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. 10: May 22, 2003
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Publisher: LSN Employment, Labor, Compensation & Pension Journals
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Editor: PAMELA PERUN
Urban Institute
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Copyright: SSEP, Inc. 2003. All rights reserved.
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Topic of This Issue:
Papers from the Society of Actuaries, Part III
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T A B L E of C O N T E N T S
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NEW and FORTHCOMING ARTICLES
"Changing Family Structure and Social Security Reform"
Social Thought: Journal of Religion in the Social Services,
Vol. 20, No. 3-4, pp. 17-23
YUNG-PING CHEN
University of Massachusetts at Boston
Gerontology Institute
WORKING PAPERS
"Defined Benefit Plans in an Era of Phased Retirement"
ALIYA WONG
Thelen Reid & Priest LLP
"An Individual's Chosen Retirement Age: When is the Economically
Feasible Retirement Age Chosen Over the Anchor Provided by Known
Others?"
LINDA SMITH BROTHERS
University of Wisconsin
"The Role of Multiemployer Defined Benefit Plans in an Era of
Phased Retirement"
DENISE M. CLARK
H.E.R.E.I.U. Welfare-Pension Funds
"The Pattern and Consequence of Survivorship Provisions in Public
Retirement Plans: Comparison of Britain, U.S., and Germany"
KAREN HOLDEN
University of Wisconsin - Madison
School of Human Ecology
MEERYOUNG KIM
Taegu University
Community Development and Social Welfare Department
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
_________________________________________________________________
"Changing Family Structure and Social Security Reform"
Social Thought: Journal of Religion in the Social Services,
Vol. 20, No. 3-4, pp. 17-23
BY: YUNG-PING CHEN
University of Massachusetts at Boston
Gerontology Institute
Contact: YUNG-PING CHEN
Email: Mailto:bing.chen@umb.edu
Postal: University of Massachusetts at Boston
Gerontology Institute
100 Morrissey Boulevard
Boston, MA 02125-3393 UNITED STATES
ABSTRACT:
Dramatic changes have occurred in family patterns and in the
role of women in the workplace during the last 30 years or so.
More and more women have entered the paid labor force. Fewer
people marry, they marry later, they divorce more often and
sooner, and they remarry less often. Increasingly, many more are
not marrying at all. Unmarried opposite-sex couple households
have grown greatly; and cohabiting adults of the same sex have
increased their ranks. Some of the changes in family patterns
have been more pronounced among blacks and Hispanics than among
whites.
Since Social Security provides income not only to retired and
disabled workers but also to their eligible dependents and
survivors, changing familial relationships will affect the scope
and value of Social Security protection. But the effect on the
role of Social Security of changing family structure has not
been generally recognized. If Social Security reform does not
include altering its benefit provisions in light of changing
family structure, then Social Security will become a less
effective income protection mechanism than originally planned.
The purpose of this paper is to identify the changes in the
structure and composition of families and to discuss the
implications of those changes for Social Security protection.
The central question is, "Who will receive less protection or no
protection if Social Security's benefit provisions are not
changed, while family patterns have changed?" The policy
challenge is how best to modify the relevant provisions.
Because older women constitute one of the most financially
vulnerable groups of people, how widows and divorcees fare under
Social Security has become a major issue, with older women in
poverty as the predominant concern. A related concern is
two-earner couples versus one-earner couples when their Social
Security benefits are calculated.
The paper will review a number of policy proposals for
addressing these issues, offer several caveats that need to be
taken in policy development, and suggest a two-tier system for
Social Security.
Section II summarizes important changes in family patterns in
the last three decades or so. Section III points out the
implications of family pattern changes for the availability of
Social Security benefits. Section IV is concerned with changing
family structure among racial and ethnic minorities. Section V
deals with the issue of poverty among older women. Section VI
briefly analyzes several policy proposals; Section VII
highlights cohabitation. Section VIII discusses the role of
minimum benefits. Section IX offers some caveats for policy
development. Section X proposes a two-tier Social Security
system. Section XI offers some concluding remarks.
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W O R K I N G P A P E R Abstracts
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"Defined Benefit Plans in an Era of Phased Retirement"
BY: ALIYA WONG
Thelen Reid & Priest LLP
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=390723
Contact: ALIYA WONG
Email: Mailto:awong@thelenreid.com
Postal: Thelen Reid & Priest LLP
701 Pennsylvania Avenue, NW
Suite 800
Washington, DC 20004-2608 UNITED STATES
ABSTRACT:
The concept of retirement is changing. Instead of viewing
retirement as the end of a career, many people are using this
time to try new careers or to scale back on current ones. As
such, many retirees are now considering "phased retirement" in
which a person does not withdraw completely from the workforce,
but chooses to work in a reduced capacity, as a part-time or
temporary employee. To retain and attract phased retirees,
employers will need to offer different compensation options.
One such option is to offer participation in a defined benefit
plan. Most phased retirees have some retirement funds available,
but due to extended life expectancy and increasing medical
costs, they may not have adequately prepared for the cost of
retirement. Therefore, earning an additional pension, or
additional pension credits, during phased retirement would be a
significant opportunity for such retirees. This paper explores
the advantages and disadvantages of a defined benefit plan
option for phased retirees.
