates of solvency effects of Bush Social Security plan

The Committee for a Responsible Federal Budget released their estimates of the effects on Social Security’s financing of the reform plan released yesterday by Gov. Jeb Bush. Overall, the CRFB estimates are very close to the figures contained in an analysis I released yesterday.


What we both find is that the Bush plan could be expected to eliminate Social Security’s 75-year actuarial deficit and to produce a small trust fund surplus at the end of 75 years. Where we differ is that the CRFB analysis finds that, despite the program being solvent over the long term, the Social Security trust fund would go through a period of insolvency that would require that the trust fund be granted the authority to borrow. That borrowing would be repaid by the end of 75 years. In my analysis, the trust fund remained solvent throughout the 75 year period.


The differences are likely due to small details of how we set up the provisions to be simulated. But again, both analyses show a similar picture: that the Bush proposal would substantially improve the long-term solvency of Social Security.

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Tuesday, October 27, 2015

SSA actuarial score of budget deal Social Security provisions

The Social Security Administration’s Office of the Chief Actuary has published a valuation of the Social Security reform provisions included in the Bipartisan Budget Act of 2015. These include changes to the Social Security Disability program, including temporary reallocation of the payroll tax to extend the program’s trust fund solvency to 2022, as well as changes that shut off certain retirement benefit claiming strategies that were a cost to Social Security.

Overall, the provisions would improve the long-term actuarial balance of the combined Social Security retirement and disability programs by 0.04% of taxable payroll.

The SSA document with additional details is available here.

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Jeb Bush releases Social Security reform proposal

Former Florida Gov. Jeb Bush has released a Social Security reform proposal designed to balance the program’s finances, establish a new minimum benefit for long-term low-wage workers, and increase incentives to delay retirement.

I analyzed the plan using the Policy Simulation Group’s microsimulation models. You can find the full analysis, including detailed provisions included in the plan, here.


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Event: “Forging a New Path: How Tax Reform Could Address the Coming Retirement Crisis”

“Forging a New Path: How Tax Reform Could Address the Coming Retirement Crisis”

Center for American Progress
October 30, 2015, 9:30am ET - 12:15pm ET
About This Event

American families face a growing retirement crisis. More than half of all working-age households are in danger of having to make severe and painful cuts to their standard of living as they grow old. Basically, American families need more and more money for retirement, while their savings have actually remained flat or even declined. People live longer and health care costs are rising faster than inflation. But, unstable jobs, uncertain financial markets and employers cutting back on offering retirement benefits for employees make it more difficult to save for retirement. No wonder then that the retirement crisis is getting worse.

This worsening crisis underscores the urgent need for policymakers to help families save more for their retirement. The tax code offers a particularly effective yet often underexplored tool at the federal and state levels to help Americans save enough for life after work. Please join the Center for American Progress and The New School’s Schwartz Center for Economic Policy Analysis as we host a conversation with policy experts and government officials to discuss the retirement crisis and explore ways to address the crisis through tax reform by means of promoting refundable tax credits for retirement savings and encouraging relevant reforms at the state level.

Welcoming remarks:
Carmel Martin, Executive Vice President for Policy, Center for American Progress

Featured panelists, The State of Research on Efficiency of Savings Incentives:
Lily Batchelder, Professor of Law and Public Policy, New York University School of Law
John Friedman, Associate Professor of Economics, Brown University
William Gale, Arjay and Frances Miller Chair in Federal Economic Policy in the Economic Studies Program, Brookings Institution, Washington, D.C.

Moderated by:
Teresa Ghilarducci, Director, Schwartz Center for Economic Policy Analysis, The New School

Featured panelists, Raising Awareness of the Retirement Crisis and Tax Reform as a Solution:
Shaun O’Brien, Assistant Policy Director for Health and Retirement, AFL-CIO
Gary Koenig, Vice President, Economic and Consumer Security, AARP Public Policy Institute
Diane Oakley, Executive Director, National Institute on Retirement Security

Moderated by:
Rebecca Vallas, Director of Policy, Poverty to Prosperity Program, Center for American Progress

Closing keynote address:
Karen Dynan, Assistant Secretary for Economic Policy and Chief Economist, U.S. Department of the Treasury

Light refreshments will be served at 9:00 a.m.


