44 34 14 7 83ii 44 27 230 32 133 31 56 19 12 18 28 17 1 26 2 24 442 43 21 620 22 38 90 13 23 4_ 37 15 56 35 4O 39 529 TABLE 5 EBRI Contents TABLE TABLE 37 Endnotes Conclusion TABLE TABLE TABLE 428 as 6/ year Conclusion 30Studies million Gpe With These All rreat -iodautho the available canoted advance r(1966 eindividuals aging rization must -above 1974), offunded data .be thof in e baby endnote taken the Simplified indicates By pr-og boom L total TABLE the STATEMENT rams Summary ini, April gene Employer and ii this that numbe make ration, endnote 15rthe aevaluation tax of significant Pensions private an filing plans 2, d .contain theinc employer deadline creation rDefine contribuiton easedinfo d sponso for rmation of benefit by 1982 over red 219 to incentiv those period 1982 dollar termination . Economic Four ewho contributed sTh1975 -e points non TEFRA 65 the take pto -rto pe wage og broade and rrcent advantage mov amwill 1982, change, to legislativ ercompensation changes aintowa significantly the pension the 1976 rFds of ereducing I.CAdefined the .dudefined represents tax unce rOve ing special rrAlso, tainty base influence thebenefit this 50cont becomes, tax the total aper rnet ibution make Cong cent tspecial reatm pcont development rress addition oportion employe tehof r.nt eibutions ha plarge rplans obl rrder sThe (thos ems toplans ave wa ofit erquestion and yrwith fo the savings agbecomes rereceiving of dbenefits wedpension re etaking fined cash 24100 .of to o2f th hav even While eye propos though strengthen For The ERISA Defined reed, pension and they abenefit rov eothe er athe rerpurposes also 97not plans economy pe regulatory rneut cent employee ;ral have .of this andTABLE all actions been through cha Policy can te racte 10 rdesigned minating rbe mistics the ay chang viewed have payment esin employees slowed diffe rcould elated as ofrentpension make the bwould enefits to ways "the relevant" pension rgrowth, to ec system ethey meet ive TABLE 9 - In the defined contribution plan, the risk of poor investment o A defined contribution plan provides no clearly stated TABLE 1 on this subject. CORPORATE AND SELF-EMPLOYED PENSION PLAN CREATIONS, PENSION PENSION PENSION PLAN PLAN PLAN GROWTH GROWTH GROWTH i/ national i/ pension EBRI -components savings would authori . be zation pleased Pension TAX of EXPENDITURES of thetoEmploye rese mak system rves ee available Stock AND are represented in OUTLAY Owne sound its rship EQUIVALENTS* published financial 12.Plans 7 perstudies cent health,ofinjudged total this more 277,000 dist pe ape app on allowed system rrcash cent cent rrind opriate ibutions workers -.e.out te The in new r.minable Looking for This the Employee pbenefit er employer can public The cupon futu multiple eis ntbe same rbehind e: aobligations retirement funded expected plans 56 Benefit INDIVIDUAL sponsor policy study pe FiTERMINATIONS plan rrcent st, this of in e..daside, indicated to sponso "att 1977, Resea the pension reduction RETIREMENT open The numbe Of ributing" FY rrch s, rall thes estructuring reffects 1984 and AND anthat epension mmInstitute ay ay IRA plans NET changes Budget only in .ACCOUNTS moving pcause rof aovide PLAN ove the 5pportion TEFRA, rpe rog awould of rhisto INCREASES to rstands cams, the an slowdown ent outhree rhoweve runde ical past influence ofeconomy ofr.defined cont standing rready la ,five yea irproportion / rge ibutions On rmanow yyea plans decisions th to vesting, ebenefit rnot of taking s,oth behad the ebe it of to of r inc pension pension wo coverage stronger benefit the between rrkfo ease system rce: . benefits) delive 35 eplans conomic orLow cents provide is those ryweaker none ea .ca ran objectives ners, wrwho ery d.ll the Csupplementation u85 rcould rent bBefore with eless ing cefo .nts .r national expect .strong them example, changes Hou.This rlyth to anedpolicy means (unit ea are gFurther, rrastrongest nowing readopted, aaclearly c.meaningful least re savings dit)discussion gua likely the aims rantee inc plans consequences rbenefit eas toto edprovid efine have of .ofofeproviding Of employe _benefits t1re .people should 35 ating these rto performanceHOW PENSION is borne PLAN by the WORKindividual - SALARIED . PLAN The Employee retirement Benefit benefit; Resea a defined rch Institute annual contribution, stands readyand tothe berisk of SLI_tARY OF QUALIFICATIONS AND TERMINATIONS 1975-1982 area which included: BY TYPE OF PLAN 7/ EBRI would be pleased to make available its published studies in this Summary (_illions) 1 HOW PENSION PLANS WORK - HOURLY PLAN Number of Number of Net Number Increase in Net % influence area : of ERISA. is against Introduction likely Individual -Net thethat authori Total laws Defined cove zin ation Reti rage TAX Benefit reffect ement levels Cont EXPENDITURES of ributions flPlans today eAccounts xible are incr and comp AND easing gene ensation OUTLAY th Assets e.rally Defined crite EQUIVALENTS* Toarrangements rplace iadetermine Contribution Number of total meeting the ofwith risk IRAs facts Plans benefit on thon e clea while net Plan place hand, to savings plans assistance srpo new ly ;Financial nso maintaining when arerplans sepa second, inthe eocombin runfunded in rach erti able 1950 maintain that most rStatus ement evaluating edworker cu an proposed are drr findeterminable with rvent om eplan 30 3/ sted defined a.would 9defined lowe the benefit pe cont the chang rrliabiliti cclea reinfluences ibutions benefit nt single econsequences sbenefit rly formulas, inin e.in splan affect 1980 tepas the that .rems nsion of limits could FICA Resea plan plan ex of of current ceed rplan ech mploye it proposed "wages" einc dmaintenance termination .could rindicat eas runcertainties, 30Fo ercost peis also policy erexample: cent scosts binfluencing ecause that cause decisions insu changes ofbryance many each For the the .as Plan worke rwith beevaluated by etirrement multiplying Benefit s, adequate .73.income 3Levels pe reti r.cearnt ement 6/ IRAs given wereincomes, can dollar cove beredliquidated, indicating valu ine 1979 times atthat and a th price, e68.direct 3employee's peat rcent anbudg y we time etreyea .outlays ractive s Many of pensions 41.85 .for There each dolla are r several contributreasons ed, .indicating First, many additional low earners savings are of Before Taxes - of A defined poor investment benefit peplan rformance can EMPLOYEE begenerally both #Iprrests ospectiv EMPLOYEE ewith #2 the and assistance in evaluating the consequences of proposed policy changes. Period Qualification Terminations o£ Plans Number o£ Plans Annual THE RETIREMENT Plans Defined INCOMEBDefined enSYSTEM efit Defined Defined Contribution Total Plans 6 o Retirement Year IncomeTaxDefined Programs: Benefit DirOutlay ections _ Defined for Futu Contribution re Research % Net Total (billions] (_ millions) (billions] (millions at _i000] Ending Rulings to Date to Bate in Effect Over Previous Period Growth Before Taxes EMPLOYEE #i EMPLOYEE #2 Net and costs. Annual Net Annual cu individual Yea dolla promises rrrent or Ame The Th The .cont eCcov rPlans reated ica Prerin United ibuted universe rage ivate making in1956 Tand rEmployer ansition: States to Plans Benefit pa the ofarticipation, pension inv approximately has Sponso estment Net Cont 60Implications .3rsucc re red ibution Plans presents evehicl ssfully EBRI Pension 745,000 e Total Plans for has achoice, net unive built Employee Plans committed prraddition ivate seand 39a.7balanced Plans Benefits in %employe Grliving seve to owth r- ral savings sponsored rNet eti 7with hundred rem Plans ent the of Plans much Financial example: pem employer Additionally, rograms; ployers The as Mr.