Characteristics of the longest job for new disabled workers: findings from the New Beneficiary Survey

This article describes the characteristics of the longest job held by new disabled-worker beneficiaries responding to questions in the 1982 New Beneficiary Survey, conducted by the Social Security Administration in October-December 1982. The characteristics include pension coverage, job duration, employer type, occupation, and industry. Many disabled workers (about half the men and two-fifths of the women) reported having been covered by a pension plan. Pension coverage, pension receipt, and job tenure all increased with age, and older disabled workers had pension coverage similar to that of retired workers. Disabled and retired workers often differed in other job characteristics, but tended to become more similar with increasing age. Disabled workers were more likely to have had longest jobs with private employers and in operator-laborer occupations. When they were compared with the job characteristics of retired workers, the characteristics of disabled women exhibited less difference than did those of disabled men.     

Pension coverage among private wage and salary workers: preliminary findings from the 1988 survey of employee benefits

Based on data for private wage and salary workers in May 1988, this article examined pension coverage under two types of employer-sponsored pension plans. Some of the factors associated with employer-financed pension coverage were also examined, and comparisons were made to findings on pension coverage of full-time workers in 1972, 1979, and 1983. "Covered" workers were defined as those actually participating in a pension plan. Among all private sector employees studied, 34 percent were covered by a "basic" pension plan (most of which, presumably, were defined benefit plans), and 14 percent were covered by a pretax retirement savings plan--a subtype of defined contribution plan. With 7 percent of the respondents covered by both types of plans, the total coverage rate under employer-sponsored plans was 41 percent. Twelve percent of the respondents reported that they had contributed to an IRA in 1987. The reported IRA usage was somewhat higher among those already covered by a pension plan than among noncovered workers. Six percent of the respondents were not covered by an employer-sponsored plan but were contributing to an IRA, yielding a total of 47 percent who were participating in either an employer-sponsored or an individual retirement plan. While it was assumed--as in previous studies--that all "basic" coverage was being funded by employers, only four-fifths of those in pretax retirement savings plans reported that employers were also contributing to these plans. The remainder of the analysis was restricted to coverage under employer-financed plans, and it was further restricted to full-time workers. A total of 46 percent of these workers were covered under employer-financed pension plans--33 percent covered only by a basic plan, 7 percent covered only by a pretax plan, and 6 percent dually covered. Among men, the coverage rate was 49 percent, compared with 43 percent among women. Several individual and job-related characteristics were found to be associated with employer-financed pension coverage among full-time employees. Coverage rates were quite low among workers under age 25, but were substantially higher among those aged 35-59. Pension coverage was also low among those with less than 5 years of employment on the job, but relatively high among those with 5 years or more of job tenure. Coverage rate differences by race were not substantial. Whites reported a coverage rate of 47 percent, compared with 42 percent among blacks and 45 percent among other races.(ABSTRACT TRUNCATED AT 400 WORDS)     

Characteristics of the longest job for new retired workers: findings from the New Beneficiary Survey

This article describes the duration and type of employment, occupational and industrial classification, and pension coverage associated with the longest job ever held by new social security retired-worker beneficiaries and nonretired persons enrolled only for Medicare. The Medicare-only enrollees usually had their retired-worker benefits withheld because their earnings exceeded exempt amounts under the social security earnings test. They were more likely to be self-employed and to be in executive, administrative, managerial, or professional occupations. By contrast, new retired-worker beneficiaries closely resembled the general labor force with respect to occupation, industry, and employer type. Persons who claimed benefits before age 65 differed from older retirees in that they were more likely to be in service and blue-collar occupations and less likely to be self-employed. Both sexes increased their pension coverage between the late 1960's and the early 1980's. By the latter period, the majority of retired workers reported employee pension coverage and, of those covered, most received a monthly benefit. Fewer women than men indicated pension coverage. Married women who retired early were least likely to indicate pension coverage and, when covered, were more likely than other retirees to report the receipt of a lump sum payment in lieu of monthly payments.     

Black-white differences in private pensions: findings from the retirement history study.

