1 Universal Voluntary Accounts: A Step Towards Fixing the Retirement System Dean Baker December 2006 Center for Economic and Policy Research 1611 Connecticut Avenue, NW, Suite 400 Washington, D.C Tel: Fax:
2 ii Contents Executive Summary...1 Introduction...2 The Benefits of Universal Voluntary Accounts...4 The Mechanics of Universal Voluntary Accounts...6 Extensions of the UVA System...7 Conclusion...9 Dean Baker is a Co-Director and Senior Economist at the Center for Economic and Policy Research in Washington, DC.
3 Universal Voluntary Accounts: A Step Towards Fixing the Retirement System 1 Executive Summary Most older workers are ill-prepared for retirement, with few financial assets to rely upon other than their Social Security. The main reason is the collapse of the system of defined-benefit (DB) pensions. Less than 20 percent of the private sector workforce is currently covered by a DB plan, and this number is declining rapidly. Defined-contribution (DC) plans, such as 401(k) accounts, have not come close to filling the gap. Nearly half of all workers don t even have access to a pension at their workplace (DB or DC). The Federal Reserve Board s most recent Survey of Consumer Finances found that 53 percent of near retirement age workers (ages 45-54) had accumulated less than $48,000 in financial assets. This paper outlines a proposal for a system of universal voluntary accounts (UVAs). UVAs would be state sponsored, but privately managed, defined-contribution accounts. The accounts would be open to every worker in a state. Such a system would accomplish three important goals: 1. It would provide every worker in a state with access to a defined-contribution pension at his or her workplace. They would be able to make contributions directly from their paychecks and employers could also contribute, if they chose; 2. It would provide a fully portable system that a worker could carry with him or her from job to job, as long as he or she remained in the state; and 3. It would provide a low-cost system with administrative costs that are far lower than in many existing DC plans. In current plans, as much as 20 percent of contributions can be eaten up by administrative costs. A system of UVAs would be especially helpful to small businesses, since it would allow small businesses to offer pensions to their workers with virtually no administrative burden and zero risk. Polling research has shown that the idea of UVAs is extremely popular among Democrats, Republicans and Independents, with more than 80 percent of those surveyed expressing approval. There also has been interest in the establishment of a UVA type system from policy analysts across the political spectrum, as the failings of the current pension system are becoming increasingly evident.
4 Universal Voluntary Accounts: A Step Towards Fixing the Retirement System 2 Introduction The retirement system in the United States is badly tattered. The traditional thinking has been that retirement income should be a three-legged stool. The first leg would be Social Security, which provides a core retirement income to nearly the entire workforce. The second leg would be a defined-benefit pension (DB), which would provide a substantial supplement to Social Security. The third component would be income from the savings that workers managed to put aside on their own. The picture of the three-legged stool no longer fits the reality of the 21 st century workforce. Less than 20 percent of the private sector workforce has a traditional DB pension, and this number is falling rapidly. Few, if any, firms are starting DB plans and the firms that do still have DB plans are shedding workers and freezing their plans at an alarming rate. There is little reason to believe that the decline in DB plans will be reversed. Defined-benefit plans have to a large extent been replaced by defined-contribution (DC) plans. DC plans are essentially a personal saving option with the difference that the money is deducted directly from workers paychecks and that most DC plans include an employer-side contribution. However, DC plans have not come close to filling the gap created by the dwindling of the DB system. Only half the workforce even have access to a pension at the workplace (DB or DC) and most of those who have DC plans manage to accumulate very little wealth during their working years. Among the 94 percent of families headed by someone between the ages of 45 and 54 who had any financial assets at all, the median holdings was just $48,000 in This means that 53 percent of these near retirement families had managed to accumulate less than $48,000 in financial assets. This figure includes assets in DC plans (although not DB plans), as well as any personal savings they had outside of their retirement accounts. If current trends continue, most workers will not have much besides Social Security to support themselves in retirement. Unfortunately, most of the public debate on retirement income has focused on Social Security, the leg of the stool that is relatively solid. According to the most recent projections from the nonpartisan Congressional Budget Office, the system can pay all scheduled benefits for the next 40 years with no changes whatsoever. Even after 2046, when the system is first projected to face a shortfall, the system would always be able to pay a higher benefit (in 2006 dollars) than what current retirees receive. Furthermore, the projected shortfall is smaller than the Social Security shortfalls that the country dealt with each of the decades from the 1950s through the 1980s, so maintaining full scheduled benefits (if Congress were to elect to follow this route) would not be a difficult task. Given the relative financial health of Social Security, the private pension system clearly poses the more urgent problem. This paper describes a simple plan a system of universal voluntary accounts (UVAs), invested privately but administered through state governments, that can be an important 1 Bucks, B, A. Kennickell, and K. Moore, Recent Changes in U.S. Family Finances: Evidence From the 2001 and 2004 Surveys of Consumer Finance. Federal Reserve Bulletin, January 1-38, Table 5, [ ].
