_______________________________________________________________
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. 5, No. 13: July 15, 2004
_________________________________________________________________
Publisher: LSN Employment, Labor, Compensation & Pension Journals
a division of
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and Social Science Research Network (SSRN)
Editor: PAMELA PERUN
Urban Institute
Mailto:pamela@planetnow.com
Copyright: SSEP, Inc. 2004. All rights reserved.
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Topic of This Issue:
Saving and Retirement
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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
"Employer Pension Contributions and 401(k) Plans: A Note"
Industrial Relations, Vol. 43, No. 2, pp. 473-479, April
2004
TERESA GHILARDUCCI
University of Notre Dame
Department of Economics
WEI SUN
University of Notre Dame - Inter-University Program
for Latino Research
University of Kentucky
Gatton College of Business and Economics
STEVE NYCE
Watson Wyatt Worldwide
"Retirement Accounts and Wealth, 2001"
EBRI Notes, Vol. 25, No. 5, May 2004
CRAIG COPELAND
Employee Benefit Research Institute (EBRI)
WORKING PAPERS
"What Triggers Early Retirement? Results from Swiss Pension
Funds"
MONIKA BüTLER
Universite de Lausanne - DEEP-HEC
Centre for Economic Policy Research (CEPR)
OLIVIA HUGUENIN
Université de Lausanne - DEEP-HEC
FEDERICA TEPPA
Universita degli Studi di Torino
Center for Research on Pensions and Welfare
Policies (CeRP)
"Who Among White Collar Workers Has an Opportunity for Phased
Retirement? Establishment Characteristics"
ROBERT M. HUTCHENS
Cornell University
School of Industrial and Labor Relations
Bard College
The Levy Economics Institute
Institute for the Study of Labor (IZA)
KAREN GRACE-MARTIN
Cornell University
"Lifetime Earnings, Social Security Benefits, and the Adequacy of
Retirement Wealth Accumulation"
ERIC M. ENGEN
National Bureau of Economic Research (NBER)
WILLIAM G. GALE
Brookings Institution
Economic Studies Program
CORI E. UCCELLO
Urban Institute
"Choice and Other Determinants of Employee Contributions to
Defined Contribution Plans"
LESLIE E. PAPKE
Michigan State University
Department of Economics
National Bureau of Economic Research (NBER)
"Plan Design and 401(k) Savings Outcomes"
JAMES J. CHOI
Harvard University
Department of Economics
DAVID I. LAIBSON
Harvard University
Department of Economics
National Bureau of Economic Research (NBER)
BRIGITTE MADRIAN
University of Pennsylvania
The Wharton School
National Bureau of Economic Research (NBER)
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N E W and F O R T H C O M I N G Articles
_________________________________________________________________
"Employer Pension Contributions and 401(k) Plans: A Note"
Industrial Relations, Vol. 43, No. 2, pp. 473-479, April
2004
BY: TERESA GHILARDUCCI
University of Notre Dame
Department of Economics
WEI SUN
University of Notre Dame - Inter-University Program
for Latino Research
University of Kentucky
Gatton College of Business and Economics
STEVE NYCE
Watson Wyatt Worldwide
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=524281
Contact: TERESA GHILARDUCCI
Email: Mailto:TERESA.GHILARDUCCI.1@ND.EDU
Postal: University of Notre Dame
Department of Economics
Notre Dame, IN 46556 UNITED STATES
Phone: 219-631-7581
Co-Auth: WEI SUN
Email: Mailto:WEI.SUN.7@ND.EDU
Postal: University of Notre Dame - Inter-University Program for
Latino Research
230 McKenna Hall
P.O. Box 764
Notre Dame, IN 46556 UNITED STATES
Co-Auth: STEVE NYCE
Email: not available
Postal: Watson Wyatt Worldwide
1717 H Street, NW
Washington, DC 20006 UNITED STATES
ABSTRACT:
We investigate the pension choices of over 800 firms between
1988 and 1996. Using the data on pension plan finances from the
Internal Revenue Service (IRS) Form 5500, required annually from
firms sponsoring plans, and on firm finances from Compustat, we
find support that a 10 percent increase in the use of 401(k)
plans reduces pension costs per worker by 1.8 to 2.0 percent.
Collective bargaining helps to mitigate the decline in employer
costs.
______________________________
"Retirement Accounts and Wealth, 2001"
EBRI Notes, Vol. 25, No. 5, May 2004
BY: CRAIG COPELAND
Employee Benefit Research Institute (EBRI)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=551001
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
ABSTRACT:
The two main savings vehicles designed for accumulating assets
for retirement are individual retirement accounts (IRAs) and
employment-based retirement savings plans such as 401(k) plans.