RSVP for this event →


Center for American Progress
1333 H St. NW, 10th Floor
Washington, D.C. 20005

Map & Directions External Link Icon

Nearest Metro: Blue/Orange Line to McPherson Square or Red Line to Metro Center

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Friday, October 23, 2015

Apply for the Steven H. Sandell Grant Program via the Center for Retirement Research at Boston College


Submit Your Application

Submit Letter of Support

About Steven H. Sandell

The Center for Retirement Research sponsors the annual Steven H. Sandell Grant Program for scholars in the field of retirement research and policy. The program is funded by the U.S. Social Security Administration to provide opportunities for junior scholars from all academic disciplines to pursue cutting-edge projects on retirement income issues. Priority areas include:

• Social Security

• Macroeconomic analyses of Social Security

• Wealth and retirement income

• Program interactions

• International research

• Demographic research

Grant Awards

Up to three grants of $45,000 are awarded based upon the quality of the applicant’s proposal and his or her proposed budget. Applicants are required to complete the research outlined in the proposal within one year of the award. Grant recipients may be required to present their work to the Social Security Administration in Washington, DC or Baltimore.


The 2016 Sandell Grant Program deadline will be January 31, 2016. Please use the application forms at the top of this page. View the proposal guidelines and the budget matrix.


Please contact Marina Tsiknis with any questions about the Sandell Grant Program at 617-552-1092 or

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Wednesday, October 21, 2015

Event: “A Solution to the SSDI Trust Fund Dilemma: Long-Term Modernization with Short-Term Options to Delay Exhaustion”

Mathematica Policy Research Logo

A Solution to the SSDI Trust Fund Dilemma: Long-Term Modernization with Short-Term Options to Delay Exhaustion

In the absence of reforms, the Social Security Trustees predict that the SSDI Trust Fund will be exhausted in the fourth quarter of 2016; subsequent revenues will be enough to pay only 81 percent of the benefits due. Some potential solutions, such as restricting eligibility, reducing benefit amounts, or allocating a larger share of Social Security payroll taxes to the SSDI Trust Fund are politically problematic. Initiatives to reduce fraud and improve the program's integrity have bipartisan support, but it is uncertain what the actual savings from these initiatives would be, and they seem unlikely to solve the financing problem on their own.

In this briefing sponsored by Mathematica Policy Research and the Committee for a Responsible Federal Budget (CRFB), disability policy experts David Stapleton (Mathematica) and Edward Lorenzen (CRFB) will describe and discuss long- and short-term policy options, including:

Comprehensive modernization of the nation's fragmented disability support system to improve outcomes for people with disabilities and to eventually yield tens of billions in savings for taxpayers every year

Near-term reforms, such as addressing program integrity issues and restructuring work incentives, which may complement the modernization effort and delay Trust Fund exhaustion

A new Mathematica issue brief, “A Solution to the SSDI Trust Fund Dilemma: Long-Term Modernization with Short-Term Options to Delay Exhaustion,” provides more information and will be available at the briefing.

Friday, October 23, 11:00 a.m. - 12:00 p.m. (ET)
B-318 Rayburn House Office Building
Craig Thornton, a senior fellow at Mathematica, will moderate the event.

For more information, please contact

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Saturday, October 17, 2015

Upcoming event: “How should retirement investment advice be regulated?”

Join us on October 16 for a discussion with Secretary of Labor Thomas Perez on how investment advice should be regulated.


Brookings Event Invitation

REMINDER: Join us Friday afternoon for an examination of the Labor Department's proposed regulation on retirement investment advice.
Register to attend in person » Register to watch the live webcast »

How should retirement investment advice be regulated?
Featuring keynote remarks by Secretary of Labor Thomas E. Perez

Friday, October 16, 2015, 2:30 — 5:00 PM
The Brookings Institution, Falk Auditorium, 1775 Massachusetts Ave, NW
Washington, DC  20036