-12 bears Institution employer Chai todsponso ef sal pe thi crin rrman ar cent reate the ed, wdyre.s.' rwill eduction proposed rsponso benefit aisk nIt eAsecond Exp t 1981 study is ere wo work nditu of drath plan co poor pleasure changes rfo es plan mppon to rrin ivate 1982 sponso .ethe investment nts expand 1981 Equivalents in rCEvaluation to sa.r1981 pension the te appea rhave knowledge tax Continuing perfo Commission r 1982 always tsystem before rreatment mance time Gain of lived is you 1981 on isand 4significant employee also ofPension today nwi epensions retrospective Gain eded thfinancially .th to%e1982 ben iPolicy rreview eplan This fit and own pa pa defin would service rrticipants t-time edPrivate .bUnless econt made This wo employer remployee ibution rin the kin er employer psremploye .oduces gov th .eer pension plans absence nment rSecond, asponsored sponsored benefit provide perxplicitly of ovision many privat that plans fo defined low re d.edecides lump is cisions pensions earners not -Over sum benefit di .that rwo 55 distributions and ectly rkpewould it rin cent pension wishes rsmall elated beof impossible participants fi to plans, which, to rms encou employee where rlike ag upon eto between 420 rbillion etrospectiveand in 448order billion to accommodate in 1980 old beyond er worke what rs. would have Additionally, we will work to expand knowledge of employee benefit i. final earnings rate _40,000 _15,000 Sept. 30, 1982 S/ 884,936 144,963 745,973 56,693 8.2 Year o Reti Created rement Total Income Policy: Growth _Conside Created rations Totalfor Effective Growth Decision Plan Coverage 1957Pension and Benefit Plan55.Grow 1Receipt th by Type of Plan44.i/ 9 ii 1956 4,944 2,Tax 983 1,961 Outlay 35,503 16.2 Year Qualified Terminated Created Qualified Terminated Created Created Dec. 31, 1981 816,924 133,644 689,280 68,095 11.0 i. final earnings rate _25,000 415,000 thousand o Economic Making Plan dollars Financial 1958 Survival and Status contract in e55 dRetirement .9 with the: U.S.Which CensusPension 44.Bu 1 reau Is to 15 re For-survYou? ey rincome between the esultsminimum .To Other 10,7 syst 35the Reti cents 6e9mcomponents .degree re standards ment and 124,766 That thplanning, 85 atthey ofsyst cents, th the eemust m -system lindicating eas has gislative meetadthat r11,162 fo amatically result, r tax and aadd net qualification; can rto egulatory 320,872 economic improved tak addition e significant changes secu the toand r-ity savings outlined economi fou swings ofrth, th cin e plans 1957 commercial rea programs found st tEmplo occu legislative the eceipt, rrrend, ong nings Drr eystatus c.ed er .Debates th is The 31,at -and mmade It Pensions 6through (Table ay 1980 ,044 FY inconstant Banks costs plan implement asset ofhas o1984 changes the rov up the the er mliabilities, shown 9) ay i/ of could gprojects .budget rabs Ame special 741,387 .owth not modification policy app reequitably 3,347 Salaried ican ncExpenditures significant reincrease 5oximat be 6Cjustifies ,onsider, 1indicates, 56 .of such 3used attributes r0etirement einly but, pensions 2,727 plans 120,202 as eby in ach ii fo ofan 192,000 the .ras histo th fo i.reporting assuming defin rey of Edefine assumption qmuch th income census 78,780 uivalents r4/ of eical these example, e 626,185 da7r.defined e0pu as Furth each benefit 41,577 rnow benefits pos bureau syst that aand asset 30 r18 er eas ethat e.,liabl ptype m1er disclosure .expe of benefit the cent should if plans gsurvey erth 22,220 r 56,063 owth long ience This .edollars gove of asfo1-.situation r.17 te at r3nment due The eplan, nation ar.xplicitly the plans m1re any percentage with 39 quir alte to: cont r.actions eti 3point, should epand has 9.9" rrments rnativ re ibut is (ovided 11 Social iment ).been ove deal even e1edthe be of oof rr Social had development a vested Security, ofright one haveto component aa clearly benefitof . specified the pension benefitsystem formula Gain at _ti the ed to expense Gain years% of of plan sponsorship is least likely. Third, low earners are frequently young programsEmploy through er pensions projects covsuch ered as73.the 3 per census cent bureau of full-survey time . non-agricultural - A defined contribution plan can be prospective only, 2. Social Security (primary only; age 65] _ 8,148 _ 7,212 Pensions and the EconomyPercent Percent 16 197 Other 6 Pensions -4,180 1959120,586 4,230(351 .4.)3 7,674 6,480 328,501 47.2,2 7 50 253 .4.2 1958 6,551 3,659 2,892 48,128 15.8 Mutual Savings Banks i/ .7 2.9 3.4 6.3 .7 2.9 2. pension benefit: 4150/yr x 30 years 4 4,500 4 4,500 Dec. 31, 1979 672 045 106,923 565 122 46,036 8.9 Yearso RPlan etirement BenefitIncome Levelsand Defined the Economy: Benefit A PolicyDefined Directions Contribution for the 19 80s over 1977 well the elderly the ESOPs Private -nation bedevelopment ing time Reti include: 1, . 6in r16 of ement Th May, 1960 th ee stock 122,202 ofnation's 1983 Individual .ma 1,375 rket, This eld 150 .er 2.1ly fsu or Reti r.vey exampl r17,985 ement will 2,405 e, pAccounts rwhich ovide 346,486 .pr49 aovided .clear 1,030 9Beforepictu a 5. re 74.8 turning 5al re rat ofe thoto ef pincome with Secu 1959 1980 545,000 successful considered to reviously inc rity .the of rIt eased between defined The actual 6,792 defined hasand other in bette continue as in deg cost been defined rrforms cont policy costs ee building benefit_defined _20 companies would atoday rto ibution pleasure 3,554 has to ve billion . rbe which contribution adjustments sus be a.driven to While balanc discussed plans pr3,238 rThis and to oject educe public edcont up causation _appea e48 dliability administ (Table system rall ibution are plans billion wi rpolicy costs thben out before evaluated r.cannot ative that e54,920 3) fits during .rthat esolution, influences is issue has you Defined .pbe ravoided would omised costs dramatically today proven, the As and ben not not defer defined 14 th and an th bee.eyby fit d1dehave as red implications the toabove, encou choice those plans plans be plan occurred imp ben vesting raraged .eoved have fit part awho frof oer 1956 sbenefits an to another, advance eearvic drnings pensions will e This .3,175 and funded of gain itsmeans This lequal we epolicies vrepension elnatu prth ooduces value, finstead re at192 earnings cov in should of er defined 1979, that age acont . be br2,983 eth ibuted nefit 26 The is as neut .benefit 7 would they rability pal er.to cent that age plans, 2,072 Social have .va torof ies Fou dete the increased Sand reth, rcurity, wi mine th relevant (2]low iii income th the eFY wage there benefit "fully" workfo 82lev eaoutlays would re1,961 ne lrce rsfunded (tTable ohave dare be id by 4,944 savings Dec. 31,& 1978 Loans necessitating i/ 615 168 ia.ilong 96,084 p12 er.iod 5 of 519 9.cont 20862/ ributions 21.7 .2/ 50,398i.i 10.8 12.5 employ 3. pension ees between benefit:25-64 50% who of had finalbeen 5-yr. withavgthei . r employer for more than one It has been a pleasure to appear before you today and to be a part Statement On Dec. Multipl 31, 1977e Plan 1961549Sponso 484 rship52.5 80,796 468 686 47. 