5 Universal Voluntary Accounts: A Step Towards Fixing the Retirement System 3 first step in solving the pension plan. 2 This system would immediately accomplish three important goals: 1. It would provide every worker in a state with access to a defined-contribution pension at his or her workplace. They would be able to make contributions directly from their paychecks and employers could also contribute, if they chose; 2. It would provide a fully portable system that a worker could carry with him or her from job to job, as long as he or she remained in the state; and 3. It would provide a low-cost system with administrative costs that are far lower than in many existing DC plans. In current plans, as much as 20 percent of contributions can be eaten up by administrative costs. In addition, UVAs are small-business friendly. The overwhelming majority of workers at large firms have pensions, while the overwhelming majority of workers at small businesses do not. The reason is that many small business owners lack the time, expertise and comfort level necessary to provide their workers with a pension. The UVA system will allow every small business owner to provide a pension to their employees with virtually no time or effort on their part, and zero risk. Employers will also be able to contribute to these pensions on their workers behalf, if they choose. Since workers value pensions, UVAs will assist small business owners in retaining workers who might otherwise be attracted by pension plans offered by larger employers. While UVAs will not provide a full solution to the problem of ensuring workers a decent retirement, they are an important first step. They will put in place a structure from which a fuller solution can be constructed. 2 This is paper is based on a proposal drafted in 1999 for the Century Foundation, Pensions for the 21st Century, [
6 Universal Voluntary Accounts: A Step Towards Fixing the Retirement System 4 The Benefits of Universal Voluntary Accounts This plan for UVAs combines goals that both liberals and conservatives have sought in structuring retirement policy. Conservatives have argued that everyone should have their own personal accounts so that they can have some sense of ownership. Liberals have been concerned that many workers will not have adequate income to provide a decent retirement. By making a universal system of accounts available to workers on a voluntary basis, UVAs should help to advance both goals. This is one reason that UVA-type proposals have drawn support from across the political spectrum. In fact, Mark Iwry, an official in the Clinton administration, recently co-authored a paper with David John, an economist with the Heritage Foundation, that advocated exactly this sort of system of voluntary accounts. 3 The Conversation on Coverage, a multi-year project to increase pension coverage that includes representatives of business, labor, the financial industry and academia, developed a similar proposal through a consensus process. The idea of a system of UVAs has also received very strong backing in polling and focus groups in Washington State. 4 All demographic groups viewed the idea of a system of portable pensions administered through the government positively, with the proposal garnering the approval of more than 80 percent of those polled. While the support was strong regardless of party affiliation, UVAs actually received the strongest support from Republicans, nearly 90 percent of whom viewed the idea positively. The benefits of such a system are straightforward. Every worker in the state can immediately have access to a pension to which they can contribute from the day they start their job. Currently, most firms require a vesting period, which is often two to three years. As a result, many workers do not stay at a job long enough to vest in a pension, and even if they do, they may have gone several years with making no contribution. In an economy that can require frequent job changes, many workers may go through their career never working at a job where they have stayed long enough to vest in a pension. In addition to allowing workers to contribute to a pension as soon as they start working, UVAs will also allow workers to keep the same pension, as long as they remain within the state. Often workers withdraw their retirement savings when leaving a job, especially if they have only accumulated a small sum in their accounts. Since workers will be able to contribute to the UVAs as long as they remain in the state, there is no reason for them to withdraw their funds when they change jobs. This will make it easier for workers to accumulate a sizable sum to support their retirement. The potential cost savings from UVAs can be substantial, and this can make an important difference in workers retirement income. President Bush s Social Security Commission estimated that a simple system of individual accounts, like those established under the UVA system, could be managed at a cost of 0.3 percent of the funds accumulated in the account. By comparison, the average for private 3 Iwry, M. and D. John, Pursuing Universal Retirement Security Through Automatic IRAs. Washington, D.C.: Heritage Foundation, [ 4 Economic Opportunity Institute, Washington Voluntary Accounts and Public Opinion, Seattle, WA: Economic Opportunity Institute, [