RSVP to Attend


RSVP for the webcast


The U.S. Department of Labor is proposing to change the legal standards for those providing investment advice to retirement accounts.  The department has proposed to limit the conflicts of interests that some advisors face when they receive differential compensation for recommending certain investment products over others. Notably, DOL has proposed making such advisors legally liable (fiduciaries) for the advice they provide, which would limit the conflicts of interest they would face.  As more and more American households are being expected to provide for their own retirement, rather than being able to rely on traditional pension plans, these issues are increasingly important.
Supporters of this “best interest” standard argue that conflicts of interest have been shown to undermine savers' retirement assets and must be addressed, and that low-balance investors may be better served by signing up for low-cost, model-based advice that is not conflicted.  Many in the investment industry, however, believe that the Labor Department’s proposed rules are unworkable, believe that conflicts of interest do not present challenges for savers, and that the proposed changes could make it harder and more expensive for low-income savers to be able to afford the professional guidance they need.
On Friday, October 16, the Initiative on Business and Public Policy at Brookings will host an event exploring these issues.  Secretary of Labor Thomas E. Perez will keynote the event, and will be joined by two panels of experts from industry, think tanks, and consumer advocates.  Participants will take questions from the moderator and audience.
The event will be live webcast. Join the conversation via Twitter at #FiduciaryRule.


Martin Neil Baily, Bernard L. Schwartz Chair in Economic Policy Development and Director, Initiative on Business and Public Policy, The Brookings Institution

Keynote Remarks

Thomas E. Perez, Secretary, U.S. Department of Labor

Panel 1: How should the rule be implemented?

Moderator: Josh Gotbaum, Guest Scholar, Economic Studies, The Brookings Institution
Kent Mason, Partner, Davis & Harman
Marilyn Mohrman-Gillis, Managing Director, Public Policy & Communications, Certified Financial Planner Board
Barbara Roper, Director of Investor Protection, Consumer Federation of America
Jim Szostek, Vice President, Taxes & Retirement Security, American Council of Life Insurers

Panel 2: Examining the evidence on conflicts of interest

Moderator: Martin Neil Baily, Bernard L. Schwartz Chair in Economic Policy Development and Director, Initiative on Business and Public Policy, The Brookings Institution
Sean Collins, Senior Director, Industry and Financial Analysis, Investment Company Institute
Jane Dokko, Fellow, Economic Studies, The Brookings Institution

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Upcoming event: “Aging Securely: An Actuarial Forum on Financial and Health Care Retirement Challenges”

You're Invited to

Aging Securely: An Actuarial Forum on Financial and

Health Care Retirement Challenges


Please join us for a public policy discussion led by actuarial experts on lifetime income, long-term care, and the sustainability of public programs that serve the needs of older people.



October 23, 2015

Noon - 3:00 PM EDT

Congressional Meeting Room South (CVC-217)

Capitol Visitor Center

Lunch will be provided

Register Now

More Information

Noon - Lunch available

12:05 - Welcome Remarks & Introduction to the Academy's Aging Securely Initiative


Tom Terry, immediate past president, American Academy of Actuaries

Tom Wildsmith, president-elect, American Academy of Actuaries

12:15 - Public Policies to Support Lifetime Income


Noel Abkemeier, co-chairperson, Lifetime Income Risk Joint Task Force

Mark Shemtob, member, Lifetime Income Risk Joint Task Force

1:15 - The Need for Long-Term Care and Public Policy Options


Chris Giese, member, Aging Task Force

Bruce Stahl, vice chairperson, Long-Term Care Reform Subcommittee

Eric Stallard, chairperson, Long-Term Care Reform Subcommittee

2:00 - Sustainability of Public Programs-The State of Medicare and Social Security; Release of the Academy's New Social Security Game


Steve Alpert, chairperson, Public Interest Committee

Tim Leier, chairperson, Social Security Committee

Cori Uccello, senior health fellow, American Academy of Actuaries

2:55 - Concluding Remarks


Tom Terry, immediate past president, American Academy of Actuaries

Tom Wildsmith, president-elect, American Academy of Actuaries




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Thursday, October 15, 2015

Upcoming hearing: “Understanding Social Security’s Long-Term Fiscal Picture”

U.S. Senate Committee on Homeland Security & Governmental Affairs


Understanding Social Security’s Long-Term Fiscal Picture

Full Committee Hearing

October 20, 2015 10:00AM

Location: SD-342, Dirksen Senate Office Building


  • Stephen C. Goss

    Chief Actuary

    U.S. Social Security Administration

  • Jagadeesh Gokhale, Ph.D.