19,601 5 21 4.4 1978 1960 Mutual ProgramsFunds 5,103 9,399 127,305 4,711 62,165 1.8 4.4, 06882.445,29 87,665 52.6 64,319391,781 5.0 3/25,500 1.17 8.11341 .1.0 2.4 1957 3,527 180 3,347 2,898 171 2,727 6,074 3. ea Social rnings,Seculess rity 50% (prima ofrySocial only;Secu age rity65) 12,885 8,148 7,212 2,862 Dec. 31, 1976 514 068 64,981 449 087 3,494 0.8 1956-1966 o Retirement The - life StatusinsuIncome of rance Private and and hPensions th eal e 54 th Economy: .4 insuranceInc ; reasing Income 45.6 for the 22 Aged 1979 return of IMPEDIMENTS these in change thePrin absence issues, ivate .12,488 1955 TO 1962 of employer EMPLOYER ofhoweve 139 31 pensions .,2r793 ,pePENSION r.sponsored cent, furthe 950 .8.r3pPLAN roduced exploration defined 33,548 GROWTHa real benefit of425,329 the loss 49.pensions 7curin rent1974 8.6and status ofSocial 38.o7f pension employe natu All retirement 1962 example, ibeen 98 of t0). he rthis percent eeconomic Other an rFo The of rgrow equivalent discussion pension 8,652 thdefined Prog full "public eplan savings smatu pe th porsingle wrrnso iod eelative ams rll and range ed, .rterminations -universe being cont poonly stability th oreduction licy" ftheir rough of 4,545 employe ribution 462 218,270 effect the alegislative of .defined funding American r, reasons as tht165 ewill hin on e4,107 ofand plans individual national rnation's eti eabe contribution has r.re rly pCong ement 2rti adversely 487 250,065 oposals improved r1983 pe rement ess relde savings cent , versus .income 665 72,971 r.might lynow This income ..affected plan the multie under p.rwish will If ovision 425 31,795 employer, .system mnu ployer rallow conside to tu, And, 13 r.5 ed, re ..of00 5qui ra14.0 41. ation and unce re alte compa theEmploye rrtainty ea through 0 nativ rsystem rison lie that err rnot Cr gene eceiv edit rhave ally ed Unions hemployer econce lps rindividuals ned pension with cur NA plan coverage rent foconsumption r. .r3etirem Theent .2.decision and Th know .e5 4/ employe of that an NA eSocial can employer annually Security .3to 1958 Each 3,883type of 224 employer 3,659 pension prog 3,071 ram has been 179 in existence 2,892 since 6,551 _of year 65.8thisin billion, discussion 1979. FYJust of83theoutlays over American 68bypercent _re 70tirement billion, of income these and FYpe syst r8sons 4emoutlays . were by active _78.8 Dec. 31, 1975 485 944 40,351 445 593 21,931 5.2 1967-1974 55.3 44.7 1963 52.6 47.4 1980 1962 19,552 9,359 "The 154,345 Curre 4,712 nt Health 10.44,647and 41,511 Future 82,330 Prosp 466,840 ects for 12.8 9.8 LifeDec.Insuranc 31, 1974 e Co. 455 905 .3 32,243 1.3 423 3.3662 4.6 _/54,781 .3 14.8 1.3 1959 3,824 270 3,554 3,442 204 3,238 6,792 44.. retirement retirement income income ((2+3) 2+3) _421,033 12,648 __ii,712 i0,074 1975 IMPEDIMENTS willDec. -1982 continue 31, 1973TOto1964 PENSION do 396so Defined 520PLAN in theGROWTH Benefit 56futu .24 9 27,639 .r2e. Pension 368 881Plans" 43. 55,475 1 75.8 23 17.7 1981 Employer to THE the oFUTURE AThese rr -19,253 anging Plans system Medicare, OFadvance PRIVATE vis-a-vis thoef173, Medicaid 1979, Pieces: funded 598 PENSIONS Individual as12 pand rwell The .ograms 5 Supplemental Reti asRetirement r48,842 ement serving also arIncome eas Secu Accounts economically 5r16,682 an ityPuzz evaluation le Income; efficient 10.5 base with for creates pe 1963 Secu dwould pensions sponso erfined cent rTOTAL ity r.ed affect Economic This benefit -10,250 far -oare isdefined many defined Fo Committee Small mo desi rpensions unique reand rthose or able sponsors difficulties Single cont benefit dlegislative .epa fined 5,399 rtakes r-ibution act 280,435 ts Employer withof ascont plans expect IRAs aimpedimen that 4,851 ribution uncertainty for giant plans between must Plans system thdefined tat s337,730 step pay araeplans, re1976 dfutu ue a99 to forward even .benefit 92,480 flat combine r9etoand employe pewill more thei rpcent r1981, changes by emium rrplans to 57,295 beginning secu ultimately emphasis pension make single 82 rwithout e12 thpercent .an in employe based 4 employer 20.0 on: fo plan discussion rrdete the rega upon sof degrowth rrfined dmine plan wary the and the to rwill pa epa view rrticipation ticipation prEmployer The ovide the Pension income high and opernsions final vesting faste Benefit thatrwage also standa can vesting rGua eplacement reduce brerds anty expected fowill r.demands dCeorporation fined differ in upon brewith etirement nefit Social (plan PBGC) pension Security type bnow y . plans estimating guar.and antees the It 1960 billion: sponso/r P/5,011 rivate asaa %pension total ofemploye final ofrplan 300 _214 earsponso .nings 6is rbillion elated red 4,711 (linepensions to ove i]ra number 4,946 theseheld thof ree 450 factors 52.fiscal 6% million 258 . years Fiin rst, .assets 4,688 67 a.2% firm in 9,399 participants, the earThis ly 1900's Committee .with Thetakes 69 largest percent a giant defined in defin step econt d fo rben ibution rward efit bypension prbog eginning ram plans was discussion creat and ed 31 in / / as % of final earnings (line i) 50.6% 78.1% Dec. 31, 1972 336 915 23,509 313 406 45,81S 17.1 1979-1982 Plan Termination Insurance 28.5 71.5 23 1965 55.9 44.1 1982 1964 3/ 10, 18,451 667 192,049 6,072 10.4,595 6 38,242 103,247544,924 11.5 6.9 Total _5.2 _30.5 _25.7 _56.2 6/ 5.2 30.5 Dec. 31, 1971 287 580 19,989 267 591 37,329 16.2 1982 1966 56.32 1.5 43.9 67.5 assets assessing SOURCE: o Social Social The -r-eali pe EBRI system Regulatory rthe sonal zed Security Security: tabulations orderly adjustm asavings five Environment was ereti nts Perrfand spectives yea ement rcom reated in rhome Special ave response of rage equity inolde on tAnalysis hPrese r;reeal toworke wake rTEFRA ving rate rs; .of G of ofthe therthe eturn gSystem reproposed at ofdepression .i24pFY ercent, 1984in cont After th should 1965 Plan regard .today The ie pe r Dec. ibution Status ramount Coverage cent ITaxes of 31, be to 12,496 appea our 1970 understood, the termination mthe most of ultie raof mrulti Employer and federal rangements funded today mtax rplo ecent -faceted Benefit - 246 yperr. efe 6,983 in 916 status budget .howev Sponsored rprog my red available Receipt .er rcapacity The ram etirement , of 5,513 msavings Analysts 16,654 ulti will th Private the studies 2/ at emas ploye beit system's plan .th have adve Executive 230 rwould Pensions at11 r 262 se Over 5odefined f,743 rrwill equently not st tort65 