7 Universal Voluntary Accounts: A Step Towards Fixing the Retirement System 5 sector DC plans is over 1.0 percent and a recent study by the Government Accountability Office found that many plans charge fees of more than 1.5 percent annually. 5 If a worker contributes $1,000 annually to a DC plan with an annual fee of 1.5 percent, she will have accumulated $54,900 toward retirement after 35 years. By contrast, if the same worker contributes $1,000 annually for 35 years to a UVA system with a fee of 0.3 percent annually, she will have accumulated $69,400, or 26 percent more. In addition, if workers want to receive their retirement money in the form of an annuity (an annual payment that continues throughout the worker s retirement), private financial firms will typically charge fees equal to 5 to 10 percent of the account s value to cover their costs. President Bush s Social Security commission assumed that a centralized system administered through the government could convert private accounts to annuities at almost no cost. The combined savings from annual administrative costs and annuity fees can easily add 30 to 35 percent to the money that workers have available in retirement. This is a remarkable gain that can be obtained simply by eliminating waste in the current system. Insofar as the UVAs also facilitate increased contributions from workers and employers, and discourage withdrawals from accounts when workers change jobs, the impact on retirement savings will be even larger. Finally, UVAs should relieve small employers of the anxiety of dealing with pensions or the risk of losing workers if they do not offer pensions. While there have been important steps taken in recent years to simplify the process whereby firms can offer pensions, 6 many employers still find the process more complicated than they want to deal with, as demonstrated by the fact that most small employers still do not offer pensions. It is entirely reasonable that small employers would not want to take the time to determine what sort of pension structure and which provider would be best for their firm. They are trying to run their businesses, not manage retirement plans. The UVA system allows small businesses to escape this burden altogether. Under the UVA system, employers are only obligated to pass along deductions that workers opt to make from their paychecks. This involves no more paperwork than is required to deduct the unemployment insurance contributions from workers paychecks. If employers opt to make their own contribution to workers accounts, they can do so in accordance with the federal rules governing DC accounts. Employers are not required to contribute on their workers behalf. The only requirement imposed on employers is that they pass along contributions that workers choose to have deducted from their paychecks. This requirement is necessary to ensure that the accounts are fully portable as workers change jobs. 5 Government Accountability Office, Private Pensions: Changes Needed to Provide Plan Participants and Department of Labor Better Information on Fees, Washington, D.C.: Government Accountability Office, GAO-07-21, [ 6 For example, the SIMPLE IRA was introduced by the Clinton administration to minimize the paperwork required of small businesses to establish small retirement accounts for their workers. It had a limited impact on pension access.
8 Universal Voluntary Accounts: A Step Towards Fixing the Retirement System 6 The Mechanics of Universal Voluntary Accounts The model for the UVAs system is the federal employees Thrift Savings Plan (TSP), which was also the model for the accounts proposed by President Bush s Social Security commission. The idea is to provide a simple low-cost system of accounts that has a small number of investment options and limited opportunities to switch between these options. The basic options would include an equity fund, a bond fund, and a money market fund. It is possible to add two or three additional funds without having a substantial impact on costs, but offering a large range of funds would raise the costs considerably. There would also be limited opportunity to switch funds between accounts, with workers being allowed to switch their allocation no more than once or twice a year. While these restrictions may sound excessive - some workers may want to be more actively involved in managing their accounts - the purpose of the UVAs is to provide workers with a low-cost option that is not currently available. Workers who want accounts that provide more options and which they can actively manage by frequently shifting their funds are not required to contribute to the UVA system; they can invest their money elsewhere. Following the design for the system of accounts developed by President Bush s Social Security commission, the money would originally be collected through a state administrative structure, possibly piggybacking on the existing system that manages the retirement system for state employees. Of course, if combining systems in this way proved useful, it would simply mean taking advantage of administrative efficiencies in running the UVAs; there would be absolutely no comingling of the funds. The actual investment of the funds would be contracted out to a private firm that would get the contract on a competitive bid that would cover a long period of time (5-10 years). With an open competitive bid process, and the winner holding a long-term contract, there should be minimal opportunities for political interference in the investment of the funds held by the system. Since the system is likely to accumulate a substantial amount of assets after a reasonable period of time, the cost of investing among a limited set of index funds should be low. (The TSP pays just 1 basis point of assets, or 0.01 percent, to the firm that invests its funds.) Firms would be obligated to make payments of the money deducted from their workers paychecks at regular intervals. Workers would receive periodic statements reporting on the size of their accumulations and also informing them of their opportunities to switch between funds. (It would be desirable to have a default investment that includes a mixture of equities, bonds, and money market funds for workers who do not make an investment choice or who do not act to renew their choices after a long period of time.) The rules on withdrawals would be similar to 401(k) type accounts. Workers would also be free to rollover UVAs into other retirement accounts, such as IRAs, and vice-versa. Loans against UVA accounts can be allowed (keeping with the rules for 401(k) type accounts), but this does add significantly to the administrative cost. If loans are allowed, then the rules should be structured so that the costs of administering the loan are borne by the individual who borrows against her account, not the system as a whole.