This paper examines the ownership of IRAs (in aggregate, but not
by type) and 401(k)-type plans by Americans age 21 or older, as
well as the average balances in these plans. The paper also
investigates the number of years that owners of these plans have
contributed to them, as continuing to contribute to these plans
is key to building assets within them. Although IRAs and
401(k)-type plans are designed for accumulating assets for
retirement, not all Americans have access to 401(k)-type plans
or use either of these plans to save. Therefore, this paper also
examines the wealth of American households that both do and do
not own IRAs or 401(k)-type plans in order to provide an
indication of the asset levels that these households have or may
have available to use in retirement and the potential effect of
plan ownership on overall wealth. While there has been much
discussion in policy circles about the necessity for individuals
to save for retirement, only a minority of the adult population
owns at least one of the two main savings vehicles designed for
this purpose.
The PDF for the above title, published in the May 2004 issue
of EBRI Notes, also contains the fulltext of another May 2004
EBRI Notes article abstracted on SSRN: "Medicare Program Takes
On More Income-Related Features."
JEL Classification: D31, D91
______________________________
W O R K I N G P A P E R Abstracts
_________________________________________________________________
"What Triggers Early Retirement? Results from Swiss Pension
Funds"
BY: MONIKA BüTLER
Universite de Lausanne - DEEP-HEC
Centre for Economic Policy Research (CEPR)
OLIVIA HUGUENIN
Université de Lausanne - DEEP-HEC
FEDERICA TEPPA
Universita degli Studi di Torino
Center for Research on Pensions and Welfare
Policies (CeRP)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=556727
Paper ID: CEPR Discussion Paper No. 4394
Date: May 2004
Contact: MONIKA BüTLER
Email: Mailto:Monika.Butler@hec.unil.ch
Postal: Universite de Lausanne - DEEP-HEC
BFSH1
CH-1015 Lausanne, SWITZERLAND
Phone: +41 21 692 3451
Fax: +41 21 692 3365
Co-Auth: OLIVIA HUGUENIN
Email: Mailto:olivia.huguenin@hec.unil.ch
Postal: Université de Lausanne - DEEP-HEC
BFSH1
CH-1015 Lausanne, SWITZERLAND
Co-Auth: FEDERICA TEPPA
Email: Mailto:teppa@cerp.unito.it
Postal: Universita degli Studi di Torino
Center for Research on Pensions and Welfare
Policies (CeRP)
Via Real Collegio, 30
10024 Moncalieri, Torino, ITALY
Paper Requests:
Contact CEPR Discussion papers, 90-98 Goswell Road, London EC1V
7RR, UK. Phone:(44 20)7878 2900. Fax:(44 20) 7878 2999.
Mailto:orders@cepr.org Fee: 5 (British Pound Sterling) /US $5 /8
euros per paper. Payment in advance is requested. Postage and
packing additional.
ABSTRACT:
Early retirement is predominantly considered as the result of
incentives set by social security and the tax system. But people
seem to retire early even in the absence of such distortions, as
the Swiss example demonstrates. We look for determinants of
early retirement, in particular the role of lifetime income and
family status, using individual data from a selection of Swiss
pension funds. Our findings suggest that affordability is a key
determinant in retirement decisions: more affluent men and - to
a much smaller extent - women tend to leave the work force
earlier. The fact that early retirement has become much more
prevalent in the last 15 years is another indicator for the
importance of affordability as Switzerland's funded pension
system has matured over that period leading to higher effective
replacement rates. We also find sizeable differences in
retirement behaviour across marital status. These may be
explained by a constrained rational choice based on differential
mortality and the desire of couples to coordinate their entry
into retirement.
JEL Classification: D91, H55
______________________________
"Who Among White Collar Workers Has an Opportunity for Phased
Retirement? Establishment Characteristics"
BY: ROBERT M. HUTCHENS
Cornell University
School of Industrial and Labor Relations
Bard College
The Levy Economics Institute
Institute for the Study of Labor (IZA)
KAREN GRACE-MARTIN
Cornell University
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=554023
Paper ID: IZA Discussion Paper No. 1155
Date: May 2004
Contact: ROBERT M. HUTCHENS
Email: Mailto:rmh2@cornell.edu
Postal: Cornell University
School of Industrial and Labor Relations
Ithaca, NY 14853-3901 UNITED STATES
Phone: 607-255-2749
Co-Auth: KAREN GRACE-MARTIN
Email: Mailto:kg47@cornell.edu
Postal: Cornell University
Ithaca, NY 14853 UNITED STATES
ABSTRACT:
Utilizing a new survey of employers, this paper examines how and
why establishments differ in their willingness to permit an
older full-time white-collar worker to take phased retirement.
Phased retirement means that an older worker remains with his or
her employer while gradually reducing work hours and effort.
Although older workers often express an interest in phased
retirement, actual occurrences are evidently rare. A possible
explanation is that employers limit opportunities for phased
retirement. The survey indicates that employers are often
willing to permit phased retirement, but primarily as an
informal arrangement. The results also indicate that
opportunities for phased retirement are greater in
establishments that employ part-time white-collar workers, allow
job sharing, and have flexible starting times. Opportunities
tend to be more limited in establishments where white collar
workers are unionized, and where the establishment is part of a
larger organization.
