i ;_i'_¸. Attachment 2 PCPP PCPP Attachment i PCPP Attachment 1 -7- -6- --- 2-8- -5- "_ Papers and Projects Due -3- Date Authocs Representative -2- -4- papers and Projects Due Date Authcx's Ret>resentative P_pers and Projects__ Due Date Authors Representative EBRI EBRI President's Commission on Pension Policy r II _7. Setting the Retirement Age December 1980 i_etty Meier EBRI's work on coverage is only one of the studies we currently l, Prof ivate"MUPS" Pensionswas andalso Capitalbased on September four other 1979assumptions. Mordecai First, Kurz there Emily Andrews 25. Eco_lomic ImpUcations of question, the common statement that the failure of the employer ._,_l"-_< 736Jackson P_ace, ! NW,Washington OC . - 20006 From 1950 to 1979, when the total workforce increased by 90 per- Forhave mationunderway. It is one that we hope will be Mhelpful arcy Avrinto this will Commission be no growth in employerWorking sponsored plans Papers- after 1984. Allocation of Pension Fund September 19g0 3ira Barth Emily Andrews pension system is that it covers less than half of the working PCPP Models The PRIORITIES '%TUPS" project FOR THE was '80scarried out By ICF under contract to _8. Alternative Designs for A Michael O'Connell Treasury Second, as a result of reaction March 25, to 1981 institution of the Commis- Subcommittee cent, participation in assessing in employer what you sponsored feel policy plans ingrew thebyfuture 263 per- Capital population, has been a common measure for the private pension INCOME ADEQUACY April 20, 1981 the Department of Labor. Release of public use taped produced Universcent. should al Minimum Ofbe.those SOur ystemworkers research not does Decembe covered lead r 198 usby 0 toa plan, twoBesolid tty65Mepercent ierconclusions. earn _|ichael O'Connell sion's recommendations, there will be no changes in present II. _DEA system Impactand onemployer Alternative sponsored ._ugust plans 1980for many years. Portland State Betty Me_.er April 8, 1981 from It isthat important work istobeing analyzecontrolled the meansbybyfan which ICLanoff's F the President's office. I The Commission's work represents a monumental effort. Given the than $i0,000 per year or $5.00 per hour; 46 percent work First, judging the private pension system on the basis of half Wor plans k Pattafter erns 1984: no freezes, no terminations, no changes in 26. Unisex Tables September 1980 Preston Basse_ Shelley Lapkof£ The Commission stated the following principal recommendation Commission reached its conclusion that coverage growth will be for understand substantive employersfrom breadth whoWally haveand Kolodrubetz less scope thanthey 25 that employees; were these asked tapes 66 to percent study, are still awork great of the workforce is unfair, unrealistic and unwise. Second, participation standards. Third, the administrative costs to ini- INTRODUCTION Because coverage was the central issue in the PCPP report, it asunder underlying review.the entire report: limited in the future. The Commission paid for the use and devel- for dealemployers was accomplished, with less than but not I00 enough. employees. The Of Commission's those individuals final _9. Vesting December 1980 Michael O'Connell Treasury [3: Role available ,J[ in-Kind research, Benefits includingAugust reasonable 1950 runs of Tomthe Commission Betty \leier tiate, operate and maintain MUPS will be $0. Finally, the assess- is the principal focus of our testimony this morning. The short- 27. Implications of Making the Mr. Dallas L. Salisbury -- I_rzilleri opment of two models. Our assessments find that using reasonable working report for and employers working papers with 1,000 leave or muchmoreto employees, be explored.92 This percent was Betty Melee Michae[ O'Connell models, Pensions indicates andPersonn¢I/ thatHu_zsignificant Riso,,rc¢Early voluntary Retirementiemployer n PublicSasponsored fety ment includes no effects which may occur by reason of its tax comings we have found in the Commission's analysis in this area, Single Person's Budget 7596 of October 1980 Tom Borzilleri Betty Meier I am Exe*cDallas utiveThe L. Dir Commission ecto Salisbury, r believes ExecutivethatDirector the replacement of the Employee of..... pre- STATEMENT OF assumptions in the same models do not support the Commission's Robert made Roeder clear by researchers at the Commission's January "Research I regret that I could not be more helpful ICin F furnishing the are covered Managemenby t:Docanumeemployer