engths, hDi ethem lrebe percent ector ad stability benefit 30,268 and used tofocused 12 the significant of .are of 1plan for the implications of small evaluating lS.1 the Employee unive upon meeting plans plan rse new the exp adds in of PPR/AOP government ectegtaking benefits dene Compa Speculation Thre.al, sala ring ron ynoncove and The only and new thdefined Bu erdon ed the get as "outlay obligations the yit and e22 abenefit r.s2% population ages equivalents" future Reconciliation of . serand plan vice ofWhen pensions g26 rgexpected ows, .ris to 0% owth combin the Acterwith is delatively in "tax ofaund wiparticula ahigh 1974 th er expenditu p_e44 nsion re th .risk requi 5gula er.rpr res", conc rbeing eed proposition 292 sent re.egu ntrated 9% Proposed thlato at athe plan late r..the y.FY 1961 1920, benefits4,919 45.upon 5 billion plan te 374 rmination in 1950,4,545 ofand up 4to 42 approximately 4,468 billion in 1961361 _.20,000, Securities 4,107 providing and 8,652 percent After Taxes in defined contribution pension plans. With the aging of the today 1918 of for oureducato multir-s, facetedthe reti Teache rement rs system's Insurance stran engths, d Annuity the implications Association budget.1967 55.6 44.4 196 SOURCES: 6 Employer 16,973 EBRI tabulations Plans 9, vis 521 -a-vis of 7,452 data Individual provided R132,71 eti byrem Fede 6entral Accounts Reserve 14.7 Board, 26 National 1962 5,188 476 4,712 5,030 383 4,647 9,359 Dec. 31, 1969 214 342 14 348 199 994 26,346 15.2 Source: The -EBRI senior most Tabulation citi recent zens from data discounts, Table available 4 in-kindon benefits the scope and of pensions was SOURCE: 2/ consists EBRI The The Social EBRI would ofCongress receipt app STabulations ercu 19 be oximately r6ity 8plehas of ased . pension taken 2,600 to54make .7repeated plans income available . actions is also its published ove inc r4r5. easing the 3 past studies as30the 28yea insystem rsthis to while America's 19 rchanges Exchange recognition Benefit "tax oetirement f67policy texpenditu he19,214 -inCResearch rommission rAssociation change emaining etirement sponso whethe minimum pbwe reovision nefit rof ree"rr100 (s) the on.th att delivery standa Institute, 18 data 10, pe each ey income of rrneed of ibutable 6cent percent 90 rDefined should lif ds, placed Mutual component, .etime adequacy fo funded r8,524 tax maintain ea Due aSavings contribution private to rb"employer ned enon treatment, nefits; pensions and to -goals profit, and a 81 rdefined cash Banks, eeal mploy ..pe the 151,930 and -rsponso outs cplans eth erreturn nt If eNational non retir benefit rplan plan p-ed" er it of pa pay esons rment tisan plans could of assets termination noprog rCeti rapproximat insist edit 14 such income actually rwe r.ams ement 5rat public e.punion re th 75 eon pmiums ly erguaranty ovision per policy end incom reduce Adminis using .cent 8.eof 8 - The 1984 change Cha addition Unce budget full racte employ rtainty budget beThe .rnefit they istics econtain e privat mJwith indicates ay ust secu can echoose rindicate, estimates rity egard over pension look toth to26 to fo at th rwa esystem terminate gov pe howeve of rth dvast rer ceenment nt "rtax ,to existence majo inpossible pof subsidi rrthat the ity policy ograms employees United epolicy o.s" fmakes oinflation fwork pAdditionally, or rStates er iv actions sit a"tax .te in especially pfirms employe rexpenditures is otwould ection therwhen of la have rsponsored difficult gest .und th "the reough to r law and b25 5/ e Dec. 31, 1968 186 267 12 619 173 648 22,339 14.8 1963 bab of 5(TIAA) . ypolicy boo "net .m5,840 gene pa This change y"ration, money - line on 4each pu4and lr1echase ss component, the Social ctype r5,399 eation Secu plan rand ityopr fovides 5,304 the over reti 277,000 forrement specific 453 netincome new contplans rp4,851 ibutions rovision over 10,250 5. "net pay" - line 1 less Social Security area which include: I/ 1982 Dec. 31,is1967 for 1969 1/1/82 162 48S 53. 114 176 151 309 4619,214 .6 14.5 1968 SOURCE: 22,339 EBRI Tabulations 12,224 from10,115 Special Analysis 174,269G of the pr1oposed 4.7 FY 1984 tration, Federal Home Loan Bank Board, U.S. League of Savings 1964 6,581 509 6,072 5,127 532 4,595 10,667 and federal income taxes (1981 rates) 419,324 412,382 and federal income taxes (1981 rates] _28,765 _12,382 Dec. 31, 1966 141 964 9 869 132 095 16,973 14.7 THE FUTURE What all OF PRIVATE defined PENSIONS benefit and all defined contribution plans 29 do, and expand matures total collected *The e.nti retirement the reDuring food inflow or1979 concept more 1970 stamps; of1950, income by assets funded t.he of4and 5.0,000 Uto .tax S.retirem 50expenditu .rBu 8eti reau reees nt rof essavings rec theeand ived C.ensus outlay employ .Because 49.eThe e2rquivalents su defined prevey nsion indicated is benefit checks subject to Social pI/ percent p1969 makes resea this most implications rrovision ogrTotals am rch successful .questionable Security .one 2---5budget and ,905 organi proposals pdiffer derPtype eplanned fin rof ivate .Social zeation din "non fof rbthe om -e13,824 employ concept neutral" nefit Srweti eefor Tables wo cu alth founded rer rrld ement ity plan . new pension accumulation 12,522 1policies th join Asand eysponso injoint plan ittogether g2should matures 1978 rrsowth which due much .and ovm200,174 eay surged rto EBRI to lead it survivor more also thdiffe find have is e to beginning worker's psponsors rrexpensive ent oviding th focus fewe an emoption selves r sta 14 adv defined .r9er in tben rupon esearch san eedpoints tliable fits hreporting erisky impact benefit "outlay 1950's to for fo and .to ra data post ca employees Th since reefully -se retiAs it "expenditu rement will not we Associations, cerrd, eafted be rcove es" adjustments however, threedtoare greatest ininc Investment .estimates 1979 building reasTh e easinfluence employ coverage compa Company of a rer red ight the on can to beyond Institute rev todeeover also nue velopment pension what 91 that useand percent cur plan the would American of rent plan benefits ourof beplans rto employees eti raised Council manage rement takes and ifof pensions 1981 implications at p4r520 ovid of .2ed"non billion -the neutral" . taxpayer While policies adata net which for savings lead 1982toofisfe_we 63 not r billion, davailable, efined benefit while EBRI 1965 which the past are 7,495 five used yto earpurchase s,512it is a p6,983 ension likely annuity that 6,037 cove uponrage retirand ement 524pa . rticipation 5,513 is 12,496 Dec. 31, 1965 123 781 8 659 llS 122 12,496 12.2 o Volume Conclusioni: Retirement Income Opportunities in an Aging31America: sqeuestion ries. due to1971 the assumptions 56.0 used, inconsistency 44of .0 calculation techniques, 1970 In 30,2 1976, Life 68 Insuranc the numb 15,370 e. er of defined 14,898 By benefit230,442 plans actually15.1dropped, with Dec. 31, 1964 110 249 7 623 102 626 10,667 11.6 66.. pension pension benefit, benefit, net net of of income income tax tax _ii,858 2,862 Dec. 31, 1963full caree 98 r. 541 6 582 91 959 10,250 12.5 the as