Frontmatter

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Title page

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p. iii

Copyright page

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p. iv

Contents and Tables

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pp. v-viii

Acknowledgments

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p. ix

This book was inspired by an Upjohn Institute book that I coauthored with Noriyasu Watanabe while on a Fulbright at the Institut de Recherches Economique et Sociale in Paris. That book, Private Pension Policies in Industrialized Countries: A Comparative Analysis (Turner and Watanabe 1995), focuses primarily on voluntarily provided defined benefit plans. ...

1 - Introduction to Pension Policy

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pp. 1-19

The U.S. pension system needs fixing. While some of its problems are longstanding, the system overall is in decline. Projections of the future are not certainties, and some analysts differ, but it appears likely that the financial security of current workers when they retire will be less than that of current retirees. ...

2 - Mandates: Pathways to Expanding Private Sector Provision

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pp. 21-32

How can pension coverage be expanded? How can retirement benefits and retirement savings be increased? How can the range of individual choice with respect to retirement income be enlarged? Roughly half of U.S. workers are covered by a pension, with older workers and higher income workers being more likely to be covered...

3 - Extending Pension Coverage

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pp. 33-53

Roughly half of U.S. private sector workers are not covered by a pension. Policymakers have long struggled with the question of how pension coverage can be expanded within a voluntary pension system. The United States has instituted numerous pension policy innovations over the past several decades, including, notably, 401(k) plans. ...

4 - Labor Market Policy: Portability and Retirement

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pp. 55-81

Pension plans contain labor market incentives and disincentives that may affect important life decisions of workers. These incentives may affect whether workers change jobs and the age at which they retire. The incentives, and the resulting decisions, may affect the efficiency of the matching of workers to jobs in labor markets...

5 - Tax Policy: Influencing Coverage and the Structure of Pensions

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pp. 83-99

Tax policy concerning pensions has come under increasing scrutiny. That scrutiny is due to the high cost of pensions in terms of lost tax revenue. It is also due to the fact that tax policy provides larger incentives for higher-income workers than for lower-income workers because higher-income workers have higher marginal tax rates. ...

6 - Managing Pension Risk

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pp. 101-123

Risk is a fundamental aspect of pension systems. Because pension plans promise to pay benefits at a future date, risk is inherent.¹ Some party must bear the economic and demographic risks associated with providing retirement benefits—employers, employees, insurance companies, other financial service providers, or the government. ...

7 - Hybrid Plans: The Best of Both Worlds?

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pp. 125-135

Hybrid pension plans combine features of both defined benefit and defined contribution plans. A factor motivating their development appears to be the desire by employers to shift the risk they bear in defined benefit plans to plan participants. In traditional defined benefit plans, the employer bears the investment risk and the risk relating to the longevity...

8 - Financinig Pensions for Adequacy and Security

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pp. 137-164

This chapter begins by considering some fundamental issues in pension financing: who ultimately bears the cost, and how to deal with inherent conflicts of interest. It considers issues common to both defined benefit and defined contribution plans, as well as issues affecting them separately. ...

9 - Pension Benefit Policy: The Search for Lost Pensions and Other Issues

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pp. 165-180

The ultimate goal of pension policy is that workers receive adequate and secure pension benefits. This chapter first considers the payment of benefits from defined contribution plans, then from defined benefit plans. Issues affecting both types of plans, including lost pensions, are discussed last. ...

10 - The Decline in Annuitization and How to Reverse It

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pp. 181-201

Annuities are generally not provided to participants in 401(k) plans.¹ This is a key shortcoming of 401(k) plans. Annuities are not required in 401(k) plans, making those plans practically indistinguishable from tax-favored retirement savings accounts, rather than making them seem like pension plans. ...

11 - Finding Better Solutions

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pp. 203-212

The goals of the pension system are to provide secure and adequate retirement income. In both respects, the U.S. system needs better solutions. With the decline in defined benefit plans and the increasing reliance on 401(k) plans, future retirees will have less secure and less adequate retirement income than current retirees. ...

References

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pp. 213-226

The Author

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p. 227

John A. Turner is director of the Pension Policy Center in Washington, D.C., which provides research and consulting on social security and pension policy. Previously, he worked at the AARP Public Policy Institute in Washington and at the International Labour Office in Geneva, Switzerland. ...

Index

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pp. 229-242

About the Institute

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p. 243

The W.E. Upjohn Institute for Employment Research is a nonprofit research organization devoted to finding and promoting solutions to employment-related problems at the national, state, and local levels. It is an activity of the W.E. Upjohn Unemployment Trustee Corporation...