    Director of Special Projects

    Penn Wharton Public Policy Initiative

  • Dean Baker, Ph.D.


    Center for Economic and Policy Research

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Wednesday, October 14, 2015

Webinar: “State and International Strategies to Expand Private Sector Retirement Savings”

Reminder: have you registered for our free webinar?

State and International Strategies to Expand
Private Sector Retirement Savings

DATE: Wednesday, October 21, 2015
TIME: 1:00 PM – 2:00 PM EST

Please join us for a one hour briefing and Q&A session to discuss a recently released report by the U.S. Government Accountability Office (GAO) examining coverage and participation rates in workplace retirement savings programs, state initiatives and comparative international strategies to expand retirement savings.
Our Panel:

  • Sharon Hermes and Jessica Gray, Senior Analysts, Education, Workforce, and Income Security Issues, U.S. Government Accountability Office (GAO)
  • Kathleen Kennedy Townsend, Commissioner, Maryland Commission on Retirement Security and Savings
  • Julian Federle, Chief Policy and Programs Officer, Office of the Illinois State Treasurer
  • Michael P. Kreps, Principal, Groom Law Group and former Senior Pensions and Employment Counsel, U.S. Senate Committee on Health, Education, Labor and Pensions


  • Angela M. Antonelli, Executive Director, Georgetown Center for Retirement Initiatives
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Center for Retirement Research 2016 Dissertation Fellowship Program

The Center for Retirement Research at Boston College announces the 2016 Dissertation Fellowship Program, funded by the U.S. Social Security Administration.

  • The Dissertation Fellowships support doctoral candidates writing dissertations on retirement income and policy issues. The program is open to scholars in all academic disciplines.
  • Up to three fellowships of $28,000 will be awarded.
  • The submission deadline for proposals is January 31, 2016.  Award recipients will be announced in April 2016.
  • The proposal guidelines are available online.
For questions, please contact:
Marina Tsiknis
617-552-1092 Read more!

New paper: “Social Security Replacement Rates”

WASHINGTON, DC – The Senate Budget Committee today released its October 6, 2015, issue of the Budget Bulletin focused on Social Security replacement rates. The Budget Bulletin provides regular expert articles by Senate Budget Committee analysts on the issues before Congress relating to the budget, deficits, debt, and the economy.

Read the full Senate Budget Bulletin here.

Excerpts follow:

Social Security Replacement Rates

Social Security provides monthly cash benefits to retired and disabled workers, as well as their eligible spouses, dependents, and survivors. The current benefit formula, enacted by Congress in 1977, was first applied to individuals born in 1917, who turned 62 in 1979. To evaluate the adequacy and equity of this formula, benefits are often compared with wages. The ratio of benefits to wages, known as the replacement rate, reflects the extent to which benefits replace the wages lost due to retirement, disability, or death. The higher the ratio, the easier it is for workers to maintain their standard of living after they become eligible for benefits.

Replacement rates provide a useful way to assess the relative value of benefits, provided they are presented in a clear and consistent manner. These rates as typically presented by the Social Security Administration (SSA), however, have been subject to criticism focused on SSA’s use of career-average, wage-indexed earnings as the denominator in their calculations, resulting in the rates’ removal from the 2014 and 2015 annual Social Security trustees’ reports.

The Social Security disability trust fund will be insolvent by the end of next year. The retirement and survivor trust fund will be insolvent in less than two decades. While that might seem like plenty of time to solve the problem, it all depends on which path the federal government chooses to take. Some solutions are more time-sensitive than others.

The public deserves the opportunity to consider all the options to address Social Security’s pending insolvency while there is still time to make a difference. And careful consideration starts with a better understanding of replacement rates and their public policy implications.