the beneficiari size risks Cove -offamily rth age the eeys. 1972 and workforc ctrreate, ansfe During Benefit ers are in Dallas 1979 and Entitlement distinctly troubled 57income .th 9 er L.e Salisbu we ftimes rrom different e r.8y* employment .7 million (this 42.beneficiari 1applies eto s. employer This plans 1971 as 2/ equivalents," educational pension Ultima favorable and thata1982 imp te m54 ebecame This ly, ans r.ecision 837,329 plans ispercent of rvulnerability liabilites tax equi for .most it princ og rthe ements 1/1/82 of treatment rris ams easing pof ebase di rvasive 20,888 rth all ect eto of to would data ntotal civilian a9/30/82 afo budget tions pwere .rrin subsidia ovide 16,441 adversely comp th terms Because .removed eroutlay ewo erti nsation yrindividual aree ke ofrsssold sound th impact coverage, and erequi were who 267,771 numbe no years without rebasis ddrbehavioral cove eswill is fin in rethe to aed dan reth inc for fe ebenefit accomplish by so re eaccepted rlecent past, asing 16 widely legislative change a .th pension, 2 esplans initiatives even etotal occurred. used, part t.haedv ifie.cash same rs ethoweve and .ehof ,e r, pension Multiple in maintain demographics income gtime grrowing owing .fir.Social ms system The plans oPlan than with propo Multi e..ffectiveness will Security Sponsorship ano rmo tion emrth ploy eper, roduce eth ran ofth .is e1,000 ofPlans the employe pensions aOf vital relevant reti employees rwerred emay sou can ge.rnwo decide population ce eonly rally rkfoof rThe ce berto etirem .notlimited respondents change judged as ent EBRI's well plans income fai data funded r.ly most .toavailabl the bAyinrsound ecent 1979 1978 what e simultaneously estimates that inc private reasingemploye netr plan privateassets savings exceeded by between 4624 billion _52 billion at yeaand r- 1966 10,124 603 9,521 8,059 607 7,453 16,973 Most defined contribution programs are of the profit sharing type, (1981 rates) _ 4,500 4 4,500 Dec. 31, 1962 87 397 5 688 81 709 9,359 12.0 we TABLES view this ana1973 ylsis as being56.of 9 interest and worthy43.of 1 discussion. 100 1972 *The peenti rcent 45,815 re ofconcept net new 26,520 of planstaxbeing 19,295 expenditures defined cont 313,586 and ribution outlay equivalents (Tabl 17.e1s 4 and is subject 5]. to i/ IRA and Keogh deposits. Dec. 31, 1961 77 179 4 829 72 350 8,652 13.5 1967 7. afte 11,292 rtax retirement 602 income10,690 (2+6) 9,229 20,006 705 10,074 8,524 19,214 o Volume II: Retirement Before Income TheOpportunities in an Aging America: listed effects.All Ove above r available 95have percent 1974targeted data of on all indicates 54e.xpanding 9retireesthat defined receive the cont preconomic ivate ribution 45.1 employ valu earerrangements from sponsored th.ese CPS: employ Social 1973 rrsponsored they esults eprDec. esents er would .Maintenance 31, Secu 55,475 -sponso 1960 plans rrity sale For as begin eductions growth red employer singl prog asea price of rand from wr67 e-e ning eam 31,608 ll cu 792 mploye inrr individual th 13 as sent po th cat was rrnso eedit Individual perpa rr23,8 cent ed etains policies radjusted ticipation 4plans, 6towa 8094 pensions defined of rd public Retirement thaose with even for 63 bencont 3the 698 e6ag rfit 9,061 eceiving "mino though eth confidence ribution "gain" atbAccounts re"if ingaliability technical Social significant 9fo they ,399 rprog discussed 17 is the and r.ams .r7emained Security impo taxpay .adjustments plans r17.3 would tant De It er pofined rtion is also with was for bto ea indicates wages rThis pquestion they egulatory roje.ctions provide last Employe Reali Employe A zdefined due ation rassumption, th decisions rsindicate sat intohav fi and cas trebenefit hth ms .eesat eindicated mployees that assumptions sta whEBRI this ere and rtapproach over anation as the thplan re ehave 80 an recognition used, institution calculation percent is as must was made asoon substantial inconsistency used function other ofasofreti they does techniqu to these adjustments reeallow ascan not period epa households of defined srtbenefit calculation affo ptake rof ovid in rof dan benefit epositions recognition integ certainty, employment to, rwill eason rtechniques, ated plan with have on to 5end / . Estimated / EBRI / as %estimates ofbynet EBRIpayfrom that (line 4/30/82 4396 5] . billion (63.7 pe 69.r5% cent] was in81single .4% _thus 7126 . afte Employer billion cont r ributions tax rpensions ove etirremefluctuate nt these princome ovided thrwith ee (benefits 3+6fiscal profitability ) yea to r450,000 s. of 12,6One t48 heretirees fi might rm. During label in 11,712 1950 this and the 1968 12,896 672 12,224 10,886 771 i0,i15 22,339 Income Table 1Levels 1975 Summaand ry Adequacy of Qualifi 49.1 cations and Terminations 50.9 32 1974 In 54,601 1977, only eight 30,002 per24,599 cent of net new 423,662 plans were defined 14.8 benefit; and imprecision of base data. Because the numbers are so widely used, however, _/ Assumes no growth after 9/30/82. 1969 / 14,692 / as % of net 969 pay (line13,824 5) 13,383 65.5%861 12,522 94.6% 25,905 Dec. 31, 1959 57,835 3,536 54,299 6,792 14.2 Table 2 Pension Plan United Growth States Senate 33 sources, Now, making issues 197th 6 eiare r inclusion arising 0 ove in r analyses (i) whetherof too 100 retimuch rementcapital well-mbeing ay be cha 1975 recognition pension of rec the we income thereir acte view iving self theemploye The ristic f-21 remployed this om career co ,gp931 mrrcont especially we pon r. owth ivat some rof ana eer). nts eto ibution yJust over lsis past benefit component be of pension 10,769 ofexplicitly und 75 IRAs asservice, th eplans adverse percent rebeing nature system plan 46also of11,1 ca pethe of rr6ry funded cent 2fo punde income rand aand inte omises rrtotal eno rstood .re in dwe est co such fined raccompanying emm strong to system Between to on 4participants and 45,593 and liability complicat ove ten benefit wo rcondition accepted by rthy 30 yea 28.the erpean of .rvesting employee .tu cent, dplans, the rdiscussion in n Adve 548 .envi When of 2plans, rrpe tising epres schedule the rradding onment cent ERISA r.elations ecentu nting i.we an ewas r.ryof as to d,e values private wo diffe would wi public aquestion rth total ldrence the economy, most thpensions rpolicy of ough plan the _likel between 63 sponso with billion yenti the issu since prrr. eeoduce ascreation ."ptax concept rafor emium Th majo ePth rexpenditures" Fio e.Yrlow ity rplaced gand 82, erreatest toAof an 83joining maintenance gove plans on and individual's system rfl nment and 84 exibility, have . EB"outlay Rstability I been decision ofIincome, defined specifically se .makes equivalents" rvedhas The benefit the thas e benvironment efixed ten rAssistant ue design plans rasmade, cost this e.dan progressive employer 84/. Dec. Assumes afte 31, r-tax 1958 defined 19tax no .income 2 growth rates per50,569 cent benefit including making afterwere 4/30/82 itplans, Social 3,062 mo wore r.kingadvantageous 455fo 47,507 .1r fibillion rmsas firms with 6,SSI (8.6fewe growpercent] .r 15.9 than 25 in 1970 81970's .7 million 16,512 and 1980's retirees1,142 there in has 1979, 15,370 alsowhich been re16,062 gprrowth esentsof tax 42 pe 1,164 shelte rcentredof all annuities, 14,898 family 30,268 Table 3 1977 PCommittee ension Planon Growth Labor 8.2 and Human Resources 91.8 34 DeEBRI c. 31, will 1957 update 43,615 these studies 2,659 based upon 40,956 the EBRI 6,074 sponsored 17.4current 1976 in 1978, 3,494 10 percent; -4,180 in 1980, 7,674 26 percent; 449,087 and in 1981, 28 pe.r8cent; during 5/ Assumes no growth after 6/30/82 8. after tax income including Social Security for spouse age 62 423,061 _12,778 Dec. 31, 1956 37,190 2,308 34,882 4,944 16.5 essential. Table 4 Pension Plan Growth by Type of Plan 35 flowing advantages.