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Retirement Benefit Decisions by City and County Governments

November 21, 2014 Comments off

Retirement Benefit Decisions by City and County Governments
Source: Center for State and Local Government Excellence

Key findings:

  • Workers who work a full career in their city or county can expect a retirement income of between 45 and 80 percent of their pre-retirement income.
  • Career employees of local governments who participate in Social Security can expect retirement income replacement rates of 20 to 30 percentage points higher than employees whose governments do not participate in Social Security.
  • These and other variations mean that many local workers will need to be disciplined about participating in savings plans, outside of their primary plans, to meet their retirement security goals.
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Views on the Value of Voluntary Workplace Benefits: Findings from the 2014 Health and Voluntary Workplace Benefits Survey and The Gap Between Expected and Actual Retirement: Evidence From Longitudinal Data (EBRI Notes, November 2014)

November 20, 2014 Comments off

Views on the Value of Voluntary Workplace Benefits: Findings from the 2014 Health and Voluntary Workplace Benefits Survey and The Gap Between Expected and Actual Retirement: Evidence From Longitudinal Data (EBRI Notes, November 2014)
Source: Employee Benefit Research Institute

Executive Summary

Views on the Value of Voluntary Workplace Benefits: Findings from the 2014 Health and Voluntary Workplace Benefits Survey

  • Three-quarters of workers state that the benefits package an employer offers prospective workers is extremely (32 percent) or very (44 percent) important in their decision to accept or reject a job.
  • Nevertheless, 34 percent are only somewhat satisfied with the benefits offered by their current employer, and 22 percent are not satisfied.
  • Eighty-six percent of workers report that employment-based health insurance is extremely or very important, far more than for any other work place benefit.
  • Workers identify lower cost (compared with purchasing benefits on their own) and choice as strong advantages of voluntary benefits. However, they are split with respect to their comfort in having their employer choose their benefits provider, and think the possibility that they may have to pay the full cost of any voluntary benefits is a strong or moderate disadvantage.

The Gap Between Expected and Actual Retirement: Evidence From Longitudinal Data

  • The 2008 economic recession sharply increased the gap between expected and actual retirement. Pre-September 2008, before the investment markets crashed, 83.9 percent of workers retired either earlier or no later than three years after their expected retirement—compared with only 59.3 percent who did so post-September 2008.
  • Longitudinal findings (comparing same cohort at different points in time) show that more people (35.9 percent) actually retired after 65 than expected (18.9 percent), and among those who expected to retire after 65, more than half (56.6 percent) did so. It also shows that 38.0 percent retired before they planned, 48.0 percent retired after they planned, and 14.0 percent retired the year they planned.
  • Longitudinal data also show that people who have a retirement plan tend to retire closer to when they planned, compared with those without a plan. It also found that the gap between expected and actual retirement is generally very small between those with defined benefit plans and defined contribution plans.

New From the GAO

November 20, 2014 Comments off

New GAO Reports
Source: Government Accountability Office

1. Individual Retirement Accounts: IRS Could Bolster Enforcement on Multimillion Dollar Accounts, but More Direction from Congress Is Needed. GAO-15-16, October 20.
http://www.gao.gov/products/GAO-15-16
Highlights – http://www.gao.gov/assets/670/666594.pdf

2. Veteran’s Disability Benefits: Improvements Could Further Enhance Quality Assurance Efforts. GAO-15-50, November 19.
http://www.gao.gov/products/GAO-15-50
Highlights – http://www.gao.gov/assets/670/667026.pdf

3. Consumer Product Safety Oversight: Opportunities Exist to Strengthen Coordination and Increase Efficiencies and Effectiveness. GAO-15-52, November 19.
http://www.gao.gov/products/GAO-15-52
Highlights – http://www.gao.gov/assets/670/667040.pdf
Podcast – http://www.gao.gov/multimedia/podcasts/666875

4. Intellectual Property: U.S. Customs and Border Protection Could Better Manage Its Process to Enforce Exclusion Orders. GAO-15-78, November 19.
http://www.gao.gov/products/GAO-15-78
Highlights – http://www.gao.gov/assets/670/667073.pdf

5. Freedom of Information Act: DHS Should Take Steps to Improve Cost Reporting and Eliminate Duplicate Processing. GAO-15-82, November 19.
http://www.gao.gov/products/GAO-15-82
Highlights – http://www.gao.gov/assets/670/667053.pdf

6. Defense Contractors: Additional Actions Needed to Facilitate the Use of DOD’s Inventory of Contracted Services. GAO-15-88, November 19.
http://www.gao.gov/products/GAO-15-88
Highlights – http://www.gao.gov/assets/670/667060.pdf

Best Practices in Pension Reform: Lessons Learned from Successful Reformers

November 19, 2014 Comments off

Best Practices in Pension Reform: Lessons Learned from Successful Reformers
Source: Reason Foundation

This report assesses the lessons learned from various efforts to reform public employee pensions in jurisdictions across the United States. It draws on the experience of policymakers, officials and campaigners in Michigan, Alaska, Utah, Rhode Island, San Diego and San Jose to outline a series of best practices that will equip a willing and motivated pension reformer with the tools he or she needs to bring about substantive change.

