_________________________________________________________________
E M P L O Y E E B E N E F I T S , C O M P E N S A T I O N
& P E N S I O N L A W
Vol. 4, No. 11: June 5, 2003
_________________________________________________________________
Publisher: LSN Employment, Labor, Compensation & Pension Journals
a division of
Social Science Electronic Publishing, Inc. (SSEP)
and Social Science Research Network (SSRN)
Editor: PAMELA PERUN
Urban Institute
Mailto:pamela@planetnow.com
Copyright: SSEP, Inc. 2003. All rights reserved.
Leading Social Science Research Delivered To Your Desktop
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Topic of This Issue:
Retirement Issues
___________________________________________________________
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T A B L E of C O N T E N T S
_________________________________________________________________
NEW and FORTHCOMING ARTICLES
"Federal Tax Policy, Employer Matching, and 401(k) Saving:
Evidence from HRS W-2 Records"
National Tax Journal, Vol. 55, No. 3, September 2002
CHRISTOPHER R. CUNNINGHAM
Syracuse University
Center for Policy Research
GARY V. ENGELHARDT
Syracuse University
Center for Policy Research
Dartmouth College
Economics
"The Evolving Concept of 'Retirement': Looking Forward to the
Year 2050"
International Social Security Review, Vol. 55, pp. 85-105,
2002
JAMES H. SCHULZ
Brandeis University
"ERISA's Top-Hat Exemption: A Primer"
Tax Notes, Vol. 99, No. 1, April 7, 2003
EDWARD J. RAYNER
Milbank, Tweed, Hadley & McCloy LLP
"Budgeting and Monitoring Pension Fund Risk"
Financial Analysts Journal, Vol. 58, No. 5, 2002
WILLIAM F. SHARPE
Stanford University
Graduate School of Business
National Bureau of Economic Research (NBER)
"401(k) Plan Asset Allocation, Account Balances, and Loan
Activity in 2001"
EBRI Issue Brief, No. 255, March 2003
SARAH HOLDEN
Investment Company Institute
JACK VANDERHEI
Temple University
Risk Management & Insurance & Actuarial Science
"Employment-Based Retirement and Pension Plan Participation:
Geographic Differences and Trends"
EBRI Issue Brief, No. 256, April 2003
CRAIG COPELAND
Employee Benefit Research Institute (EBRI)
"Will Today's Workers Retire with Adequate Income? How are
Today's Retirees Surviving from a Financial Perspective?"
EBRI Notes, Vol. 24, No. 4, April 2003
JIM JAFFE
Employee Benefit Research Institute (EBRI)
WORKING PAPERS
"Reality Testing for Pension Reform"
PAMELA PERUN
Urban Institute
C. EUGENE STEUERLE
Urban Institute
S S R N I N F O R M A T I O N
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N E W and F O R T H C O M I N G Articles
_________________________________________________________________
"Federal Tax Policy, Employer Matching, and 401(k) Saving:
Evidence from HRS W-2 Records"
National Tax Journal, Vol. 55, No. 3, September 2002
BY: CHRISTOPHER R. CUNNINGHAM
Syracuse University
Center for Policy Research
GARY V. ENGELHARDT
Syracuse University
Center for Policy Research
Dartmouth College
Economics
Contact: GARY V. ENGELHARDT
Email: Mailto:gvengelh@maxwell.syr.edu
Postal: Syracuse University
Center for Policy Research
426 Eggers Hall
Syracuse, NY 13244 UNITED STATES
Phone: 315-443-4598
Fax: 315-443-1081
Co-Auth: CHRISTOPHER R. CUNNINGHAM
Email: Mailto:crcunnin@syr.edu
Postal: Syracuse University
Center for Policy Research
426 Eggers Hall
Syracuse, NY 13244 UNITED STATES
ABSTRACT:
We use panel data from W-2 records for households in the Health
and Retirement Study (HRS) to examine the responsiveness of
401(k) saving to taxation, employer matching, and lifecycle
factors. The limit on the tax deductibility of IRA contributions
enacted in the Tax Reform Act of 1986 appears to have raised
401(k) saving by 6 percent. Individuals eligible for employer
matching contribute substantially more, but this result is not
robust once job and firm characteristics are taken into account.
Alternative pension coverage greatly reduces 401(k) saving,
whereas the ability to direct the investment of funds is
associated with higher saving.
______________________________
"The Evolving Concept of 'Retirement': Looking Forward to the
Year 2050"
International Social Security Review, Vol. 55, pp. 85-105,
2002
BY: JAMES H. SCHULZ
Brandeis University
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=309069
Contact: JAMES H. SCHULZ
Email: Mailto:author340269@ssrn.com
Postal: Brandeis University
Waltham, MA 02454 UNITED STATES
ABSTRACT:
Economic growth, more than demography, will determine the nature
of future retirement. With growth has come a steady increase in
retirement years. Now, however, there is increasing interest in
'rolling back' these gains. Alternatively, some scholars propose
a different framework for evaluating 'work' late in life - one
that includes altruism, citizenship, stewardship, creativity,
and the search for faith. Attitudes toward retirement in the
future are likely to move sharply away from the simplistic view
of all work before retirement and no work after. Some of the
resulting changes we can expect to see are more part-time work,
expanded 'citizen participation,' and an older workforce with
more training and retraining.