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Friday, October 9, 2015

New papers from the Social Science Research Network

"What Causes Workers to Retire Before They Plan?"
Center for Retirement Research Working Paper No. 2015-22

ALICIA H. MUNNELL, Boston College - Center for Retirement Research
GEOFFREY SANZENBACHER, Boston College Economics Department
ANTHONY WEBB, Boston College - Center for Retirement Research

This paper explores the extent to which health, employment, family, or finances are associated with earlier-than-planned retirement using the Health and Retirement Study (HRS). The importance of any shock that drives early retirement depends both on its effect on those experiencing it and its prevalence in the population; therefore, the analysis proceeds in two steps. First, a probit regression is used to determine the strength of the relationship between the shocks and earlier-than-planned retirement, controlling for individual characteristics. Second, to incorporate the prevalence of the shock, counterfactual experiments are run to determine how much early retirement would be reduced in the population if these shocks did not occur.

"Job Polarization and Labor Market Outcomes for Older, Middle-Skilled Workers"
Center for Retirement Research at Boston College Working Paper No. 2015-23

MATTHEW S. RUTLEDGE, Boston College, Center for Retirement Research
QI GUAN, Boston College - Center for Retirement Research

Numerous studies have found that even as employment growth in high- and low-skill occupations has been robust, employment in middle-skill occupations such as office administration and manufacturing is in long-term decline. The timing of this decline could not be worse for the older workers looking to prolong their careers to compensate for decreasing Social Security and pension income. But few existing studies have examined the consequences of job polarization on older workers, who may be less likely than prime-aged workers to find work in high- or low-skill occupations. This paper uses the Survey of Income and Program Participation to investigate employment outcomes specifically for older workers first observed in middle-skill jobs. If they leave a middle-skill job, are they able to find jobs in another skill level, or are they forced out of employment prematurely? What are the circumstances surrounding these transitions, and how are the workers’ earnings affected?

"Characteristics of Noninstitutionalized DI and SSI Program Participants, 2013 Update"
Office of Retirement and Disability Policy, Office of Research, Evaluation, and Statistics. Research and Statistics Note, No. 2015-02, 2015

MICHELLE STEGMAN, Government of the United States of America - Office of Program Development, Social Security Administration
JEFFREY HEMMETER, Government of the United States of America - Social Security Administration

The authors use data from the 2008 panel of the Survey of Income and Program Participation (SIPP) matched to administrative records from the Social Security Administration (SSA) to produce tables describing the characteristics of Disability Insurance (DI) beneficiaries and Supplemental Security Income (SSI) recipients in December 2010. This match to survey data allows the authors to provide detailed information on the economic and demographic characteristics of program participants not available in administrative records. These tables update those previously published by DeCesaro and Hemmeter (2008) using 2002 data.

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Monday, October 5, 2015

Upcoming event: Savings & Retirement Foundation

TUESDAY, OCTOBER 13: Join us on  for a luncheon discussion of the Department of Labor's Update to Fiduciary Rules with Charles Gabril, Kent Mason, and Ike Brannon. Please RSVP through the link below if you plan to attend.

Join us on Tuesday, October 13th at Noon
for a special event on Capitol Hill
A Panel Discussion on The U.S. Department of Labor's Updated Fiduciary Rules
Confirmed Panelists
Charles Gabriel
Capital Alpha
Kent Mason
Davis & Harman
Ike Brannon 
President of Capital Policy Analytics
Tuesday October 13, 2015
Noon-1:00 p.m.

Dirksen Senate Office Building
Room G11

Lunch will be provided.
This is a widely attended event.







Charles Gabriel
President, Capital-Alpha

Kent Mason
Partner, Davis & Harman

Ike Brannon
President, Capital Policy Analytics

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CBO projects lower interest rates for Social Security Trust Fund bonds

The Congressional Budget Office has posted a presentation on their projections for long-term interest rates, which play an important part in Social Security trust fund and solvency measures (though no real part in annual payroll tax and benefit outlay measures). The presentation was made to the Social Security Trustees Working Group, which  meets throughout the year to consider issues as the Trustees work to construct the following year's annual report.

The punchline to this presentation can be found on page 10: the CBO projects that from 2015-2040, interest rates on trust fund bonds will average 4.5%, versus the 5.3% projected by Social Security's Trustees. From 2040 onward, CBO projects an average bond yield of 4.7%, versus 5.6% from the Trustees. This difference would explain part of why CBO projects a substantially larger long-term Social Security shortfall than do the Social Security Trustees, though other factors weigh larger in that outcome.

