Retirement

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Topic of This Issue:
Retirement
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T A B L E O F C O N T E N T S

"Employment Status of Workers Ages 55 or Older"
CRAIG COPELAND
Employee Benefit Research Institute (EBRI)

"Do Funds Need Governance? Evidence from Variable Annuity-Mutual
Fund Twins"
RICHARD B. EVANS
University of Virginia - Darden School of Business
RUDIGER FAHLENBRACH
Ohio State University - Department of Finance

"Employment-Based Retirement Plan Participation: Geographic
Differences and Trends, 2006"
CRAIG COPELAND
Employee Benefit Research Institute (EBRI)

"Revised Pension Rules and the Cost of Debt"
KENNETH W. SHAW
University of Missouri at Columbia - School of
Accountancy

"The Aging of the Boomers and the Coming Crisis in America's
Changing Retirement and Elder Care Systems"
HENRY DRUMMONDS
Lewis and Clark College-Law School

"The Effect of Retirement Incentives on Retirement Behavior:
Evidence from the Self-Employed in the United States and
England"
JULIE M. ZISSIMOPOULOS
The RAND Corporation
NICOLE MAESTAS
RAND Corporation
LYNN A. KAROLY
The RAND Corporation - Santa Monica CA Offices
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"Employment Status of Workers Ages 55 or Older"
EBRI Notes, Vol. 28, No. 8, August 2007

Contact: CRAIG COPELAND
Employee Benefit Research Institute (EBRI)
Email: COPELAND@EBRI.ORG
Auth-Page: http://ssrn.com/author=255137

Full Text: http://ssrn.com/abstract=1005391

ABSTRACT: An increasing percentage of older Americans are in the
labor force: The percentage of those ages 55 or older in the
labor force increased from 37.7 percent in 1993 to 44.9 percent
in 2006. For those ages 65-69, the percentage increased from 18.4
percent in 1985 to 29.0 percent in 2006. This paper examines the
employment status (full time, part time, or part year) of these
older workers. Using March Current Population Survey data, the
percentage of these older workers working full time, full year
was found to have increased steadily from 1993 to 2005.
Consequently, not only are members of the older population more
likely to work, they are more likely to be working full time,
full year. The trend toward more full-time, full-year work is
more closely examined across various demographic categories.
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"Do Funds Need Governance? Evidence from Variable Annuity-Mutual
Fund Twins"
Fisher College of Business Working Paper No. 2007-03-18
Charles A. Dice Center Working Paper No. 2007-17

Author: RICHARD B. EVANS
University of Virginia - Darden School of Business
Email: evansr@darden.virginia.edu
Auth-Page: http://ssrn.com/author=408838

Contact: RUDIGER FAHLENBRACH
Ohio State University - Department of Finance
Email: rudi@cob.osu.edu
Auth-Page: http://ssrn.com/author=107971

Full Text: http://ssrn.com/abstract=1030022

ABSTRACT: We study the roles of traditional governance (boards,
sponsors, etc.) and market governance(investors voting with their
feet) in mutual funds and variable annuities. We find that market
governance is less pronounced for variable annuity investors.
Using a matched sample of variable annuity-mutual fund twins, we
find that variable annuity investors are less sensitive to poor
performance and high fees than mutual fund investors. Given the
weaker role played by market governance, we then examine the role
played by traditional governance in variable annuities. Variable
annuity boards and sponsors add alternative investment options
and replace advisors on behalf of their investors after poor
performance and high fees. These traditional governance
mechanisms are, however, less effective when conflicts of
interest exist between variable annuity sponsors and fund
advisors.
______________________________

"Employment-Based Retirement Plan Participation: Geographic
Differences and Trends, 2006"
EBRI Issue Brief, No. 311, November 2007

Contact: CRAIG COPELAND
Employee Benefit Research Institute (EBRI)
Email: COPELAND@EBRI.ORG
Auth-Page: http://ssrn.com/author=255137

Full Text: http://ssrn.com/abstract=1030102

ABSTRACT: This paper examines the level of participation by
workers in public- and private-sector employment-based pension or
retirement plans, based on the U.S. Census Bureau's March 2007
Current Population Survey (CPS), the most recent data currently
available. It begins with an overview of retirement plan types
and participation in these types of plans. Next, it describes the
data used in this study, along with their relative strengths and
weaknesses. From these data, results on participation in
employment-based retirement plans are analyzed for 2006 across
various worker characteristics and those of their employers. The
paper then explores retirement plan participation across U.S.
geographic regions, including a state-by-state comparison and a
comparison of certain consolidated statistical areas (CSAs). In
addition to the results for 2006, trends from 1987-2006 in
employment-based retirement plan participation are presented
across many of the same worker and employer characteristics as
used for 2006. The paper concludes with a discussion of this
study's findings.
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"Revised Pension Rules and the Cost of Debt"
Research in Accounting Regulations, Vol. 20, 2007