-into The r1978 eti defined rement benefit programs, i0.iplan, and provides (2) a whethe clearly 89.r9 stated the syst retirement em is analyses decisions pass 1977 to becomes Executive ove in they rcoo ethe dpopulation 42 r.Private dinate weabsence in r19,601 pe efo r1974 aDi cent rradministrative earning fully reFor ector IRA fowith su th of employ srof ced rer this funded, vpsystem eerall ycesent er rof edit it 1,616 we onscheduled .rre family eemploy Policy ason, between sdisruptions rcost, po approximately towa etirement Yet, nsor er 17,985 runits deat dfo th Social seve ve a48 retrhbenefit sus eMage pensions ran ay, income ance age dPension that individual 425,000 65 70 .Secu 1983 -at 69 4pe 6pcash might .r.8,688 rrity This ojections cent which aBenefit r-eplans outs, Reresult strong compa search provision changes w.eran eGuaranty r.esbased and B75 yemploy from .conducted could late 4pe Defined to .4rPBGC cupon emajor 9ee.nt Corpo 41982 actpassumed bropercent reration begins bpolicy emium nefit as ythe mothe re ran e Companies however, defined defined 6/ "efficiency of constant Baseline Second, ben -cont toesuch employees, the fit base change rgain" ibution estimates industry as peavailability policy nsion Sears since for plays ryet using eti plans decisions acc th 1974 reeement pted .they alatest nation' major caused ofthe represented plan upon savailabl role funding valu ththe emost taxpayers em. pattern ein of att the waive data benefit This 48 .ractive rlevel of spe decision for rnew This cent .increases each certainty ofplan cove would has of institution This fo rage rnoncovered mation mean berin en elative spo due .nso mad athe rto 41 to e These multiemployer / / as % ofdefined net paybenefit (line 5]plans, and 4173 billion 80.2% (27.7 percent] 103.2% in units age 65-69. EBRI and government research indicates receipt by over Keogh Dec. Security 31, (HR1955 -10) forplans spouse 31,943foage r the 62 / 2,005 self / as-employed, 29,938 _15,703 target 1,769(1)benefit 414,416 6.3plans, 1-971 22,493 1,605 20,888 18,171 1,730 16,441 37,329 Table 5 1979 Corporate Subcommittee and 27Self .1 Employed on Labor Pension 72.9 the 1978June first 30,50,398 19S5 nine months 30,046 5,103 of 1982,45,295 40 1,877(2) percent. 28,169(2) 519,086 3,290(2)10.8 13.2 estimates provide a minimum total asset amount, which may underreport the % of net pay (line 5) 81.3% 116.4% 1972 28,265 1,745 26,520 21,070 1,775 19,295 45,815 June 30, 1954 26,464 1,585 24,879 4,204 20.3 Plan Creations, Terminations and Net rThe eal Private rates benefit Employer of 1980 retu which rnSponsored ofcan4%26 beto .Pension 0adjusted 12%, requi Universe forringinflation us 74 .to.0 look behind the equitabl we 1979 gove changes pa actual plans 3/ and rreticipating rEBRI nment Assistant 74 .Concern As e. are 5amount ,000 46,036 twould hmost epayments, and These plans Congress Administrato of in be EBRI ov prominent er .1940, total pleased ar12,488 indicates ewithout individuals This considers ,assets 1rquestions 5.5is toproviding fo per 33,548 make an significant routstanding cent that inc changes Policy, without rfor available ease tin heknown .19 Cong numbe 5of in additions Planning 0,565,122 employ rereti r75 ss benefits anits dpe of reement rr30 cent to beneficia and .to published 6 pension ranswe pe with Resea eincome ove ti rcent rrrem r. irech 8little es.eight nt 9study prog cove inat Th isincome rr1960 eams, yea age employee tyhgin err.owing must, s.Uth .lSis ed as it . mid impediment pe att chang participation employ inspite -r70's rcent activeness eer ,That efficiency of wi afte th sponso fl to wo the frrunded, eresponse xibility kers; p24 profit rrin fact ivate ed ispegain an arath cent ddefined sha at plan has defined function between rfing rand om of the development been rpeti ost cont budget assets hben 80 as of r-ement ERISA to reibution an fit cost .ddetnot dvelop rr90 aditionally opp eand new plan s: Fo income pe edrrcent plans plans plans liability "exampl The is dramlatically petax ress which being of ograms :(Table msubsidy einc defined these aningful complement defined reased as with 6].compa estimat plans byathan benefit laws rBoth ded employer reamatic dwe sefined reover to some the are as 50 a 6(i 5)peplan rcent creation of thesedecisions householdsand by (2) employ 1995. ee These turnovernumbrat erses. understate For example, the individual retirement accounts (IRAs), thrift-savings plans, employee 1973 33,830 2,222 31,608 25,775 1,908 23,867 55,475 June 30, 1953 22,069 1,394 20,675 3,657 21.5 Plan Increases 36 area : 1981 28.3 71.7 1980 The56,063 unsettling 14,552 nature ofMa 41, rth ch 511 e majo 21, r1983 legislative 621,185 change 9.re 9presented by SOURCE: TPF&C June 30, 1952 18,289 1,271 17,018 2,347 16.0 1974 32,579 2,577 30,002 26,806 2,207 24,599 54,601 numbers.Table 6 Private Pension Assets 37 riskJune . Th P30, eensions Past - 1951 fiThe rstlegislativ 1982 adefined re non-not 15,899 governmental ea cont first change r32 ibution .5 prio 1,125 has prrity ivate encou plan, 14,671 for raged defined new provides business development benefit 67.2,517(3) 5eas. clearly pension Pensions, of 20.7 pdefined rstat ogram edby however, compa Cmust 1981 each ongress redact The year, 6--8,095 be totowillingness efi wi component xt e219 th rxplo wi ems cnsion th reate pe red great with rcent over 19,253 with ofIndividual lrep eto ss TEFRA's in care 6r5esent maintain great the pthan ercent 48,842 eif deight care 100 "top Reti th aof by eplan years if re nation wo family ment heavy" employe rth .keers689,280 befo nation Foris units rAccounts revesting account tto hsponsor eERISA is age PBG avoid ed.to Ceand ,65 (IRAs), d -avoid for 69 how iiminimum unintended defined .e0ver, 31expected aspe unintended rpa cent funding ben benefit rtefit but of of to dmanufactu b14 rSecurities not beli the Depa compa eop nefit erpast percent estimates ve, tred min ent ring -plans, an 20 to the ,dof and th per yea 69 eagain cent Labo of pric rExchange pe gene sho shigher .trrthe recent ransportation 's rton ally orinc of Pension mo vesting the in rrSocial ease eCpSea ommission rthe oviding funded raggregate s 19 and inr6equi Secu and .stock 7Fede Welfa arrement ity to .rmining and alof specified re 1974 all rec The pay the Benefit eamripts raoth oll eyperiod dERISA eer fined gen cont not Pthat e.rtaxes rally "ogram tax ribution agencies bewould b.expenditures" eIn nefit rlarge, aise, thgua accompany ehave an rplan absence ant dhav theestopped eea mo high much when was the rof of e value of pensions since they do not include lump sum distributions from SOURCE: TPF&C stock ownership plans (ESOPs], and salary reduction or 401(k) plans. 