JEL Classification: J26, J14
______________________________
"Lifetime Earnings, Social Security Benefits, and the Adequacy of
Retirement Wealth Accumulation"
BY: ERIC M. ENGEN
National Bureau of Economic Research (NBER)
WILLIAM G. GALE
Brookings Institution
Economic Studies Program
CORI E. UCCELLO
Urban Institute
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=546243
Paper ID: Center for Retirement Research Working Paper No.
2004-10
Date: April 2004
Contact: WILLIAM G. GALE
Email: Mailto:WGALE@BROOKINGS.EDU
Postal: Brookings Institution
Economic Studies Program
1775 Massachusetts Avenue, NW
Washington, DC 20036 UNITED STATES
Phone: 202-797-6148
Fax: 202-797-6181
Co-Auth: ERIC M. ENGEN
Email: not available
Postal: National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138 UNITED STATES
Co-Auth: CORI E. UCCELLO
Email: Mailto:CUCCELLO@UI.URBAN.ORG
Postal: Urban Institute
2100 M Street, NW
Washington, DC 20037 UNITED STATES
Paper Requests:
Contact Amy Chasse, Communications Specialist, Center for
Retirement Research, Boston College, Fulton Hall 550, Chestnut
Hill, MA 02467-3808. Phone: (617)552-6783. Fax: (617)552-1750.
Mailto:chassea@bc.edu
ABSTRACT:
This paper provides new evidence on the adequacy of household
retirement saving. We depart from much previous research on the
adequacy of saving in two key ways. First, our underlying
simulation model of optimal wealth accumulation allows for
precautionary saving against uncertain future earnings. Second,
we employ data on lifetime earnings. Using data from the 1992
Health and Retirement Study, we find that households at the
median of the empirical wealth-lifetime earnings distribution
are saving as much or more as the underlying model suggests is
optimal, and households at the high end of the wealth
distribution are saving significantly more than the model
indicates. But we also find significant undersaving among the
lowest 25 percent of the population. We show that reductions in
Social Security benefits could have significant deleterious
effects on the adequacy of saving, especially among low-income
households. We also show that, controlling for lifetime
earnings, households with high current earnings tend to save far
more adequately than other households.
______________________________
"Choice and Other Determinants of Employee Contributions to
Defined Contribution Plans"
BY: LESLIE E. PAPKE
Michigan State University
Department of Economics
National Bureau of Economic Research (NBER)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=546247
Paper ID: Boston College, Center for Retirement Research Working
Paper No. 2004-06
Date: March 2004
Contact: LESLIE E. PAPKE
Email: Mailto:PAPKE@PILOT.MSU.EDU
Postal: Michigan State University
Department of Economics
East Lansing, MI 48824 UNITED STATES
Phone: 517-355-3773
Fax: 517-432-1068
Paper Requests:
Contact Amy Chasse, Communications Specialist, Center for
Retirement Research, Boston College, Fulton Hall 550, Chestnut
Hill, MA 02467-3808. Phone: (617)552-6783. Fax: (617)552-1750.
Mailto:chassea@bc.edu
ABSTRACT:
Understanding the role that 401(k) plan characteristics - like
investment choice - play in participation and employee
contributions is important as more workers rely on this type of
retirement plan and proposals for Social Security solvency
include individual savings plans. Using the 1992 Health and
Retirement Study, this paper investigates which individual and
job characteristics are associated with asset choice in defined
contribution plans. Investment choice is found to substantially
increase contributions to defined contribution plans.
______________________________
"Plan Design and 401(k) Savings Outcomes"
BY: JAMES J. CHOI
Harvard University
Department of Economics
DAVID I. LAIBSON
Harvard University
Department of Economics
National Bureau of Economic Research (NBER)
BRIGITTE MADRIAN
University of Pennsylvania
The Wharton School
National Bureau of Economic Research (NBER)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=546283
Paper ID: NBER Working Paper No. W10486
Date: May 2004
Contact: DAVID I. LAIBSON
Email: Mailto:dlaibson@harvard.edu
Postal: Harvard University
Department of Economics
Room M-14
Littauer Center
Cambridge, MA 02138 UNITED STATES
Phone: 617-496-3402
Fax: 617-495-8570
Co-Auth: JAMES J. CHOI
Email: Mailto:JAMES_CHOI@POST.HARVARD.EDU
Postal: Harvard University
Department of Economics
Room M-14
Littauer Center
Cambridge, MA 02138 UNITED STATES
Co-Auth: BRIGITTE MADRIAN
Email: not available
Postal: University of Pennsylvania
The Wharton School
3641 Locust Walk
Philadelphia, PA 19104-6365 UNITED STATES
Paper Requests:
Full-Text downloads are available from SSRN Online for $5.
ABSTRACT:
We assess the impact of 401(k) plan design on four different
401(k) savings outcomes: participation in the 401(k) plan, the
distribution of employee contribution rates, asset allocation,
and cash distributions. We show that plan design can have an
important effect on all of these savings outcomes. This suggests
an important role for both employers in determining how to
structure their 401(k) plans and government regulators in
creating institutions that encourage or discourage particular
aspects of 401(k) plan design.