This article compares older black workers and older white workers on coverage under private pension plans, the receipt of pension benefits upon retirement, and the job characteristics associated with both coverage and receipt. Data are from the 1969 and 1975 interviews of the Retirement History Study and describe pre-ERISA conditions among persons in their late fifties to mid-sixties. Black workers were much less likely than white workers to have been covered by a private pension on their longest job. Moreover, among those who were covered, they were less likely to have received benefits. The racial differences appear to result in part from subtantial differences on job characteristics, particularly industry.     

Pension coverage and benefits, 1972: findings from the retirement history sutdy

This article, based on data from the Retirement History Study, examines coverage by an employee pension plan on the longest job and the extent to which covered workers received an employee pension upon retirement and the size of their benefits. It also examines the joint receipt of employee pension and OASDI benefits and the size of the combined benefits. Each of these pension variables is analyzed for differences by class of worker (private wage and salary or government), sex, and characteristics of the longest job (industry, occupation, tenure, recency of job, extent of employment, and annual earnings rate). The majority of completely retired individuals in their early to middle sixties in 1972 did not receive employee pension benefits in that year. Women employed in private industry on their longest job were the most disadvantaged in this regard. Even when they were fortunate enough to receive retirement benefits from employee pension plans, their benefits were substantially lower than those of men or of women employed in government.     

Characteristics of individuals with integrated pensions

Employer pensions that integrate benefits with Social Security have been the focus of relatively little research. Since changes in Social Security benefit levels and other program characteristics can affect the benefit levels and other features of integrated pension plans, it is important to know who is covered by these plans. This article examines the characteristics of workers covered by integrated pension plans, compared to those with nonintegrated plans and those with no pension coverage. Integrated pension plans are those that explicitly adjust their benefit structure to help compensate for the employer's contributions to the Social Security program. There are two basic integration methods used by defined benefit (DB) plans. The offset method causes a reduction in employer pension benefits by up to half of the Social Security retirement benefit; the excess rate method is characterized by an accrual rate that is lower for earnings below the Social Security taxable maximum than above it. Defined contribution (DC) pension plans can be integrated along the lines of the excess rate method. To date, research on integrated pensions has focused on plan characteristics, as reported to the Bureau of Labor Statistics (BLS) through its Employee Benefits Survey (EBS). This research has examined the prevalence of integration among full-time, private sector workers by industry, firm size, and broad occupational categories. However, because the EBS provides virtually no data on worker characteristics, analyses of the effects of pension integration on retirement benefits have used hypothetical workers, varying according to assumed levels of earnings and job tenure. This kind of analysis is not particularly helpful in examining the potential effects of changes in the Social Security program on workers' pension benefits. However, data on pension integration at the individual level are available, most recently from the Health and Retirement Study (HRS), a nationally representative survey of individuals aged 51-61 in 1992. This dataset provides the basis for the analysis presented here. The following are some of the major findings from this analysis. The incidence of pension integration in the HRS sample is 32 percent of all workers with a pension (14 percent of all workers). The HRS can also identify integrated DC plans, a statistic that is not available from BLS data. The rate of integration for workers with only DC plans is 8 percent. After controlling for other variables, several socio-demographic characteristics are significantly related to the incidence of integration. The probability of having an integrated pension is 4.6 percentage points less for men compared to women. Non-Hispanic blacks are 6.4 percentage points less likely than non-Hispanic whites to have integrated pensions. Union members are 14 percentage points less likely to have integrated pensions, while workers with less than a graduate level education are at least 15 percentage points more likely to have a pension that is integrated. Some earnings and pension characteristics are also significantly correlated with pension integration. Earnings are positively related, with the probability of having an integrated pension increasing by 2 percentage points for an increase of $1,000 in annual pay. An even larger effect comes from earning at or above the Social Security taxable maximum. Workers at or above this income level are 10 percentage points more likely to have an integrated plan, but for those with more than one plan the probability of pension integration goes up by 13 percentage points.     