ntedandPotesponsored ntialOrganizplan; atioby nsof blicthose ha,J. lCTCworking onnelI, for treatment plan growthchanges can beorexpected other recommendations. in the future. however, do raise questions in many other areas of the report. the BLS Intermediate Couple's Benefit conclusions. Research retirementInstitute disposable(EBRI). incomeIt from is a all pleasure sourcesto is be ahere Conference." Employee Mr. Rober Benefit tSubstantial Roed Research er behavioral, Institute benefit, _ and economic l_i. Ba President's employers mate rgainin20 riIm alp ve sac _ts of with you Commission P Ret ensi irer ons 500-999 eequ onest Huema d. on nemployees, RePension soIur Se fce ptember youFeb Policy 84 have ruary 1percent 980 198any 1. moare re Rickquestions, covered. Bank These please Tom As EBRI completes its review in those areas the results will this morning desirable and I retirement thank you for income giving goal.EBRI the opportunity 1920 N Street, N.W. DALLAS L. SALISBURY Management S_stems and ",Idivid,.aal Bene give research fits me Freedom a must call. ofstill Informa betion undertaken. Officer Research regarding the effect Woodruff 736 figures Jackson indicate Place, aNWrelatively significant success story since 50. Systembe Admi made nistratiavailable on, EnIorce- to the Dec Subcommittee. ember 1950 B|aydon, et. al. Tom WoodruII 28. Cost to pappear. f EliminatingEBRI Earn was ingsestablished in 1978 to meet a need for pro- First, Washington, Work.the BekaCommission uicDC ,5 by20036 Judy D placed . Olian. absolute maximums on the level that of tax PCPPincentives is only now beginning. A CONSISTENT PUSH FOR MORE Washington, 1950 for private DC 20006 employer sponsored and public employer sponsored ment and Monitoring I While fessional this need analysis may exist, and comprehensive, the research practical, criteria are objective not satis- Test . StephenJ. Carroll, Jr.,and Cra EXECUTIVE ig October E. 1980 DIRECTOR Betty Meier coverage could grow in the future in their macroeconomic model. plans.736 Those Jackson who are Place notN.W. covered can be clearly identified and The Commission based its conclusion that the lack of pension fied. Cost Schneiand er,Coll consequences egeof Busis,eanalyses ss and were limited. The amount IS. Tresearch ax Policy-Repor on temployee on Costs benefits. September 1980 Mary Barth Emily Andrews Dear TheirMr.cap Roeder: resulted in a maximum potential coverage of 72 percent policies If Dearadopted, Mr.targeted Salisbury: the Commission's t® provide for recommendations them. could have . .-_.....signifi- Sincerely, Washington, D.C. 20006 _1. PensiThe ons anCommission d the Labor Ma recommendations rket January include 1980 a consistent Larry Kotlikoemphasis lf Emily Andrews coverage was the most serious retirement income problem on Management,University of Mar_land, of comprehensive and interactive economic analysis needed to 29. Early Retirement, Hazardous EMPLOYEE BENEFIT RESEARCH INSTITUTE in 1995. EBRI had the same models rerun without those caps. The cant implications for the public and private sectors in many on allocating additional national resources to retirement income analysis Februaryof 198the 1. total workforce and without regard to employment effectively EBRI is notassess an action-oriented, the major policylobbying implications organization would be which sub-takes Dutyresult: Occupations., by 1995 etc. there couldOctober be a 1980 possible increase Betty Meier in coverage Betty MeEer areas, This isincluding: in reply to your letter of March 25th requesting 23. D Iescr respectfully iptiqDear n ofMr. Smallrequest Roeder: Plans copies Seof ptember the following 1980 documents American Socwhich iety Michael O'Connel provision. _2. Implicat Coverage stabililty. ions of Policy Growth It toe concluded that of the total workforce, only 45 stantial. This is made clear in documentation of the Commis- specific positions on policy proposals. Rather, the Institute of Pension \ wetobelieve 83 percent, should anbeincrease availableof under over ii thepoints Freedomor of I percent Information per various materials which we had expected to be available at Capitalpercent Formationparticipate ) Savings in a private employer sponsored pension pro- sion's providesmodels. research Analysis and basic must include information assessing that can the beimpact of useon to year. In assessing the reasonableness MAY 15, 1981of the maximums the Commis- 30. Pensions and * Personnel The