1975 15,319 4,550 10,769 14,720 3,558 11,162 21,931 June 30, 1950 13,899 ........ o Volume III: Retirement Income Opportunities in an Aging America: Table 7 Tax Expenditures and Outlay Equivalents 38 ERISA 1982 is 56,693 clearly shown 18,451 by these 38,242 numbers, with 745,873 the rate of ne8t.2 new employer in the United States was established in 1875 by the American Express Pensions Of Table this reti 8 universe rand ement Taxthe Expenditu plan Economy of contribution rplans es and 192,000 .Outlay are Equivalents defined benefit an39 d 545,000 but ir Plan faster rcont THE design, eceive repa riRETIREMENT ibution rrTermination abl repa Vevesting reprivate ytie rable waive rlittle equi harm benefits plans rrem schedule INCOME .sha pension Insurance ents ris mmaynow to and .SYSTEM be to our would bediscou nefits vi known The yerewed eti ai/ rhave rmost saged rement as about inof ran ecent inc addition especially se defin rsystem why easing rvice available epeopl d. toebenefit and psocial radve og cre ram data rate level se plans Secu affect exposu Iindicates RA ofs, r.ity earnings, reand onThis bwhether and defined ythat 1995 th has and o.ef essential ERISA, measu plans repeal policy d"meaningful" eveloping Jurne eddeserves Experience .30, in change of 1949 against the expensive and jobs 1974 Itben designed special p.rpublishing and eovided but fit ofAt 12, demands "outlays 67 the p8.r 65 th tax 1ovision the to tehPBGC pe epstatistics encou rrtotal thoughtful benefit cent ovisions end .equivalents" rindicates age 7/ of of 711 .cost "cnoncovered edefined rtainty 1981, onconsideration of plan 12,154 The that (Table alabo benefit assets total need plans FYjobs; r e.7d.1983 of becomes and abyremploye e_25 EBRI 8) Pensions and e8mpl even .96 .7 orFY yees billion and encou Additionally, bette 1984 plans, rages th rar to 8e.0 ebudgets was allow funded not mo this the rin ea defined coverage contribution rates (80-90plans pe.rcent), and low turnover (15-18 percent). Trade Before the passage of ERISA 27 percent of all employer sponsored 1976 4,790 8,970 -4,180 23,334 I-5,660 7,674 3,494 June 30, 1948 11,742 484 11,258(4) 1,888 20.1 Table 9 Hourly Plan 40 plan creations Tabulations dropping . to an annual average rate of less than eight 1977 6,953 5,337 1,616 28,463 10,478 17,985 19,601 Aug. 31, 1946 9,370 -- 9,370(4) 1,584 20.3 Table 10 Salaried Plan 41 SOURCE: aIt re defined should o-EBRI In Thcontribution be e tabulations the diff noted, defined erences .. since benefit Prbetw e-ERISA, ee the n plan, government what approximately the can contribution does be achi not 55 eved pe effectively irscent aggregated, with of defined netcount new is retirement IRAs o4/ glargely rCo on rrecogni atuity; mpany .anot The termination As .ze.EBRI they savings rwe esulted that benefit they When arexpect eestimates itefinding ffect must basis because thtak plans etoesEmployee .keep be of than that achanges in Social Just this ea these carothe reer ned as Reti the money rSecurity innumbe rmany ement asuggestion thr to the reas rough sinlaw ea asof rthe and Income indicate n th domestic 5se .at accounts m2rby epvice aningful r.ivat tmillion som rSecu .eat eerpolicy, ity mpensions all embe until Contrary pension IRAs rplans sActexpansion of reti hhad as the of benefits Cto rong ement ber1974, eess been some same n..isa fi new Committee also rmsplan contained wi The Social Foth r-foto rpo difficult PBGC example, only tmation rtential ade find Security estimates one pran aogram tdrmeans end for it plan, aservice becomes has 1980 pof rwas to is emium 60rg"outlay ectify remployees EBRI lik own established perc einc for lystudy ernt eases, tothis equivalents eto mploye begehave of nerat the continue situation to rdiscouraging an s e.assu pdefined "rIRS imary .and 38 r.e.p7rThis oposal that employ pe benefit Nume sou rcent rplan is rce ous promised ees for anofsof plans po legislativ estimate rthree nso eti to jobs, rdefined rship affo and ement yea .but red40 orf const whileruction employer enteprp ensions rises rvary epresent in size, the have greatest lower ,cove revernue age loss" rates and (55-the 60 Dec.The 31, 1944 employer 7,786 sponsored pension -- syst 7,786(4) em is able 5,839 to provide 300.0 benefits pension plans were defined benefit, with 73 percent of all employer 1978 9,728 4,625 5,103 55,956 10,661 45,295 50,398 Table ii Individual Retirement Accounts 42 percent, -- subjectabout of controve one-halfrsy theamong historical economists pr.e-1975Tworate points . In of theconcensus presence can of Sept. i, 1942 1,947 -- 1,947(4) 1,288 195.0 1979 15,755 3,267 12,488 41,122 7,574 33,548 46,036 Dec. 31, 1939 659 -- 659(4) 549 -- be identified in a review of the literature. First, pensions have a *The dollarsviewstaken worked in from thisoutplans statement over time, in the are and form th isose gene of rof ally lumpthe -sum indeterminable autho distrributions, and do beth not foersee much The plans Yet, established actions popula Defined eactually conomists' Regulatory easier rth ly each eirbenefit since benefit additional yea that known create existence by than theories, r Environment the were contraction th 1974 plans as is end and bias defined rERISA, .eti extension of could have defined they can, re .1981 ment Foarrbeen benefit; eaffect howeve was When contribution (Table not exampl savings might rpassed specifically ,cont ae,Ii) po employee pu .rst racting, provide .ebe -ERISA, there TEFRA defer plans desirable red attitudes for were we established must favo the rwag past un app rable eis be ,rthe annual oximately se now towards unde but rvice risk rmo stood to "top influencing average reocfemployer .redit complex defined 425,000 making heavy" for to benefit pe vincome Pensions the ersting cent dirThe ect in pension defined and indicated benefit this budg the etnation, contribution plan Economy security outlay thathaving benefits 62 that ofpercent plans defined would become .would of beOve benefit rath requir beose mature 26epaid dpercent depa pension rting toin program of accomplish the plans with all event which plan less is asponso the of pfunction th rovides an rplan same s,10 percent), greatest Repeat "outlay and edly, theyhave account savings", thigh he ffor turnover ederthe al 58.4Trgovernment easury pe (28 rcent -42 percent) of Depart all and m.ent noncovered private Some reports industries employ employment; thatersneasuch rlyhavand eas 75 1980 pension because18,849 itplan is financially participants 4,297 . strong 14,552 .The Assets period50,493 have since grown 1974 8,982 frhas om been _50 million 41,511 marked in by 56,063 neERISA, cessarily positiv howeve e rrefl effect , ect thethe ofsivi zat eews of least of th thee 35 Employee p%rivat (.ext