Income of new retired workers by social security benefit levels: findings from the New Beneficiary Survey

This article, based on New Beneficiary Survey (NBS) data, examines the sources and amounts of income available to newly retired workers by the level of their primary insurance amount (PIA). For this analysis, the PIA distribution was divided into quartiles. Retired workers with high PIA's were found to be more likely to have private pensions or asset income and thus to have the highest total income. When a spouse's income is taken into account, married retired workers at all PIA levels have higher total income than do the unmarried retirees. The difference between the income of married and unmarried retirees is greatest for those with PIA's in the lowest quartile, where the median total income of the married retirees is roughly three times as high as that of the unmarried group. New retirees with PIA's in the lowest quartile were a mixed group: Many had additional important sources of income; others did not and had income that was quite low. About 21 percent of those with PIA's in the lowest quartile had pensions and their median total income was about $19,100. An additional 55 percent were married women without pensions of their own who, together with their husbands, had a median total income of $15,900. The remaining 24 percent were married men and unmarried retirees without a pension and with much lower median income--$7,100 for the married men and their wives, and $5,000 for the unmarried men and women.     

Retirement-age women and pensions: findings from the New Beneficiary Survey

This article examines the extent of employer-sponsored pension receipt and the amounts of pension benefits among a cohort of retirement-age women interviewed in the New Beneficiary Survey. These women reported relatively low levels of pension protection. Only 27 percent were receiving a pension in late 1982, either from their own employment or as survivors. This was one-half the rate of current pension receipt among a comparable cohort of men. An additional 17 percent of the women were expecting pensions of their own or had potential survivor protection through their husbands' pensions. Among those receiving a pension, women reported median monthly benefits of $250, compared with $460 among men. Pension benefits were a fairly important source of income for these women, particularly those who were unmarried. Almost one-half of the unmarried recipients depended on their pensions for one-third or more of their total incomes, and without their pension income 11 percent would have been below poverty income levels.     

Comparing replacement rates under private and federal retirement systems

One measure of the adequacy of retirement income is replacement rate - the percentage of pre-retirement salary that is available to a worker in retirement. This article compares salary replacement rates for private-sector employees of medium and large private establishments with those for federal employees under the Civil Service Retirement System and the Federal Employees Retirement System. Because there is no standard benefit formula to represent the variety of formulas available in the private sector, a composite defined benefit formula was developed using the characteristics of plans summarized in the Bureau of Labor Statistics Medium and Large Employer Plan Survey. The resulting "typical" private-sector defined benefit plan, with an accompanying defined contribution plan, was then compared with the two federal systems. The Civil Service Retirement System (CSRS) is a stand-alone defined benefit plan whose participants are not covered by Social Security. Until passage of the 1983 Amendments to Social Security Act, it was the only retirement plan for most federal civilian employees. Provisions of the 1983 Amendments were designed to restore long-term financial stability to the Social Security trust funds. One provision created the Federal Employees Retirement System (FERS), which covers federal employees hired after 1983. It was one of the provisions designed to restore long-term financial stability to the Social Security trust funds. FERS employees contribute to and are covered by Social Security. FERS, which is a defined benefit plan, also includes a basic benefit and a 401(k)-type plan known as the Thrift Savings Plan (TSP). To compare how retirees would fare under the three different retirement systems, benefits of employees retiring at age 65 with 35 years of service were calculated using hypothetical workers with steady earnings. Workers were classified according to a percentage of the average wage in the economy: low earners (45 percent), average earners (100 percent) high earners (160 percent), and maximum earners (earnings at the taxable maximum amount). Overall, this analysis found that: Excluding Social Security benefits and TSP and defined contribution annuities, CSRS retirees have a higher pre-retirement salary replacement rate than either FERS or private-sector retirees. Private-sector retirees, however, have higher replacement rate than their FERS counterparts. Including Social Security benefits but not TSP and defined contribution plan annuities, CSRS retirees who are maximum earners have a higher pre-retirement salary replacement rate (despite receiving no Social Security benefits) than FERS retirees with the same earnings. Private-sector retirees in all earnings categories have a higher replacement rate than federal retirees with the same earnings. Including Social Security and TSP and defined contribution plan annuities, private-sector retirees in all earnings categories have a higher replacement rate than federal retirees, but their rate is close to that of FERS retirees. The rate is higher for FERS retirees than for CSRS retirees in all earnings categories. This analysis shows that replacement creates could exceed 100 percent for FERS employees who contribute who contribute 6 percent of earnings to the TSP over full working career. Private-sector replacement rates were quite similar for those with both a defined benefit and a defined contribution pension plan. Social Security replacement rates make up the highest proportion of benefits for th private sector's lowest income quartile group. The replacement rate for 401(k) plans and the TSP account for a higher proportion of benefits than does Social Security for all other income groups, assuming the absence of a defined benefit plan.     