cost of doing business Craig ActSchneier uaries Act. The Employee Benefit Research Institute will reimburse the this time. Unfortunately, manRyoberprojects t J. Roedreemrain unfinished. gram. *This The letter Commission shall serve believes as an thatofficial other programs request to forsupple- and Investments 3amuary 1980 BiU Cau'twright BiU C.artwri_ht The President's Commission study concluded that its "forecasting other private government organizations, expenditures the Congress, as well as andprivate others, business in reaching expen-, sion assumed, EBRI examined the fact that over the last ten Management October 1980 Stephen Carroll Michael O'Connel', Commission for any expenses incurred in duplicating the docu- Administrative Officer inform ment ationsocial undersecurity's the Freedobasic m of floor Information of protection Act. must models indicate that the portion of the labor force covered and ditures. policy conclusions. What programs I will shouldbenote cut back specifically to enablethat retirement EBRI does ments. years, *withThe thelevel exception of employment of the years and new immediately job Judycreation Olianfollowing 2_. 1979 OfSchedu the le52B papers Data listed inSeptember Attachment 1980 1 to yAmer our ican letter, Academyonly Preston Bassett be substantially increased. vested in employee pension plans is not expected to increase income expenditures to expand? not have a position on the policy recommendations of the Presi- EBRI ERfSA,Coverage annual Statistics growth in coverage exceeded 1.2 percent per year. of Actuaries Enclosures 18 have been issued by the Commission. These are listed on page significantlyi. under One copy current of all policies." items referred As a result to of this dent's Commission on Pension Policy. EBRI does believe that one 31. Wage i. /Pension The *Commission Tradeo The ff pattern on Pension of new October Policy business I980published creation Smith a reference list Emily ._ndrews 105 of the Commission's final report. The paper by Mike The report provided no information on the potential cost of Presk:JentsCommisk)n on Pension Policy in your letter of April 8, 1981 as assumption and based on their forecasts of no future growth, Atshould a verybeearly allowed, stage,based the upon Commission full anddownplayed open information, the potential to make Congress Second, aestablished, microsimulationthrough modelthewasEmployee developedRetirement for the Income Commission. of 52 pagers and projects to be undertaken by the Commission. 27. Implications of Making the O'Connell was included in this list by mistake as it has not accomplishing this particular goal. The criteria were not met, the Commission not presented yet available as its keystone recommendation the Man- success anMicrosimulation assessment of many ofalternative whether models focus orapproaches notona individual recommended to increasing workers policy retirement and course theiris 32. Disab Security dity S* tudies ActThe(ERISA), scope ofminimum government Octobestandards r 19;8regulation 0 for participation Monroe Berkowitz in Michael O'Connell I request copies of the following studies, which are Dre- Single Person's Budget 75% of October 1980 Tom 6orzilleri B_y Meier whatever yet beenthecompleted. merits. A staff Copiesworking of these paper 18 which papers was arecompleted available datory Universal Pension System RELEASE(MUPS). DATES The EBRI study has care- income. The Commission's Executive Director_ speaking in Vancou- the appropriate one. I will briefly review today the Commission pension protection accruals. The contractor who developed the pension sentedprograms. exactly as Thelisted standard, in Attachment according i. to the legislative the BLS Intermediate Couple's from our office if there are any you don't have. All are being in May, 1979, did provide some estimates of cost. According to fully attempted 2. One to copy accessofthe theCommission's final reportmodels from PC andPP assump-_e_ue_ F/i[81 ver, B.C. in June, 1979 (only three months after the first report from the standpoint of research sufficiency. EBRI has model submitted an initial report to the Commission which indi- history,*THEidentifies PRESIDENT'S Future prospects whenCOMMISSION a worker for government ON mostPENSION readily mandating POLICY beginsREPORT, oftoprograms stay that revised, paper, however, achieving and this willgoalbe with included a 75 percent as chapters spousein benefit the " PCPP 34. Coo tions. rdinationOur of Pe assessment nsion Programraised s Octtwo ober questions: 1980 First, Cynthia how Dittmcan ar 263 Cynthia Dirtmar meeting used a of number the Commission) ofcontrac criteria tor noted for ICF,this that Inc.analysis, tax titled incentives "including: Background had not with cated anthat employment there would situation be substantial and when it future is financially growth in employer reason- 2 Copies of the work specifications and compensation and/or "P_!