______________________________
"An Individual's Chosen Retirement Age: When is the Economically
Feasible Retirement Age Chosen Over the Anchor Provided by Known
Others?"
BY: LINDA SMITH BROTHERS
University of Wisconsin
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=390681
Paper ID: Retirement Implications of Demographic and Family
Change Symposium Monograph Working Paper
Contact: LINDA SMITH BROTHERS
Email: Mailto:lbrothers@bus.wisc.edu
Postal: University of Wisconsin
2261 Grainger Hall
Milwaukee, 53201 UNITED STATES
ABSTRACT:
Do individuals make rational, well-planned retirement age
decisions? Evidence is not conclusive; some decisions seem to be
quite reasonable, while others, including the long-term trends
generated by these decisions, seem irrational. In order to be
able to predict and influence this important decision, the
process leading up to it needs to be better understood. The
process an individual uses to make a retirement decision may be
influenced by a rational allocation of money, time, and effort,
as suggested by a utility-maximizing Household Production
approach. Alternatively, the decision process may be strongly
influenced by an anchor, defined by the retirement ages chosen
by friends, neighbors, relatives, and colleagues, as suggested
by Anchoring and Prospect Theory. Studies investigating
anchoring and risk-seeking/risk-aversion behavior, which results
when a target is seen as a loss or a gain from the anchor,
have found that individuals make irrational decisions under many
different circumstances. A set of retirement decision
propositions, which hypothesize that the heuristic of Anchoring
and the resulting cognitive biases described by Prospect Theory
will influence the chosen retirement age, are developed in
this paper. Retirement information provided by the employer is a
possible moderator that may reduce the influence of the anchor
on the retirement decision; a set of moderator hypotheses are
also developed in this paper. Propositions strongly supported by
existing research predict that, unless sufficient information
regarding retirement issues is used by an individual, s/he is
likely to choose an inappropriate retirement age. Finally,
recommended methods, including settings, variable measurement,
and possible methods of data analysis, for completing the
proposed study are provided.
______________________________
"The Role of Multiemployer Defined Benefit Plans in an Era of
Phased Retirement"
BY: DENISE M. CLARK
H.E.R.E.I.U. Welfare-Pension Funds
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=390680
Contact: DENISE M. CLARK
Email: Mailto:dmclark@hereiufund.com
Postal: H.E.R.E.I.U. Welfare-Pension Funds
711 North Commons Drive
Aurora, IL 60504 UNITED STATES
ABSTRACT:
The nature of work and the workplace has changed significantly
over the years. During most of the twentieth century, an
employee expected to spend most, if not all, of his working life
with one employer and then retire with a token of a job well
done, usually a gold watch, and a small retirement benefit.
During this same period, an employer relied on long-term
relationships with its employees, who, after developing valuable
skills, often became economically irreplaceable. Moreover, the
industrial landscape permitted employees having similar skills,
craftsmanship, and interests to pursue organized economic
advancement through the labor movement. Those relationships
further enhanced their skills, wages, benefits, and voice in the
workplace.
______________________________
"The Pattern and Consequence of Survivorship Provisions in Public
Retirement Plans: Comparison of Britain, U.S., and Germany"
BY: KAREN HOLDEN
University of Wisconsin - Madison
School of Human Ecology
MEERYOUNG KIM
Taegu University
Community Development and Social Welfare Department
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=390620
Contact: KAREN HOLDEN
Email: Mailto:HOLDEN@LAFOLLETTE.WISC.EDU
Postal: University of Wisconsin - Madison
School of Human Ecology
1225 Observatory Drive
Madison, WI 53706 UNITED STATES
Phone: 608-263-9283
Co-Auth: MEERYOUNG KIM
Email: Mailto:author340878@ssrn.com
Postal: Taegu University
Community Development and Social Welfare
Department
Taegu, KOREA
ABSTRACT:
The economic consequences of reform of social retirement systems
for women - who are more likely to receive family benefits from
social old-age insurance programs - and particularly for widows,
have been a major focus of public policy discussions. As work
careers for women have lengthened, some question the need for
family benefits, originally designed to protect non-working
spouses against the income consequences of a working spouse's
retirement or death. Others argue that a continuing pattern of
unequal division of paid work responsibilities between spouses
and myopic decisions about the allocation of retirement
resources over the lifetimes of both spouses indicate an ongoing
need for survivor benefits.
A Gerontological Society of America Task Force on Women
concluded that "future low-income elderly women will be no
better off than are today's lower income older women,"
(Smeeding, Estes and Glasse, 1999). The Task Force recommended
more research on ways to improve the economic position of
survivors. This paper builds on this recommendation by comparing
the income consequences of a husband's death in three countries.
The study examines how income sources change when married women
in Britain, the U.S. and Germany are widowed, and it draws
inferences about the income consequences of specific retirement
and survivorship provisions. The data come from the
Cross-National Equivalent File, which includes data from the
German Socio-Economic Panel (1984-1997), the U.S. Panel Survey
of Income Dynamics (1980-1997) and the British Household Panel
Survey (1991-1998).