Income of new retired workers by age at first benefit receipt: findings from the New Beneficiary Survey

Using data from the New Beneficiary Survey (NBS) of the Social Security Administration (SSA), this article examines how income sources and total monthly income received by newly retired social security beneficiaries vary with the age at which the first benefit check was received. The NBS respondents who received a first benefit at age 65 or older were better off economically than were those who received a first benefit at ages 62-64. At the time of the interview, 18-30 months after receiving a first benefit, these older beneficiaries had higher levels of total income and were more likely to have income from earnings and assets. Pension receipt rates did not vary by the age at which the first social security benefit was received except for married women retired workers, for whom the rate was higher at the older ages. The largest proportion of aggregate income (slightly more than one-third) was derived from social security benefits. More than 90 percent of the NBS Medicare-only respondents--a sample of nonbeneficiaries who were eligible for monthly cash benefits but had established their entitlement only for the purpose of enrolling in the Medicare program--reported earnings income. They had lower rates of pension receipt and higher rates of asset income receipt than the retired workers. The Medicare-only respondents had substantially higher incomes than did retired workers, and most of their aggregate income was from earnings. The NBS retirees were generally in better financial condition than a group of social security beneficiaries aged 65 or older from all benefit categories in the Current Population Survey Income Supplement with whom they were compared.     

Pension sponsorship and participation: trends and policy issues

Employment sector and employer size account for substantial variation in workers' participation in employer-sponsored retirement plans. Other things being equal, employees in the public sector--that is, federal, state, and local governments--are much more likely to be offered a retirement plan than workers in the private sector. Within the private sector, workers in firms with 100 or more employees are significantly more likely than workers in smaller firms to have the opportunity to participate in a retirement plan. This situation has prompted Congress to seek ways of reducing small businesses' obstacles to pension coverage. For example, Congress has authorized retirement plans that have fewer reporting requirements and less stringent contribution rules than those imposed on larger employers. Evaluating the effect of these laws on pension coverage is complicated by the many other variables that affect an employer's decision to sponsor a retirement plan and a worker's decision to participate in it. Nevertheless, data collected in national surveys of employers and households can be used to establish a baseline against which future changes in retirement plan sponsorship and participation can be measured. Recent surveys of employers and households reveal that: During the 1990s, participation in retirement plans rose among workers in firms with fewer than 100 employees but remained steady among workers in larger firms. The 1990s saw a substantial shift from defined benefit retirement plans to defined contribution plans. Despite increases in participation, workers in firms with fewer than 100 employees are only about half as likely as those in larger firms to participate in an employer-sponsored retirement plan. In both the public and private sectors, part-year or part-time workers are much less likely than year-round, full-time workers to be offered an opportunity to participate in an employer-sponsored retirement plan.     

Distribution of income sources of recent retirees: findings from the New Beneficiary Survey

Using data from the New Beneficiary Survey, this article examines income received by the newly retired from assets, employer-provided pensions, and social security. Today's retirees commonly possess pension or asset income to supplement social security. The proportions with asset income were 83 percent for married men and their wives and 69 percent for the unmarried. The proportions with pension income were 56 percent for the married couples and 42 percent for the unmarried. The article finds that up through the middle of the income distribution, social security remains the main income component. In addition to these traditional income sources of the retired, the data also highlight the important role of earnings among many of the new beneficiaries--44 percent of the married couples and 27 percent of the unmarried had current earnings.     