_ " 30. Pensions and Personnel Craig Schneier at age "COMING 65 retirement OF AGE: TOWARD would cost: A NATIONAL RETIREMENT INCOME POLICY" technical appendix to the final report. Most of the other papers • O,_.._O0o¢_ percent participation growth over 29 years be assumed to instan- Analysis of Potential Effects cf a worked in the past and could not be expected to work in the P_E_=rs and Projects * Levels of overall DueFederal Date taxation Authors, Representative able sponsored to require plans. participation. The Commission There staffare changed workera groups criticalinassump- the contract specifications signed between the Commission and 37. Alternatives'to Universal " Management listed in Attachment 1 willOctober also [980 be incorporated Stephenas Carroll chapters Michael O'Conne. taneously stop? Second, how can recent history be such an inaccu- future. The Commission's report presents no research to substan- I. Have major Mini_,_.: research Universal questions Pensionregarding System. benefits, (Z_S)" costs population that as a matter choice or the nature of their work tion; instead of assuming future real wage growth, they assumed those authors under contract with the Commission, including _l_I _l YEARS OF SERVICE COST AS PERCENT OF PAYROLL 3udy Olian in this appendix, which we hope to publish early in May. Socizd Security CoveraKe October 1980 Leigh McDermott rate predictor of the future? Dynamic analysis based on recent and consequences been addressed? tiate this hypothesis, and no working papers were released during but not limited to those listed in Attachment 2. no growth. Except for the past 2½ years, real wage growth has role would * not Distribution normally of be tax expected incentives to be amongst in employer and sponsored between I I. -_DEA Impact on Alternative .au , gust 1980 " Portland State Betty Meter data indicates that employer plan coverage is growing and can the life of the 20 Commission that provided additional 45 insights _. One copy of full documentation and data plans. With these adjustments, one can move from the total work- been common. Further, future real wage growth is assumed by the _,or k Patterns government programs 31. Wage/Pension Tradeoff October 1980 Smith Emily _ndrews 32. Housel Enclosed .old Surveyare copies of work specifications Mar and ketinvoices FactslSRI which Emily Andrews inbe force this expected area. to a relevant to Thedocriteria so workforce. in the cannot future. be satisfied. While regulatory Nonetheless_ uncertainty the 2. Does the 25 report provide sufficient information 35 to allow tapes from PCPP contractor SRI International Administration, the Congressional Budget Office, the Senate Bud- 3. Copies of data tapes and programs specially develomed from Commission you requested concluded: in Attachment 2. Except for the household survey caused new net30plan formations in the private 29 sector to drop an understanding of why a particular conclusion was as soon as available. get Committee, and others in planning for the future. the CPS master tapes by ICF, Incorporated to create tables * The proportion of gross national product dedicated l_. Index Bonds August 1980 Bob Betty _,teter 32. Disability Studies October 1950 Monroe Berkowitz Michael O'Conne[ reached? toall 3,494 workplans was in done1976, on a1980 noncompetitive witnessed thebasis formation throughof purchase 56,063 i)9, Description of Private35 Plans October [980 To 24m Woodruff Tom Woodruff The included relevant inworkforce "Potentialremoves Effectsfromofthe a Minimum total 95.4 Universal millionPension those to retirement income programs Schoeplein netorders. new plans: In most 14,552cases defined the Executive benefit plans, Director 41,511gavedefined work speci- con- * Tax incentives, 40 even those proposed by21this report, under age 25 and over age 64 (24.1 million persons). EBRI also System Let me(MUPS)", know shoul DRAFT d you FINALneeREPORT, d additional January inf23, ormation. 