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New report: “The Windfall Elimination Provision: It's Time to Correct the Math”

The Windfall Elimination Provision: It's Time to Correct the Math

The Social Security Advisory Board is pleased to announce publication of The Windfall Elimination Provision: It’s Time to Correct the Math. The report recommends that Congress replace the Windfall Elimination Provision (WEP) for new retirees starting in 2017, when earnings data for workers not covered by Social Security will become available. These data will make it possible for SSA to calculate these workers’ benefits proportional to their contributions. The Board’s full report can be found here.

Highlights of the report include:

  • About one quarter of state and local government employees do not contribute to Social Security;
  • The WEP unevenly adjusts benefits for low earners vs. high earners;
  • The WEP is often confusing to those affected;
  • Using newly available earnings data for non-covered employment, SSA has the ability to calculate benefits proportional to contributions.

Replacing the WEP for future retirees would gradually phase out an unpopular and imprecise tool for calculating retirement benefits. The Board urges Congress to implement this fix.

Contact: Anita Kelly (202) 475-7700

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Brookings event October 7: “Are new directions needed in state pension policy?”

Join us on October 7 for a discussion of new directions for state-sponsored retirement savings plans.


Brookings Event Invitation

REMINDER: We hope you will join us Wednesday morning for a discussion of the role of states in boosting retirement plan coverage and retirement adequacy.  
Register to attend this event in person » Register for the live webcast »

Are new directions needed in state pension policy?

Wednesday, October 7, 2015, 9:45 AM — 12:00 PM
The Brookings Institution, Falk Auditorium, 1775 Massachusetts Ave, NW
Washington, DC  20036

RSVP to Attend


RSVP for the webcast


Recent developments have raised many issues about the role of the states in boosting retirement plan coverage and retirement adequacy.  State-run retirement systems are, in aggregate, well short of the funding they need to finance promised benefits.  Many workers are not covered in any retirement plan.
On October 7, the Retirement Security Project will host an event to discuss these and related issues.  Presenters will examine options for structuring state-sponsored retirement savings plans for small businesses and revisit the question of whether state and local government workers should be covered by Social Security.  Following each presentation, discussants will add their thoughts and all participants will take questions from the moderator and the audience.
Join the conversation on Twitter at #Retirement.

Opening remarks

William G. Gale, Co-Director, Urban-Brookings Tax Policy Center; Director, Retirement Security Project; Senior Fellow, Economic Studies, The Brookings Institution

Session one: Structuring state retirement saving plans -- A practical guide to policy issues

Presenter: David C. John, Deputy Director, Retirement Security Project, The Brookings Institution
Moderator: Joshua Gotbaum, Guest Scholar, Economic Studies, The Brookings Institution
Discussant: Daniel Biss, State Senator (D), Illinois 9th District
Discussant: Lisa Bleier, Managing Director, Public Policy and Advocacy, SIFMA

Session two: Social Security coverage for state and local government workers -- A reconsideration

Presenter: William G. Gale, Co-Director, Urban-Brookings Tax Policy Center; Director, Retirement Security Project; Senior Fellow, Economic Studies, The Brookings Institution
Moderator: Annamaria Lusardi, Denit Trust Chair of Economics and Accountancy and Academic Director, Global Financial Literacy Excellence Center (GFLEC), The George Washington University
Discussant: Jason Fichtner, Senior Research Fellow, Mercatus Center, The George Washington University 
Discussant: Teresa Ghilarducci, Professor, Bernard L. and Irene Schwartz Chair in Economic Policy Analysis and Director, Schwartz Center for Economic Policy Analysis (SCEPA), The New School

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Friday, October 2, 2015

New papers from the Social Science Research Network

"What Does Consistent Participation in 401(k) Plans Generate? Changes in 401(k) Account Balances, 2007-2013"
EBRI Issue Brief, Number 418 (September 2015)

JACK VANDERHEI, Employee Benefit Research Institute (EBRI)
SARAH HOLDEN, Investment Company Institute
LUIS ALONSO, Employee Benefit Research Institute (EBRI)
STEVEN BASS, Investment Company Institute