Contact: KENNETH W. SHAW
University of Missouri at Columbia - School of
Accountancy
Email: shawke@missouri.edu
Auth-Page: http://ssrn.com/author=141000

Abstract: http://ssrn.com/abstract=1029158

ABSTRACT: Statement of Financial Accounting Standards No. 158
significantly changes how firms report the financial position of
their defined-benefit pension plans. Under this new standard,
firms must report the funded status, equal to the net of the
projected benefit obligation and the fair value of their pension
plan assets, on the balance sheet. As a result, prior service
costs and gains or losses, previously unrecognized but disclosed
in footnotes to the financial statements, are included on the
balance sheet. Using a sample of firms with defined-benefit
pension plans over 1999-2005, this study examines the relation
between yield spreads on new debt issues and recognized or
disclosed pension information. The results show that both
recognized and disclosed pension information are related to yield
spreads. Further, there is no significant difference in the
relation between pension information and yield spreads depending
on the location of pension information in the financial
statements. Overall, the results suggest that bond investors
utilize both recognized and disclosed pension information in
their pricing decisions, suggesting little potential impact of
SFAS No. 158 on the cost of debt.
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"The Aging of the Boomers and the Coming Crisis in America's
Changing Retirement and Elder Care Systems"
Lewis & Clark Law Review, Vol. 11, No. 267, 2007
Lewis & Clark Law School Legal Studies Research Paper
No. 2007-16

Contact: HENRY DRUMMONDS
Lewis and Clark College-Law School
Email: hhd@lclark.edu
Auth-Page: http://ssrn.com/author=622834

Full Text: http://ssrn.com/abstract=1027981

ABSTRACT: An aging population, coupled with a trend toward
shifting risk from employers to individual employees, has created
a variety of issues within America's retirement system. In
searching for a solution to the coming crisis, this Article steps
back to analyze the retirement system as a whole. Instead of
examining each type of retirement plan individually, the author
argues for fundamental change within the entire retirement
framework. Because the policy behind ERISA - creating tax
benefits to reward long-term employment - has changed, America
needs a new comprehensive retirement policy that accounts for the
crisis facing the current pension system. The author contends
that rather than fashioning individual solutions for each
problem, the situation requires a broad solution governed by an
overarching theme. Professor Drummonds calls for a "new ERISA,"
integrating all of the disparate parts of America's emerging
retirement system. He argues the social security system should be
maintained as a social, not retirement program, guaranteeing
every worker some subsistence level income against the
vicissitudes of life. He calls for the conversion and phasing out
of defined benefit plans in the private and public sector toward
the defined contribution/individual account model as fairer to
the children and grandchildren of the Boomer generation.
Professor Drummonds believes the individual account model is less
subject to the funding and moral hazard problems seen pervasively
in the defined benefit plans. To address the underfunding and
non-participation in defined contribution plans, Professor
Drummonds would mandate that employers offer such plans, with
opt-out features and diversified default portfolios, and a
mandatory employer match of voluntary employee contributions up
to 6%. He would eliminate less than market premium rates for
termination insurance in remaining defined benefit plans and
require a standardized and accurate accounting system for those
plans.
______________________________

"The Effect of Retirement Incentives on Retirement Behavior:
Evidence from the Self-Employed in the United States and
England"
RAND Working Paper Series WR-528

Contact: JULIE M. ZISSIMOPOULOS
The RAND Corporation
Email: ziss@rand.org
Auth-Page: http://ssrn.com/author=332680

Co-Author: NICOLE MAESTAS
RAND Corporation
Email: maestas@rand.org
Auth-Page: http://ssrn.com/author=104565

Co-Author: LYNN A. KAROLY
The RAND Corporation - Santa Monica CA Offices
Email: karoly@rand.org
Auth-Page: http://ssrn.com/author=33240

Full Text: http://ssrn.com/abstract=1022430

ABSTRACT: The authors examine how public and private pension and
health insurance systems affect retirement transitions. In many
countries, public and private pension eligibility, as well as
access to health insurance varies between self-employed and wage
and salary workers, and these differences are likely to cause
differential retirement patterns both within and across
countries. They use the variation in these institutional features
within and across the United States and England to analyze
retirement patterns. Based on longitudinal data from the Health
and Retirement Study (HRS) in the United States and the English
Longitudinal Survey of Ageing (ELSA) they find that the higher
labor force exit rate of wage and salary workers compared to
self-employed workers is due to defined benefit pension
incentives created by the public and private pension systems.
Higher rates of labor force exit at ages 55 and older in England
compared to the United States are due in part to the availability
of publicly provided health insurance.