Testing a Financial Incentive to Promote Re‐employment among Displaced Workers: The Canadian Earnings Supplement Project (ESP)

This article presents findings from a randomized experiment conducted in four Canadian provinces to measure the effects of a generous financial incentive that was designed to promote rapid re‐employment among workers who were displaced from their jobs by changing economic conditions. The incentive tested was an earnings supplement which, for as long as 2 years and as much as $250 weekly, would replace 75 percent of the earnings loss incurred by displaced workers who took a new lower‐paying full‐time job within six months of receiving a supplement offer. Findings from the experiment indicate that although persons offered the supplement understood its terms and conditions, only 2 out of 10 actually received supplement payments. Furthermore, the supplement offer had little effect on job‐search behavior, employment prospects, or receipt of unemployment insurance. Nevertheless, persons who received supplement payments benefited from them substantially. On average, they received payments for 64 weeks, totaling $8,705. © 2001 by the Association for Public Policy Analysis and Management.     

Does retirement education teach people to save pension distributions?

As defined contribution pension plans have become increasingly common over the past two decades, so have lump sum distributions from those plans. Employees who elect such a distribution take the balance of their pension account with them when they leave a job. They can then choose to maintain the funds in accounts designated for retirement, invest them in other saving vehicles, or spend them. If spent pension distributions are not replaced by other savings, however, the future elderly are unlikely to be able to maintain a desirable standard of living. With employee-funded pensions expected to play an increasingly important role in financing Americans' retirement, saving these funds in essential. This article is the first to examine the relationship between retirement education--specifically, meetings sponsored by employers or by public and private institutions--and the saving of lump sum distributions. Two definitions of saving are used: one that includes reinvestment only in tax-deferred saving vehicles, and a broader one that includes tax-deferred vehicles, general saving vehicles (stocks, bonds, savings accounts, and so on), and paying off debt. The analysis also evaluates the effects of retirement education on specific groups identified in previous research as being less likely to keep their pension distributions in tax-deferred accounts: namely, women, younger persons, and persons with less than a college education. The same groups tend to be less financially secure in retirement, making the effects of retirement education on them particularly relevant. With an econometric model using ordinary least squares and data from the 1992 Health and Retirement Study, the analysis finds that retirement education does not affect the overall likelihood that employees will save their distributions, whether in tax-deferred or non-tax-deferred vehicles. The picture is more complicated for subgroups of employees. Attending a retirement meeting is associated with an increased likelihood of saving among persons age 40 and under but a decreased probability of saving among college graduates and women. No effect was found for men, individuals over age 40, or persons who did not graduate from college. The finding that retirement education increases the likelihood of younger persons' saving a distribution is reassuring, for these workers are America's future retirees. However, the finding that attending a meeting does not increase saving among some of the most financially vulnerable groups is a matter of concern to policymakers. Further study of the long-term effects of spending pension distributions is needed.     

Pension Reform and the Fiscal Policy Stance

The increased budget deficit caused by the privatization of a public pension plan does not imply a relaxation of the stance of fiscal policy. The reform's impact on the fiscal stance and national saving depends primarily on its effect on the sum of explicit and implicit public debt and on the postreform payroll tax and private system contribution rates. Its impact also depends on the difference between the rate of interest on implicit and that on explicit public debt, among other influences. Pension privatization, if not offset by fiscal consolidation, can loosen the fiscal stance in some circumstances.     

An Options Pricing Method for Calculating the Market Price of Public Sector Pension Liabilities

State and local public sector employee pensions are widely known to be underfunded, but pension financial reports do not reveal the true extent of funding shortfalls. Pension accounting methods assume that plan investments can earn high returns without taking any account of the market risk involved. This gives a false sense of the financial strength of public sector pensions and understates risks to taxpayers. Since accrued pension benefits are legally and constitutionally protected, any pension funding shortfalls must be met by taxpayers. This benefit guarantee amounts to an effective put option on plan investments, the cost of which is not disclosed under current actuarial accounting. This paper uses an options pricing method to calculate the market value of taxpayer guarantees underlying public sector pensions. The average funding ratio declines from 83 percent under actuarial accounting to 45 percent under this options pricing approach. The typical state has unfunded public pension liabilities three times larger than its explicit government debt. Public pension shortfalls equal an average of 27 percent of state gross domestic product, posing a significant fiscal challenge in coming years. Accurate measures of public pension liabilities are important for policy makers, taxpayers, investors considering the economic environment in which to start or locate a business, and bond purchasers considering the risk premia appropriate to municipal government bonds that are in practice subordinate to public pension liabilities.     