1981. Speci- 33, Roles ot Income Security tribution plans. MUPS fications ANALYSISorally to the authors under contract. The following 3. will Does not the significantly report provide increase sufficientthe information pension plantopar- allow _0. Actuarial and Accounting removes fically, Thank * agricultural Makeup you breakdowns in of advance workers thefortotal for households andyour compensation the coope self-employed, versus ration. package individuals groupscon- not I_. Bargaining Over Retiree September 1980 Rick Bank Tom _rograms October 1950 Stanford Ross Barbara Bowers Standpapers ards were not funded byOcthe toberCommission I980 so3ira I Bam ail unable toMich._e! O'Connel There is ticipation one a tremendous to reachofan amount lowindependent andofmoderate research conclusion? income that would workersneedandto be tained in Tables 19, 20 and 21. If permission were granted, likely to be covered by employer plans, or unlikely to generally Bene fits Woodruff The Commission assumed that new small plan development was presented furnish workers to anymeet information employed the criteria byabout small forwork businesses. evaluation. specifications What would or compensa- be need The Commission's this additionalrecommendations source of income set out (8.1 amillion frameworkworkers). that should The Commission used the same microsimulation model to analyze we would be pleased to work directly with ICF, Incorporated. Sincerely, tion for them: unlikely. Yet, the average new plan size in 1980 was less than 38. Household 4. Survey Were appropriate and consistent assumptions Market used Facts/SRl for Emily Andrews _1. Inthe terge=social 'erational and Distribution economic benefits, costs and consequences? Tom Woodruff What the potential effects of the mandatory universal pension system Finally, when moving to the ERISA standard (25 years of age, be analyzed and conceptually tested• All parties must move toward 16. Social Security Benefit • September 1980 Shelley Lapkof{ Shelley Lal_off 75. Once a firm views itself as an ongoing business concern and This hypothesis analysisdeserves and modeling? to be fully researched and tested before benefits might employees lose in order to gain extra retirement ofPlease one Iin ncome the year let future. ofmeservice, know However, if 1,000 there in Oc are hours running toberanyof 1980 difficulties the employment model Mar toper cor yassess Ayear), vif rin full "MUPS," theTom Woodrutf Structa urenational retirement income policy based upon solid facts and 140. Actuarial and Accounting itprofitable is used18.asenough Tax the Policy basis to afford for - Rep justifying othe rt plan, on Costs major the employer policy changes. will probably income? number of Whatthesegments relevant ofworkforce the population drops would from the benefit? 95.4 million How would response will exceed ten days. the comprehensive Commission understanding, staff assumed aincluding i percent anperunderstanding year increaseof inthe Standards October 1980 3ira BaU Michael O_onnel create total to a plan. 49.7 million This is workers. particularly significant since 66 percent Testing Over thewould past need two to years be on members a dynamic of thebasis Commission making use gaveofsubstan- recent 40. Actuarial and Accounting Standards _2. Des this criptton goal of compare State and Local to that set Nove for mberother t980 segments SRl/Urban of the popula-Michael O'Connei 17. S(x:ireal aJ Secuwages. rity FinancIt ingis peculiarSeptthat ember two fg_Ocontradictory Bill Cartwrigassumptions ht BillCartwright consequences for other national needs and priorities. ,ll tion? data. tial of those While time individuals and limited attention analysis nottocurrently the has study beencovered completed, effort.work Theydata forsucceeded employers from thein were used to assess these two different futures: the future of Plan s 42. Description of State . and Local Plans Inst itu te Sincerely, A Hearing of Bureau with focusing less of Labor public than Statistics i00 attention employees. indicates on the Overimportance the thatlast by 1977 of tenretirement years currenttheincen- income small _2. D voluntary escriptio50. n ofprograms: Sta System te :,_ndAdministration, Local NovemberEnforcement t9g0 SR and l/Urba Moni n toring. " Michael O'Conne Of the relevant workforce, 74 percent are currently covered by lJ..Tax r Policy-ReportonCosts September I9gO Mary Baurth Emily Andrews employer sector has created new jobs at a much faster rate than