9 Universal Voluntary Accounts: A Step Towards Fixing the Retirement System 7 When the worker reaches retirement age, the default should be that the fund is converted to an annuity at whatever age the worker chooses to start drawing on it. Workers can opt to take out the money along the same schedule as would apply for other DC accounts, but the purpose of the account is to increase retirement income. This means that the norm should be that workers get most or all of their accumulation as annuity. Extensions of the UVA System While the UVA system would substantially increase retirement income for many workers, it would not by itself fill the gap for many workers between the income provided by Social Security and the income needed for a decent retirement. However, there are additional steps, building on the UVA structure, that would get closer to this goal. At the top of this list would be instituting a system of default contributions by workers under which workers would contribute a specific sum to a retirement account (a company-provided plan or a UVA), unless they specifically requested that they get this money in their paycheck instead. Recent research has shown that workers have a strong tendency towards inertia in dealing with retirement accounts. 7 If the default situation is that they don t contribute, then most workers don t make the effort to sign up for their company s retirement plan. This is true even in cases where the company will provide a match, so that workers are effectively leaving money on the table. Alternatively, if the default situation is that workers make a contribution to their retirement plan, then most workers opt to stick with this default, allowing a percentage of their paycheck to be deducted for their retirement account. If a state implements a UVA system, then it can also require employers to deduct a modest amount (e.g. 3 percent) from workers paychecks to be paid into either the UVA system or a company provided pension system. Workers who decided that they wanted this money to be paid to them in their monthly paycheck instead would have the option of opting out of the system by requesting this switch from their employer. Workers would of course also have the option of contributing more than the amount designated as the default, and employers could also opt to make the default contribution themselves on their workers behalf. A default contribution would raise retirement savings further at a very minimal cost in terms of the additional administrative burden it would impose on employers. A second step that states could take to increase retirement savings would be to have a modest public contribution that could be designed to help lower-paid workers. This contribution could be made in the form of a tax refund for states that have income taxes, or otherwise simply a check that would be deposited each year in a UVA or other retirement account. The contribution could be a modest sum (e.g. $300) that is phased down to zero for middle income and higher income taxpayers. (A phase out for higher income workers would be more difficult to design in the case of states without income taxes.) In this way, it would be analogous to the Earned Income Tax Credit, except the money would go into a retirement account instead of being paid directly to the worker. 7 See Orzag, P., E. Duflo, W. Gale, J. Liebman, and E. Saez, Saving Incentives for Low- and Middle-Income Families: Evidence from a Field Experiment with H&R Block," Washington, D.C.: Brookings Institution, Retirement Security Project Policy Brief #2005-5, [
10 Universal Voluntary Accounts: A Step Towards Fixing the Retirement System 8 This sort of modest payment will not provide a huge retirement benefit, but even a payment of $300 a year can provide an accumulation of $20,000 (adjusted for inflation) after 35 years. This would be sufficient to provide an annuity at age 65 of more than $1,500 annually. This would likely be a substantial increase in retirement income for a worker who may have earned an average of $15,000 annually during their working lifetime. Of course, any payment directly into the accounts would require revenue, and in many states facing budget crunches, even small amounts of revenue can be hard to find. This is one reason that the UVA system is so attractive. Apart from some minimal start-up expenses (which can be recovered once the system is up and running), the system should be essentially self-financing. The participants will be charged fees that cover all costs related to running the system, so the program should be revenue neutral. Once the UVA system is in place, if budgets allow for funds to be committed for the purpose, then it is always possible at some future date to provide for subsidies to low-income workers. Another improvement of the UVA system would be to offer a defined-benefit option. This would be a fairly simple matter administratively, although there may be some legal obstacles under current law. Essentially, a defined benefit would allow a worker who contributes a certain amount from their paycheck at a given age to guarantee themselves a retirement annuity of a fixed sum. The administrator of the accounts would effectively be assuming the market risk themselves and offering the worker an average rate of return (minus expenses) over their working lifetime. For example, a worker who contributed a one time sum of $1,000 for a defined-benefit option at age 35 could receive an annuity of $200 (adjusted for inflation) a year beginning at age The annuity would rise to $240 a year if the worker waited until age 67 to begin collecting it. While a single year s contribution would not secure a very large annuity, a lifetime of contributions could provide a substantial boost to a worker s retirement income. For example, a worker putting aside $1,000 annually for 35 years (as described earlier) would be able to get a retirement annuity of $6,600 a year at age 65 using the same conservative assumptions as in the earlier calculation. If she waited until age 67 to begin collecting, the