______________________________
"ERISA's Top-Hat Exemption: A Primer"
Tax Notes, Vol. 99, No. 1, April 7, 2003
BY: EDWARD J. RAYNER
Milbank, Tweed, Hadley & McCloy LLP
Contact: EDWARD J. RAYNER
Email: Mailto:erayner@milbank.com
Postal: Milbank, Tweed, Hadley & McCloy LLP
1 Chase Manhattan Plaza
New York, NY 10005 UNITED STATES
ABSTRACT:
In this report, the author examines the ERISA top-hat exemption,
which exempts certain plans, typically covering senior
executives, from most of ERISA's requirements. As a result of a
lack of regulatory guidance for the requirements of the top-hat
exemption, virtually all guidance for the top-hat exemption has
been provided by courts. Unfortunately, these courts have not
provided clear guidelines that would enable a practitioner to
determine with some level of certainty whether or not a plan he
or she is designing will satisfy the top-hat exemption. In this
article, the author reviews the case law related to the top-hat
exemption and sets forth guidelines that could assist a
practitioner in designing a plan intended to satisfy the top-hat
exemption.
______________________________
"Budgeting and Monitoring Pension Fund Risk"
Financial Analysts Journal, Vol. 58, No. 5, 2002
BY: WILLIAM F. SHARPE
Stanford University
Graduate School of Business
National Bureau of Economic Research (NBER)
Contact: WILLIAM F. SHARPE
Email: Mailto:wfsharpe@stanford.edu
Postal: Stanford University
Graduate School of Business
Gsb L381
518 Memorial Way
Stanford, CA 94305-5015 UNITED STATES
Phone: 650-725-4876
Fax: 650-725-7979
Paper Requests:
Contact Cheryl Montgomery, Associate,
Mailto:cheryl.montgomery@aimr.org Postal: AIMR, Educational
Products, 560 Ray C. Hunt Dr., Charlottesville, VA 22903. Phone:
434-591-5393. Fax: 434-951-5370. Fee $25.
ABSTRACT:
This article describes a set of mean–variance procedures for
setting targets for the risk characteristics of components of a
pension fund portfolio and for monitoring the portfolio over
time to detect significant deviations from those targets.
Because of the significant correlations of the returns provided
by the managers of a typical defined-benefit pension fund, the
risk of the portfolio cannot be characterized as simply the sum
of the risks of the individual components. Expected returns,
however, can be so characterized. I show that the relationship
between marginal risks and implied expected excess returns
provides the economic rationale for the risk budgeting and
monitoring being implemented by a number of pension funds. I
then show how a fund's liabilities can be taken into account to
make the analysis consistent with goals assumed in
asset/liability studies. I also discuss the use of factor models
and aggregation and disaggregation procedures. The article
concludes with a short discussion of practical issues that
should be addressed when implementing a pension fund
risk-budgeting and -monitoring system.
Keywords: Risk Measurement and Management: portfolio risk
______________________________
"401(k) Plan Asset Allocation, Account Balances, and Loan
Activity in 2001"
EBRI Issue Brief, No. 255, March 2003
BY: SARAH HOLDEN
Investment Company Institute
JACK VANDERHEI
Temple University
Risk Management & Insurance & Actuarial Science
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=393140
Other Electronic Document Delivery:
http://www.ebri.org
SSRN only offers technical support for papers
downloaded from the SSRN Electronic Paper Collection
location. When URLs wrap, you must copy and paste
them into your browser eliminating all spaces.
Contact: JACK VANDERHEI
Email: Mailto:temple@vanderhei.com
Postal: Temple University
Risk Management & Insurance & Actuarial Science
489 Ritter Annex
Fox School of Business and Management
Philadelphia, PA 19122 UNITED STATES
Phone: 610-525-6139
Fax: 435-603-1422
Co-Auth: SARAH HOLDEN
Email: Mailto:sholden@ici.org
Postal: Investment Company Institute
Research Department
1401 H Street, NW
Washington, DC 20005 UNITED STATES
Paper Requests:
Contact Alicia Willis at Mailto:publications@ebri.org, or 2121 K
St., NW, Suite 600, Washington, DC 20037-1896.
Phone:(202)572-7422, Fax:(202)775-6312. Full-Text downloads are
available from SSRN Online for $7.50.
ABSTRACT:
This Issue Brief examines asset allocation, account balance, and
loan activity of a large and representative group of 401(k) plan
participants as of year-end 2001 using data gathered by the
Employee Benefit Research Institute (EBRI) and the Investment
Company Institute (ICI) in their collaborative effort known as
the EBRI/ICI Participant-Directed Retirement Plan Data
Collection Project. The EBRI/ICI 401(k) database is the most
comprehensive source of 401(k) plan participant-level data
available to date, containing 14.6 million active 401(k) plan
participants in 48,786 plans with $632.7 billion in assets. The
2001 database accounts for 12 percent of all 401(k) plans, 33
percent of all 401(k) participants, and about 36 percent of the
assets held in 401(k) plans.