Toward Meaningful Military Compensation Reform: Research in Support of DoD’s Review

November 14, 2014 Comments off

Toward Meaningful Military Compensation Reform: Research in Support of DoD’s Review
Source: RAND Corporation

Key Findings

Deficiencies in the Current System

  • Because service members do not receive retirement benefits unless they have served for 20 years, most members (about 86 percent of officers and 66 percent of enlisted personnel) receive no benefits.
  • The military compensation system emphasizes compensation in the form of deferred payments, despite the fact that the typical service member is young and has a preference for current over deferred compensation. As a result, compensation costs are higher than necessary.
  • The vesting point at 20 years of service and immediately available retirement benefits induces similar career lengths in all occupational specialties, but optimal career length may well differ by occupational specialty.

A Modernization Proposal

  • A hybrid system that combines elements of a defined-benefit plan (the military’s current system) and a defined-contribution plan (popular in the civilian sector) could address criticisms of the current system while maintaining key advantages.
  • Earlier vesting (before 20 years of service) in the proposed system can improve equity by increasing the likelihood that a service member will become vested.
  • A hybrid plan can increase efficiency and enable the services to flexibly manage the force via decisions about how the defined-benefit element is computed, how retirement eligibility criteria are defined, and when payouts are made.
  • RAND analysis indicates that a hybrid plan is able to create a steady-state force level and experience mix equivalent to the current force despite changes in the timing and amount of compensation and earlier vesting.
  • The hybrid plan could incorporate a streamlined disability retirement benefit that is both simpler and fairer than the current system’s.

Employment-Based Retirement Plan Participation: Geographic Differences and Trends, 2013

November 10, 2014 Comments off

Employment-Based Retirement Plan Participation: Geographic Differences and Trends, 2013
Source: Employee Benefit Research Institute

Executive Summary

  • The percentage of workers participating in an employment-based retirement plan rose in 2013, increasing for the first time since 2010 among all workers and private-sector workers.
  • The retirement plan participation level depends on the type of worker being considered: Among all American workers in 2013, 51.3 percent worked for an employer or union that sponsored a retirement plan (the sponsorship rate), while 40.8 percent participated in a plan.
  • Among wage and salary workers ages 21–64, the sponsorship rate increased to 56.0 percent, and the portion participating increased to 45.8 percent.
  • Among full-time, full-year wage and salary workers ages 21–64, the sponsorship rate was 62.3 percent and 54.5 percent of the workers participated in a retirement plan.
  • Almost 74 percent of wage and salary public-sector workers participated in an employment-based retirement plan.

New From the GAO

October 30, 2014 Comments off

New GAO Reports
Source: Government Accountability Office

1. Pension Plan Valuation: Views on Using Multiple Measures to Offer a More Complete Financial Picture. GAO-14-264, September 30.
http://www.gao.gov/products/GAO-14-264
Highlights - http://www.gao.gov/assets/670/666288.pdf

2. DOD Business Systems Modernization: Additional Enhancements Are Needed for Army Business System Schedule and Cost Estimates to Fully Meet Best Practices. GAO-14-470, September 30.
http://www.gao.gov/products/GAO-14-470
Highlights - http://www.gao.gov/assets/670/666294.pdf

3. Federal Real Property: More Useful Information to Providers Could Improve the Homeless Assistance Program. GAO-14-739, September 30.
http://www.gao.gov/products/GAO-14-739
Highlights - http://www.gao.gov/assets/670/666258.pdf

4. VA Health Care: Management and Oversight of Consult Process Need Improvement to Help Ensure Veterans Receive Timely Outpatient Specialty Care. GAO-14-808, September 30.
http://www.gao.gov/products/GAO-14-808
Highlights - http://www.gao.gov/assets/670/666249.pdf
Podcast - http://www.gao.gov/multimedia/podcasts/666528

5. Energy Policy: Information on Federal and Other Factors Influencing U.S. Energy Production and Consumption from 2000 through 2013. GAO-14-836, September 30.
http://www.gao.gov/products/GAO-14-836
Highlights - http://www.gao.gov/assets/670/666271.pdf

6. Disability Compensation: Review of Concurrent Receipt of Department of Defense Retirement, Department of Veterans Affairs Disability Compensation, and Social Security Disability Insurance. GAO-14-854R, September 30.
http://www.gao.gov/products/GAO-14-854R

7. DOD Space Systems: Additional Knowledge Would Better Support Decisions about Disaggregating Large Satellites. GAO-15-7, October 30.
http://www.gao.gov/products/GAO-15-7
Highlights - http://www.gao.gov/assets/670/666715.pdf

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