annuity would rise to almost $8,000 a year. In the case where a low-income worker received a government subsidy of $300 annually for 35 years, he would be able to get a retirement annuity of almost $2,000 a year at age 65 and almost $2,400 a year at age 67. Again, these are not large sums, but the median income for a household over age 65 is currently just $26,000 and more than a third of older households have an annual income of less than $18, Increasing the income of retirees at or below the median by $2,000-$2,400 per year would likely make a substantial difference in their standard of living. A defined-benefit option in the UVA system works in exactly the same way as defined-benefit pensions do in the private sector. They remove market risk for workers, which will instead be assumed by either financial institutions or the state government. In principle, a large long-lived entity like a state government can assume market risk because it will survive through up and down 8 This calculation assumes a 4.0 percent real rate of return, minus expenses of 0.3 percentage points annually while the worker is employed. It assumes a post-retirement return of 3.0 percent and a life expectancy at age 65 of 19 years (approximately the life expectancy projected by the Social Security trustees for 2035). 9 United States Census Bureau, Annual Demographic Survey, March Supplement, HINC-02 [
11 Universal Voluntary Accounts: A Step Towards Fixing the Retirement System 9 markets. Individual workers, on the other hand, will only retire once, and if they happen to retire during a down market, they have no options to borrow against a future life. A defined-benefit option will also facilitate planning by workers, since they will know with some confidence the amount of retirement income that they will get with a specific contribution to their accounts. A final improvement of the UVA system would be its potential extension to other states. Legislators and/or governors in several states have expressed considerable interest in establishing UVA systems in their states. It is likely that if the system is implemented in one or several states and proves effective, then it will quickly spread to other states and possibly be adopted on the national level. There would be two important advantages from having the system spread to other states. The first is that if the system is adopted in more than one state it could allow for some greater economies of scale. Once a state has adopted a successful model, having worked through problems that will only be apparent with the implementation of the system, other states will be able to immediately design their system along the lines of what proved successful elsewhere. This would be true for the financial intermediaries as well. They will be able to structure their services around an existing model that had already been demonstrated to work. Over time, as more states adopt UVA systems and the design is improved, the administrative cost should decline. Of course if the system is adopted nationally, then the costs would decline even more as the amount of money being managed would increase considerably. The other advantage of having the UVA program extended to other states, or be adopted nationally, is that it would allow workers to stay within the system if they left the state, but moved into another state that also had a UVA system. Most workers do not typically change states when they change jobs, but it is not uncommon for workers to move across state lines, especially in cases where metropolitan areas overlap state boundaries. If UVA systems can be coordinated so that workers can stay within the system when they cross state lines, this will increase the likelihood that workers will be able to continue contributing to their pensions. Conclusion There is wide agreement among policy experts that the country s pension system is seriously inadequate. Close to half of the workforce does not currently have the option to contribute to a pension at their workplace and even most workers with pensions fail to accumulate substantial resources for retirement. This proposal for state-sponsored systems of universal voluntary accounts could substantially increase workers ability to accumulate funds to support their retirement. The plan gives workers a low-cost and simple saving option, while imposing minimal burdens on employers. For this reason, it is especially appealing to small businesses, since it allows them to offer workers a pension with minimal administrative work and no financial or legal risk.
AP Photo/John Amis The Promise and Peril of a Model 401(k) Plan Measuring the Effectiveness of Retirement Savings Plans Offered by Private Companies and the Federal Government By Rowland Davis, Nayla Kazzi,
Retirement Security June 2006 Public Policy Issue Statement Background Retirement plans represent an important aspect of the total compensation package used by employers to recruit and retain employees.
UNIVERSAL VOLUNTARY RETIREMENT ACCOUNTS: Expanding Employee Savings Opportunities By Sadaf Knight INTRODUCTION July 27, 2010 A generation ago, workers could count on being able to participate in a pension
Part VI Retirement Accounts for Small Businesses and the Self-Employed While employees of most large companies have access to 401(k) plans or traditional pension plans, those employed by small firms often
Prudential Financial The Four Pillars and Public Policy Prudential s positions on legislative and regulatory issues impacting retirement security in America Public policy affects many aspects of our everyday
This publication has been developed by the U.S. Department of Labor, Employee Benefits Security Administration. It is available on the Internet at: www.dol.gov/ebsa For a complete list of EBSA publications,
The Impact on Inequality of Raising the Social Security Retirement Age David Rosnick and Dean Baker April 2012 Center for Economic and Policy Research 1611 Connecticut Avenue, NW, Suite 400 Washington,