This paper analyzes changes in 401(k) account balances of consistent participants in the EBRI/ICI 401(k) database over the six-year period from year-end 2007 to year-end 2013. Two major insights emerge from looking at consistent participants in the EBRI/ICI 401(k) database over this six-year time period: The average 401(k) account balance fell 25.8 percent in 2008, and then rose from 2009 through year-end 2013. Overall, the average account balance increased at a compound annual average growth rate of 10.9 percent from 2007 to 2013, to $148,399 at year-end 2013. The median (midpoint) 401(k) account balance increased at a compound annual average growth rate of 15.8 percent over the period, to $75,359 at year-end 2013. At year-end 2013, the average account balance among consistent participants was more than twice the average account balance among all participants in the EBRI/ICI 401(k) database. The consistent group’s median balance was more than four times the median balance across all participants at year-end 2013. Three primary factors affect account balances: contributions, investment returns, and withdrawal/loan activity. The percentage change in average account balance of participants in their 20s was heavily influenced by the relative size of their contributions to their account balances and increased at a compound average growth rate of 46.6 percent per year between year-end 2007 and year-end 2013. The asset allocation of the 4.2 million 401(k) plan participants in the consistent group was broadly similar to the asset allocation of the 26.4 million participants in the entire year-end 2013 EBRI/ICI 401(k) database. On average at year-end 2013, about two-thirds of 401(k) participants’ assets were invested in equities, either through equity funds, the equity portion of target-date funds, the equity portion of non-target-date balanced funds, or company stock. Younger 401(k) participants tend to have higher concentrations in equities than older 401(k) participants. Equity holdings by consistent 401(k) participants increased slightly among younger participants and decreased slightly for older participants. High allocations to equities dropped for both groups from 2007 to 2013. More consistent 401(k) plan participants held target-date funds at year-end 2013 than at year-end 2007, on net; many of those with target-date funds held all of their 401(k) account in target-date funds.

"How Much Longer Do People Need to Work?"

ALICIA H. MUNNELL, Boston College - Center for Retirement Research
ANTHONY WEBB, Boston College - Center for Retirement Research
ANQI CHEN, Center for Retirement Research at Boston College

Working longer is a powerful lever to enhance retirement security. Individuals should be able to extend the number of years they work because, on average, they are healthier, live longer, and face less physically demanding jobs. But averages are misleading when discrepancies in health, job prospects, and life expectancy have widened between individuals with low and high socioeconomic status (SES). To understand the magnitude of the problem, this paper, using data from the Health and Retirement Study, specifies how much longer households in each SES quartile would need to work to maintain their pre-retirement standard of living and compares those optimal retirement ages with their planned retirement ages to calculate a retirement gap. It then uses regression analysis to explore whether the gap reflects poor circumstances or poor planning – that is, the extent to which the retirement gap results from health, employment, and marital shocks that occur before the HRS interview but too late for the household to adjust saving (between ages 50 and 58), as opposed to a gap resulting from inadequate foresight. The analysis shows that households in lower-SES quartiles have larger retirement gaps, and this pattern remains true even after controlling for late-career shocks. In short, the most vulnerable have the largest retirement gaps, and these gaps arise from poor planning rather than late-career shocks.

"Pension Management between Financial Market Development and Intergenerational Solidarity: A Socio-Economic Analysis and a Comprehensive Model"
EGPA 2015 Annual Conference, Toulouse, 26-28 August 2015

YURI BIONDI, French National Center for Scientific Research (CNRS)
MARION BOISSEAU, Université Paris Dauphine

In recent decades, management modes for pension obligations has been coevolving with political and financial economic strategies aimed to prompt and promote active financial markets and institutional investors, as well as transnational harmonisation and convergence of accounting standards between private and public sectors. In this context, our article provides a theoretical analysis of these management modes for pension obligations, drawing upon a comprehensive review of existing practice and regulation. The latter are still inconsistent with the actuarial representation that has been fostered by international institutions, including the World Bank, the European Commission and the International Public Sector Accounting Standards (IPSAS) Board. According to our frame of analysis, a variety of viable modes of pension management exists and may be acknowledged. Our article elaborates a model of pension management in view to clarify and improve on pension protection, that is, the assurance of continued provision of pension payments at their agreed levels under viable alternative modes of pension management. Drawing upon this model, we further develop policy recommendations for accounting and prudential regulations concerned with pension obligations.

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