Reported reasons retired workers left their last job: findings from the New Beneficiary Survey

About a third of all new retired-worker beneficiaries who had stopped work reported that the main reason they left their last job was a desire to retire. The existence of health problems was the next most frequently given reason, and it was reported by about a fourth of the group. These responses were made to questions in the 1982 New Beneficiary Survey, conducted by the Social Security Administration (SSA) in October-December 1982. Recently retired workers not only said they wished to retire, but more of them began receiving benefits at age 62 than at older ages; by age 65 most were beneficiaries. Forty-five percent of the men and almost 54 percent of the women had already left their last job at the time they received their first benefit. Married women in particular had not only stopped work but frequently had left their last job more than 3 years before they received their first benefit check.     

Chronic Illness and health insurance-related job lock.

Job duration patterns are examined for evidence of health insurance-related job lock among chronically ill workers or workers whose family member is chronically ill. Using Cox proportional hazard models to indicate the effect of health insurance and health status on workers' job duration we allow for more general insurance effects than that shown in the existing literature. Data for workers in Indiana predating the Health Insurance Portability and Accountability Act (HIPAA) are used to examine the potential effect of HIPAA on job mobility. Among the workers in this sample who relied on their employer for coverage, chronic illness reduced job mobility by about 40 percent as compared with otherwise similar workers who did not rely on their employer for coverage. Results reported here identify previously under-appreciated job lock among chronically ill workers and workers whose family member is chronically ill, clarify how one best researches job lock, and indicate the potential effect of policies aimed at alleviating job lock and promoting inter-employer worker mobility.     

State and local pension plans' equity holdings and returns

This article explores recent trends in the size and performance of the equity investments of state and local pension plans. It also provides a context for the discussion about investing Social Security trust fund reserves in private equities. Equity holdings and returns for five of the largest private pension plans were compared with those of state and local pension plans. Key findings discussed in the article include: Equities were the largest investment in the aggregate portfolio of state and local pension plans in 1999 and represented 67 percent of the $3 trillion in aggregate state and local pension assets. Equity allocation of the five private plans resembled that of the aggregate. About 80 percent of state and local pension plan holdings were domestic equities in 1999. The five largest plans had about the same domestic/foreign allocation of equity investments during that same period. In 1999, state and local pension plans held about 11 percent of the U.S. equity market, which includes foreign equities held in the United States. State and local pension plans held about 10 percent of domestic equities in the U.S. equities market that same year. Returns on equity investments over a 10-year period were more than 17 percent for both private pensions and state and local pension plans. Although private plans tend to have slightly higher total returns, the difference stems from the higher equity asset allocation of the private pensions that were studied.     

Cream‐Skimming,Parking and Other Intended and Unintended Effects of High‐Powered,Performance‐Based Contracts

As performance‐based contracting in social welfare services continues to expand, concerns about potential unintended effects are also growing. We analyze the incentive effects of high‐powered, performance‐based contracts and their implications for program outcomes using panel data on Dutch cohorts of unemployed and disabled workers that were assigned to private social welfare providers in 2002 to 2005. We employ a difference‐in‐differences design that takes advantage of the fact that contracts gradually moved from partial performance‐contingent pay to full (100 percent) performance‐contingent contracting schemes. We develop explicit measures of selection into the programs and find evidence of cream skimming and other gaming activities on the part of providers, but little impact of these activities on program outcomes. Moving to a system with contract payments fully contingent on performance appears to increase job placements, but not job duration, for more readily employable workers.