Consulting Retirement Consulting Talent & Rewards The Real Deal 2012 Retirement Income Adequacy at Large Companies RETIREMENT YOU ARE HERE About This Report This study assesses whether employees of large
Pension Lump-Sum Distributions: Do Boomers Take Them or Save Them? I. Introduction Boomers are facing a retirement system different from the one their parents knew. A greater proportion of the previous
The Key to Stabilizing House Prices: Bring Them Down Dean Baker December 2008 Center for Economic and Policy Research 1611 Connecticut Avenue, NW, Suite 400 Washington, D.C. 20009 202-293-5380 www.cepr.net
A Safe and Secure Retirement for All Americans Pension Reform in the United States Why We Need Pension Reform American workers face a retirement crisis. The extreme fragility of financial markets reveals
May 2015 United States Government Accountability Office Report to the Ranking Member, Subcommittee on Primary Health and Retirement Security, Committee on Health, Education, Labor, and Pensions, U.S. Senate
November 214 The Wealth of Households: An Analysis of the 213 Survey of Consumer Finances By David Rosnick and Dean Baker* Center for Economic and Policy Research 1611 Connecticut Ave. NW Suite 4 Washington,
United States Senate Committee on Finance Hearing: Helping Americans Prepare for Retirement: Increasing Access, Participation and Coverage in Retirement Savings Plans Testimony of Catherine Weatherford
CHAPTER 6 DEFINED BENEFIT AND DEFINED CONTRIBUTION PLANS: UNDERSTANDING THE DIFFERENCES Introduction Both defined benefit and defined contribution pension plans offer various advantages to employers and
Employee Costs and Risks in 401(k) Plans The rapid growth of employer-sponsored 401(k) plans has been facilitated, in part, by the many advantages offered to participants. However, employees also may encounter
IRAs: Powering Your Retirement One of the most effective ways to build and manage funds to help you meet your financial goals is through an Individual Retirement Account (IRA). An IRA can put you in control
September 2006, Number 54 WILL REVERSE MORTGAGES RESCUE THE BABY BOOMERS? By Andrew D. Eschtruth, Wei Sun, and Anthony Webb* Introduction Many of today s workers are at risk of having insufficient resources
December 11, 2014 PROPOSAL Starter 401(k) Plan (S. 1270 Sen. Orrin Hatch (D-UT)) Rep. Ron Kind (D- WI) has also indicated interest in a similar concept. Establishes a new plan type of safe harbor 401(k)
TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION Millions of Dollars in Potentially Improper Claims for the Qualified Retirement Savings Contributions Credit Are Not Pursued March 26, 2014 Reference Number:
Guaranteed Lifetime Income Options within Employment-Based Plans Leveraging Advantages and Overcoming Challenges January 2013 About the Insured Retirement Institute: The Insured Retirement Institute (IRI)
Retirement Policy Allowing Retiring Employees to Test Drive an Annuity by Melissa Kahn and Jody Strakosch If defined contribution (DC) plan sponsors haven t already done so, they soon will be giving serious
Statement of William F. Sweetnam Principal, Groom Law Group, Chartered Before the Committee on Ways and Means United States House of Representatives April 17, 2012 Chairman Camp and Ranking Member Levin
United States Government Accountability Office Report to Congressional Requesters March 2016 RETIREMENT SECURITY Better Information on Income Replacement Rates Needed to Help Workers Plan for Retirement
GOALS What You Should Know About... Retirement Planning EMPLOYER PLANS CALCULATING YOUR NEEDS INVESTMENTS DECISIONS YourMoneyCounts No matter who you are or how much money you have, you re probably hoping
Making Jobs Good John Schmitt and Janelle Jones April 2013 Center for Economic and Policy Research 1611 Connecticut Avenue, NW, Suite 400 Washington, D.C. 20009 202-293-5380 www.cepr.net CEPR Making Jobs
Thursday, February 19 2015 WRM# 15-06 The WRMarketplace is created exclusively for AALU Members by the AALU staff and Greenberg Traurig, one of the nation s leading tax and wealth management law firms.
Retirement Savings Proposals Summary of Key Provisions February 2014 Three different proposals have recently emerged from Washington D.C., each seeking to improve access to retirement plan savings vehicles.
P R O G R A M O N R E T I R E M E N T P O L I C Y Could a Cash Balance Plan Benefit Illinois Public School Teachers? Richard W. Johnson and Benjamin G. Southgate April 2015 The Teachers Retirement System
cepr CENTER FOR ECONOMIC AND POLICY RESEARCH briefing paper Defaulting on The Social Security Trust Fund Bonds: Winner and Losers Dean Baker 1 July 23, 2001 SUMMARY The United States government has never
Statement of Jim McCarthy, Merrill Lynch & Co., Inc. on behalf of the Savings Coalition of America Before the UNITED STATES SENATE COMMITTEE ON FINANCE June 30, 1999 This statement is presented on behalf
Policy Brief www.wvpolicy.org October 2014 Solving the Retirement Crisis in West Virginia Sean O Leary As thousands of West Virginians approach retirement age, workplace retirement plans, along with Social
SOCIETY OF ACTUARIES THE AMERICAN ACADEMY OF ACTUARIES RETIREMENT PLAN PREFERENCES SURVEY REPORT OF FINDINGS January 2004 Mathew Greenwald & Associates, Inc. TABLE OF CONTENTS INTRODUCTION... 1 SETTING
The Changing Face of Employer Sponsored Retirement Plans Mike Dulaney, FSA, EA, MAAA Senior Consulting Actuary, Retirement Actuarial Services Principal Financial Group Subject: Actuarial Science Article
T H E P U B L I C P E N S I O N P R O J E C T RESEARCH REPORT Can California Teacher Pensions Be Distributed More Fairly? Richard W. Johnson Benjamin G. Southgate December 2014 ABOUT THE URBAN INSTITUTE
Job Dislocation Making Smart Financial Choices after a Job Loss Who We Are FINRA FINRA, the Financial Industry Regulatory Authority, is an independent regulatory organization empowered by the federal government
Table of Contents Preface............................................... i Life Expectancy for a 65-Year-Old Person............................ i Questions to Ask before Withdrawing Your Account....................