Keywords: 401(k) Plans, Asset Allocation, Employment-based
Benefits, Pension Plan Assets, Pension Plan Loans, Retirement
Plans, Self-directed Investments
JEL Classification: D31, G11, J26
______________________________
"Employment-Based Retirement and Pension Plan Participation:
Geographic Differences and Trends"
EBRI Issue Brief, No. 256, April 2003
BY: CRAIG COPELAND
Employee Benefit Research Institute (EBRI)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=400260
Other Electronic Document Delivery:
http://www.ebri.org
SSRN only offers technical support for papers
downloaded from the SSRN Electronic Paper Collection
location. When URLs wrap, you must copy and paste
them into your browser eliminating all spaces.
Contact: CRAIG COPELAND
Email: Mailto:copeland@ebri.org
Postal: Employee Benefit Research Institute (EBRI)
Suite 600
2121 K Street, NW
Washington, DC 20037-1896 UNITED STATES
Phone: 202-775-6356
Fax: 202-775-6312
Paper Requests:
Contact Alicia Willis at Mailto:publications@ebri.org, or 2121 K
St., NW, Suite 600, Washington, DC 20037-1896.
Phone:(202)572-7422, Fax:(202)775-6312. Full-Text downloads are
available from SSRN Online for $7.50.
ABSTRACT:
This Issue Brief examines the level of participation by workers
in employment-based pension or retirement plans. Their
participation is examined for 2001 across various worker
characteristics and those of their employers. The report then
examines retirement plan participation across U.S. geographic
regions, including by state and certain consolidated
metropolitan statistical areas (CMSAs). Participation trends
from 1987 to 2001 are also presented.
Keywords: Demographics, Employment-based Benefits, Pension
Plan Coverage, Pension Plan Participation
JEL Classification: J33
______________________________
"Will Today's Workers Retire with Adequate Income? How are
Today's Retirees Surviving from a Financial Perspective?"
EBRI Notes, Vol. 24, No. 4, April 2003
BY: JIM JAFFE
Employee Benefit Research Institute (EBRI)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=400282
Other Electronic Document Delivery:
http://www.ebri.org
SSRN only offers technical support for papers
downloaded from the SSRN Electronic Paper Collection
location. When URLs wrap, you must copy and paste
them into your browser eliminating all spaces.
Contact: JIM JAFFE
Email: Mailto:jaffe@ebri.org
Postal: Employee Benefit Research Institute (EBRI)
Suite 600
2121 K Street, NW
Washington, DC 20037-1896 UNITED STATES
Phone: 202-775-6353
Fax: 202-775-6312
Paper Requests:
Contact Alicia Willis at Mailto:publications@ebri.org, or 2121 K
St., NW, Suite 600, Washington, DC 20037-1896.
Phone:(202)572-7422, Fax:(202)775-6312. Full-Text downloads are
available from SSRN Online for $7.50.
ABSTRACT:
A confluence of changing conditions has created a growing
concern about whether America's current workers will receive an
adequate income in retirement. This issue was examined at the
Employee Benefit Research Institute's December 2003 policy
forum, where experts examined current research on retirement
savings and retirement income adequacy, the resources workers
are likely to need in retirement, how current retirees are
faring financially, and the implications for consumers,
business, and government. There was agreement that the American
retirement system was stressed and that there was a need for
continuing change to meet new circumstances. Individuals will
have to take a more active role in planning for retirement
during their working years.
Keywords: Aged, Employment-based Benefits, Retirement Income,
Retirement Policy
JEL Classification: D31
______________________________
W O R K I N G P A P E R Abstracts
_________________________________________________________________
"Reality Testing for Pension Reform"
BY: PAMELA PERUN
Urban Institute
C. EUGENE STEUERLE
Urban Institute
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=413202
Contact: PAMELA PERUN
Email: Mailto:pamela@planetnow.com
Postal: Urban Institute
2100 M Street, NW
Washington, DC 20037 UNITED STATES
Phone: 510-644-9410
Co-Auth: C. EUGENE STEUERLE
Email: Mailto:ESTEUERL@UI.URBAN.ORG
Postal: Urban Institute
Senior Fellow
2100 M Street, NW
Washington, DC 20037 UNITED STATES
ABSTRACT:
These are interesting times in the pension world now that there
are two diametrically opposed proposals for change before
Congress. The first is the Pension Preservation and Savings
Expansion Act of 2003 recently introduced by Representatives
Portman and Cardin. This bill embodies the traditional type of
pension reform, an omnibus statute that tinkers with almost
every aspect of the private pension system to make incremental
changes. The second is the Administration's attempt at radical
change and simplification. Its proposal contemplates a sweeping
consolidation in the number and types of defined contribution
plans. This paper evaluates these two approaches - one
evolutionary, the other revolutionary - and then considers an
alternative. Its analysis focuses on the nuts-and-bolts of the
private pension system, that is, on the plans that comprise it
and the rules that govern them. Its thesis is that examining the
architecture and machinery of the private pension system can
teach us much about directions for reform.