issues Plans and in beginning Committee many potentially on . Finance far reaching Institutresearch e tives were having an effect among small employers. Having CONCLUSION established an umbrella goal, the report turns to recom- employer sponsored programs; 68.3 percent are actively partici, t_3. Risk in the System November 1980 Tom Woodruff Executive Director larger employers. But the average life of firms with fewer than projects. We are concerned that much of the benefit of this mendations paring WeRick submit Bank in the for that is plan; increasing on this our56 ispayroll percent a retirement highlyasofquestionable anparticipants program intermittent coverage. procedure areconsultant currently to useat 20. EllectnofSubcommittee Savings on Savings, September Pensions, 1980 andBiInvestment llCartwri&ht Policy Bill Cartwright 20 employers is less than five years. This indicates that it effort may be lost, for United the Commission's States Senate detailed work has not due a vested benefit and 80 percent of those who have been in when attempting to allow a distinguished Commission to reach Because $192.72 we perhave day.found The inconsistencies contract file onandMarket problems Factsin has the been Commis- _¢. Ownership and Control November 1980 Rick Bank Emily Andrews _5. The Impact of Demographic THE takes COVERAGE time for QUESTION small employers to reach a point of profitability been made public at this time. We hope that the information will Wethe reasoned feel plans that conclusions forthemore Commission than based Dallas i0 years staff's upon L.full are Salisbu_'y analysis due information. a vested understates benefit.theIn sion research made available Ninety-Seventh to date, Congress we feel it especially misplaced but the total contract cost was $1,377,408. The SRI Cynthia Dittmar 23. Descriptiono5Small Plans _ September 1980 American So<:iety MichaelO'Connell Changes on Savings November 1980 Paul Wachtel Emily Andrews sufficient for plan creation. Economic questions arise as to Executive First Session Director be made public before the Commission's termination on May 24, future addition, of employer 9 percentplans of the under participants current policy, have benefits does not that adequate- are contract was for $487,063. ofPension important that all the items in Attachment I be released. If when young firms can either voluntarily or mandatorily set aside The 1981. President's I submit Commission for the Record on Pension as partPolicy of thisconcluded statementthat Attach- "the vested in previous employers' plans. Of those who are not cur- ly assess the potential impact of additional voluntary incen- The theCommission information report is notconcludes released,that we may the basis never Actufor be aries able recommending - to identify _5. The Impact of Demographic 50. System Administration, Enforce- December 1980 Blaydon, el. al. Tom Woodruff more money than is already required by law for retirement most ment DLS/das serious 1 which problem outlinesfacing the products our retirement and items system that today shouldisbethemade rently covered by a retirement program who meet the ERISA minimum tives, "MUPS" and is may the overstate projection the of relative no significant positivegrowth effects in the of "MUPS." private those recommendations for which the analysis stands up under Cha m ng ent es a on ndSavi Monitoring ngs November 1980 Paul Wachtel Emily Andrews savings.DLS/bw available Attachments in order to serve the public interest. lack of pension coverage of private sector workers." The coverage careful evaluation. Astandard pension balanced system. criteria, and consistent Yet14a percent positive analysis are realvested would wage bein assumption, necessary a plan from to if allow auni- pre- 2t_. [979 Schedule B Data Septem'oer 1980 American Academy Preston Ba,sse_,t a full assessment of the Commission recommendations. vious formly employer. applied, These would statistics have shown indicate such growth. that 05 ActThe uapproximately ariesPCPP ana--_ysis a6. 51 A. ppPensio ropriate ns an Prere d th tie rem La ebor nt Market 3anuary 1980 Larry Kotlikoff Emily Andrews two-thirds of the relevant workforce will receive a benefit from Earnings Base December [980 Betty Meier employer sponsored plans. EMPLOYEE BENEFIT RESEARCH INSTITUTE tgZON Strew, NWlWuhing_a. DC Z0036/Tehlshcme (ZOZ)659-0670 EMPLOYEE BENEFIT RESEARCH INSTITUTE 1920 N Some% NW/Wubi_q.m DC _ _0036rlE4q_me ¢202) 659.0670