TREASURY FACT SHEET: HELPING AMERICAN FAMILIES ACHIEVE RETIREMENT SECURITY BY EXPANDING LIFETIME INCOME CHOICES In September 2009, President Obama announced several new steps to make it easier for American
Celebrating Pork The Dubious Success of the Medicare Drug Benefit Dean Baker March 2007 Center for Economic and Policy Research 1611 Connecticut Avenue, NW, Suite 400 Washington, D.C. 20009 202 293 5380
Draft Legislation Social Security Individual Retirement Account Problem 1. The solvency and sustainability of Social Security increasingly looms as a critical problem. As Americans continue to live longer
Where Have All the Good Jobs Gone? John Schmitt and Janelle Jones July 2012 Center for Economic and Policy Research 1611 Connecticut Avenue, NW, Suite 400 Washington, D.C. 20009 202-293-5380 www.cepr.net
Order Code RL30631 CRS Report for Congress Received through the CRS Web Retirement Benefits for Members of Congress Updated January 21, 2005 Patrick J. Purcell Specialist in Social Legislation Domestic
Administration s Retirement Savings Proposals An Updated Analysis by the Pension Committee of the American Academy of Actuaries August 2005 The American Academy of Actuaries is the public policy organization
P R O G R A M O N R E T I R E M E N T P O L I C Y Are California Teacher Pensions Distributed Fairly? Richard W. Johnson and Benjamin G. Southgate April 2015 The California State Teachers Retirement System
The Five Pillars of a Retirement Plan An employee retirement plan can help: Recruit and retain valuable employees Bridge the gap between Social Security and retirement income needs, which are estimated
Saving early for retirement Have you started saving money for retirement yet? It s more important than you may think no matter your age. Saving early for retirement is the best way to maintain financial
2012 HOUSEHOLD FINANCIAL PLANNING SURVEY A Summary of Key Findings July 23, 2012 Prepared for: Certified Financial Planner Board of Standards, Inc. and the Consumer Federation of America Prepared by: Princeton
Fact Sheet AARP Public Policy Institute Annuities and Other Lifetime Income Products: Their Current and Future Role in Retirement Security A new survey finds that older workers are definitely interested
advisory & Brokerage consulting services Make Your Retirement Savings Last a Lifetime Member FINRA/SIPC ADVISORY & Brokerage consulting SERVICES Three Things to Consider When Planning for Retirement Today,
october 2012 Understanding Traditional and Roth IRAs summary An Individual Retirement Account (IRA) is a powerful savings vehicle that can help you meet your financial goals. As shown in the chart on page
INSIGHT on the Issues The Saver s Credit: What Does It Do For Saving? AARP Public Policy Institute The saver s credit is one of very few tax incentives to promote savings that targets lowand middle-income
Part IV Basics of Defined-contribution plans are considerably different from defined-benefit plans. From a participant s perspective, perhaps the greatest difference is that the eventual benefits are not
Katelin P. Isaacs Analyst in Income Security July 31, 2015 Congressional Research Service 7-5700 www.crs.gov RL30631 Summary Prior to 1984, neither federal civil service employees nor Members of Congress
Policy Brief June 2010 Pension Tension: Understanding Arizona s Public Employee Retirement Plans The Arizona Chamber Foundation (501(c)3) is a non-partisan, objective educational and research foundation.
RSP Policy Brief No. 2006-2 Automating Saving: Making Retirement Saving Easier in the United States, the United Kingdom and New Zealand J. Mark Iwry Senior Adviser, The Retirement Security Project Nonresident
Highlights of the Boehringer Ingelheim: Retirement Savings Plan Retirement Plan This brochure is intended for eligible employees of Boehringer Ingelheim hired after December 31, 2003. Table of Contents
Cornell University ILR School DigitalCommons@ILR Federal Publications Key Workplace Documents 3-8-2013 Federal Employees Retirement System: The Role of the Thrift Savings Plan Katelin P. Isaacs Congressional
Choosing the Best Retirement Plan for Your Business Experts estimate that American workers will need 70 to 90 percent of their preretirement income to maintain their current standard of living in retirement.
October 8, 2012 The U.S. retirement savings system encourages individuals to save for retirement by providing income tax exclusions or deductions for contributions to employer-sponsored defined contribution
June 2006, Number 48 A NEW NATIONAL RETIREMENT RISK INDEX By Alicia H. Munnell, Anthony Webb, and Luke Delorme* Introduction Americans weaned on post-war affluence have come to expect an extended period
Building Successful, State Sponsored Retirement Programs for Private Sector Employees April 25, 2016 2.25 x 0.875 Confronting a retirement readiness gap 55 million Americans do not have access to a pension
Planning for the Stages of Retirement The Financial Planning Association (FPA ) connects those who need, support and deliver financial planning. We believe that everyone is entitled to objective advice
RETIREMENT SAVINGS OF AMERICAN HOUSEHOLDS: ASSET LEVELS AND ADEQUACY Report to the Consumer Federation of America and DirectAdvice.com Catherine P. Montalto, Ph.D. Consumer and Textile Sciences Department
CONGRESSIONAL BUDGET OFFICE U.S. Congress Washington, DC 20515 Peter R. Orszag, Director April 24, 2008 Honorable George Miller Chairman Committee on Education and Labor U.S. House of Representatives Washington,
LABORPARTY Financing Just Health Care Labor Party Briefing Paper Revised February 2002 The Labor Party proposes a national health insurance program for the United States that would provide universal coverage
6P A R T Retirement and Estate Planning Should you invest in a retirement plan? Chapter 19 Retirement Planning Chapter 20 Estate Planning How much should you contribute to your retirement plan? How should
An Integrated Approach to Pension Benefits by William J. Ruschau The search for the perfect pension system, like the search for the Holy Grail, continues to prove elusive. The economic collapse of 2008
The Quebec Voluntary Retirement Savings Plan (VRSP) An overview of the newly announced workplace retirement savings plan Use this summary of Quebec s recently-introduced Voluntary Retirement Savings Plan
401(k) Plans and Retirement Savings: Issues for Congress Patrick Purcell Specialist in Income Security John J. Topoleski Analyst in Income Security July 14, 2009 Congressional Research Service 7-5700 www.crs.gov
The Case For Employer-Sponsored Retirement Plans Benefits and Accomplishments April 2009 www.sparkinstitute.org www.sparkinstitute.org 1 About The SPARK Institute The SPARK Institute represents the interests
The American Council of Life Insurers Written Statement for the Record for Tax Reform and Tax-Favored Retirement Accounts Committee on Ways and Means United States House of Representatives April 17, 2012
Introducing and the plan On the day you begin public school employment, you are automatically enrolled in the plan. As a new employee who first worked for a Michigan public school on or after September
May 3, 2012 CC:PA:LPD:PR (Reg-115809-11) Room 5203 Internal Revenue Service PO Box 7604 Ben Franklin Station Washington DC 20044 RE: Longevity Annuity Contracts To Whom It May Concern: The American Academy
The Definition of a Social Insurance Scheme and its Classification as Defined Benefit or Defined Contribution I. Introduction John Pitzer June 30, 2003 1. In an interview posted on this electronic discussion
The Benefits of a Financial Transactions Tax Dean Baker December 2008 Center for Economic and Policy Research 1611 Connecticut Avenue, NW, Suite 400 Washington, D.C. 20009 202-293-5380 www.cepr.net The
Cato Institute Policy Analysis No. 73: Deductible IRAs Are Best for Workers June 3, 1986 Peter J. Ferrara Peter J. Ferrara, a Washington attorney, is author of Social Security: The Inherent Contradiction
A Voluntary Default Savings Plan: An Effective Supplement to Social Security Dean Baker and David Rosnick February 2011 Center for Economic and Policy Research 1611 Connecticut Avenue, NW, Suite 400 Washington,
Federal Employees Retirement System: The Role of the Thrift Savings Plan Katelin P. Isaacs Analyst in Income Security January 11, 2011 Congressional Research Service CRS Report for Congress Prepared for
Simplified Employee Pension A retirement savings plan designed for small businesses Allianz Life Insurance Company of North America Allianz Life Insurance Company of New York AMK-121-N Page 1 of 8 A Simplified
Table of Contents Introduction... 1 Life Expectancy for a 65-Year-Old Person...1 Questions to Ask Before Withdrawing Your Account...2 Tailoring Your Withdrawal Decisions to Your Personal Needs...3 Leaving
Summary of the Automatic IRA Act of 2010 (S. 3760) Introduced by Senator Jeff Bingaman (D-NM) August 5, 2010 Under the Automatic IRA Act of 2010, employees of firms with 10+ employees that do not sponsor
Statement of Jim McCarthy, Managing Director, Retirement Plan Services Morgan Stanley On behalf of the Securities Industry & Financial Markets Association Before the House Small Business Subcommittee for
Saving for Education: A Long-Term Investment A Guide to Understanding 529 Plans Table of Contents It Pays to Save for Education................. 1 Education Costs Outpace Inflation............ 2 The Importance
Why is Life Insurance a Popular Funding Vehicle for Nonqualified Retirement Plans? By Peter N. Katz, JD, CLU ChFC This article is a sophisticated analysis about the funding of nonqualified retirement plans.
Retiring Allowing employees to invest their retirement savings in the stock market may make good economic sense when the market is booming. But how well does it work when it s time to retire and the market
The Retirement Savings Crisis: Is It Worse Than We Think? Media and Interested Parties Webinar June 20, 2013 11:00 a.m. ET Agenda Welcome and Introductions Report Overview Detailed Findings Conclusions
RETIREMENT ACCOUNTS Gary R. Evans, 2006-2013, November 20, 2013. The various retirement investment accounts discussed in this document all offer the potential for healthy longterm returns with substantial
Why retiree healthcare is important for you and your employees Workforce demographics tell a large part of the story. On average, in higher education and other education-related, nonprofit organizations,
28. Retirement Planning 3: Employer-qualified Plans Introduction Employer-qualified retirement plans, also called employer-sponsored retirement plans, are the second source of income you should consider
PostPartisan Small Business and Employee Retirement Savings Plans By Pamela Villarreal, National Center for Policy Analysis Introduction Over several decades, employer-provided pension plans have played
VOL. 28, NO. 1 SPRING 2015 BENEFITS LAW JOURNAL Longevity Plans: An Answer to the Decline of the Defined Benefit Plan William Most and Zorast Wadia With people living longer and the undeniable shift from