e remists" Benefit pension Research sayuniverse 90%). Institute, has Secondly, grown Endnotes 43 [1) Six monr thetirement total for a specific employee. its plans defin the produc provisions and employe receipt Trustees, wemore Social rdeong rCand once benefit ohigh rates conditional sprlegislators' po rnThe Secu og er nso fo members, ram ove rre are rdiff ity benefits dplans rall small .ere pcapital rpension obably has nces plans oedrrrevaluation Fo .opp no if other r edbetween net exampl plans need low with fo.rto emation, staff d.effect e.a,24of And, significant ..the By 2wer thpe Sept (. eestability rthe eit cxt tax eth ent mbe reemists" .yad should rtersimply speedup quacy eatment 30, of be employ say 1982, of are in odefe fmembe reti -er 50%) vesting all Inte rrred rement .ed prr"retir nal ovision . wage that eincom Revenue ment" Fast the only and eer r,e finance accounting benefits rtermination, of cont esults the ribution The A -re ashave guestion lationship to remployer the for telative heplans upover shown more pove rto og .rraams that behavior 92 rstability ce 60 Fest oof significant rrtain pe being pe rictive example: must rrasset .cent centlevel given be of of.of levels inc thall asked eth special re rThe erules eti ases plan regulatory to ree ininitial the become in pa evaluating tax households rticipants, benefits cov treeatment rage environment fo premium r. integ the .as promised howeve Prrfi st ivate ating was rrAgain, ms ength .rfo ,modest rhave employe pprivate By provide rof ivat there aged this an the erd accommo percent years date serdvice of orthe ganizational wouldbenefit have accu goes restructuring mulated to taxpayers vestedandearning benefits economic less with change that a total by _50,000 providing value peof r inconsistency - 27 anpercent d instability had. earnings below _i0,000; however, this group 1950 to _624 billion in late 1982. EBRI estimates that _451 billion (72.3 1981 23,789 4,536 19,253 51,748 8,906 48,812 68,095 (2) See RR 101.-4 significantly. (3) Increase from June 30, 1949 (see RR 101.4) 1982_ 22,102 3,651 18,451 45,910 7,668 38,242 56,693 defin Service ed or-ecords bAeIn nefit dth efined eindicate defined plans benefit thcont atallow rplan ibution approximately ppost rovides -plan, retirement a745,000 theclearly contemployer rinflation ibution statedplans isadjustments remade tirwere ement on ina pension and savings vesting 5/ There the This Therefore, prog prog in stability nation rrthe aams ams re defined .rcisks rinfluences itics in hascontribution recognition of ofsuccessfully individual who Social plan question of sSecurity, plans pobuilt pnsorship job rovision tu (ican a)rnov compl le er the must decisions produce d exrates Congress enti beand .re und at valu mer ultifaceted As stood conc young e.toth e.pt e extend ages, In statistics ofdefined public among "IRA tax measu more the would sponsored pension is reason reliability thbe anthe -syst nodefin one to plans au epo agg mth qu splan eori rsible edegate is stion upon zwith .ation ben theeOf efit Social conomic of plan nume effective multipl plans of ric pensions teHR rSecurity, mination e-justification 10 avalidity reconomic eplan Keogh in and.fi good th Social rwas plans ms, e valu mo health, Becaus rviewed 55 efo eSecu repercent difficult received rpost itybut cras -r edeti are ence (14 manag th rement by ere unique it percent etable his eisbecomes .placed nation parts vabenefit rof iance all For to in at of re an yea ti drr. (4) ement grown 28This .month incentives rep period, rcompa esents res, average th 44r.ough 12,507 forperplans cent example, defined perofyearall benefit tononco 5.9verpercent plans ed .worke of And, rs.taxpayers the military under pe less rcent)thanwas _1,000, in defined and anben additional efit pensions 23 percent, plans. a total Well ov value er half of less of these than The defined benefit plan proportion of all net new employer plans (5) 9 month period, 1/1/82 - 9/30/82 ERISA had the clear and immediate result of retarding the expenditures'; (2) the calculation methods used; (3) and, the increases.- authorization of Individual Retirement Accounts and eoperation benefit (provided ligibility assumption prThe ivate oplans, EBRI onThe benefit, p(Table eto r-an sponso reti differ all employee however, ad th rement at rwo hoc i) eewith dnces r.kebehavio rbasis This sbasis racurrent es income ein fluctuating arin rep rch by the and resents th would 85 population indicates esystem Economic ispe effects rallocated cent .not aannual 75Recove That of that ochange perc fsusponso rpolicy to vey ersystem contribution, it nt y individual rwith pto Tax s) rincrease oduces .chang has beAct changes econducted sgre of littl accounts atly in on and 1981 the ein different the reduced benefit t.an by hnu edmb risk the tax er to mindicate, fi these the pa la ultie rrrms) tge-rtime metirement ployer numbers, Third, sfpo -rom nso ERISA affo because wo rrthe kers, dunion redhoweve bo incom fined caused themploy and ercu a,status and rr benefit system defined disruption er ent to they among justify sponso is taxation daue rplans b.eenefit casual also rto inte edpth thei rrThe esting ivate eco and opension rlabo rr flaw elat impact aemphasis rcont ,plans, defined echanged dtorplans ibutions compa system of topa on: TEFRA pension rcontribution have re.in ticula . 1981, to On been will rly epension cov indicato and designed er not for age, plan the show r.rsplans emwith all up is is to holds by planOf that siall ze th plan and e defined type par.ticipants, benefit approximately plan is essential53 percent to maintenance (28 million)of arae __50,000 2,000. who Forbenefit these workers, from the a cost_benefit exclusion fromcomparison tax of inte byrest the on pension state plan and plans created *Does ar notebetween include over plans100 1956 covering percent and self-emplo 1974 funded yed was . individuals Each approximately yea (Keo r ghfund Acted55 plans).pe strrength cent. has For been the *Through September 30, 1982. law. EBRI is considering these issues in a study to be completed in development of employer sponsored pensions. That result was most severe SO(]RCE: Charles D. Spencer Associates for 1930 to 1975, EBRI tabulations of IRS data for 1976 later 1983. increase - thIn e allowabl the defined e contributions benefit plan, amount. the EBRI risk eof stimates poor investment that in pove local Uof value cove .S.rpension rtyCensus bonds Judg but older, among e.dsof typ iplans Bu gnerificantly th po seau against stable, eorsponsored aged, of in investm May afull plans higher eand nt 1983, standard -by time ,prpe employe omises expense rand will formance workrof esp.the rs reven ovide .delive durrring esting elative grrIn eat ing detailed er this 1979, on meaningful ben prospects eight the einfo fit foremploye rmation yea secu example, rben rrity pe eof fits riod, on sponso inthei IRA to 49 r. the the s, .r7a in pa therticula plan prosp The To The rte ly oerct evidence pmination th remploye (and La -ivat erthe ge wo eof extent rrth annual orde sSingl p.eadditional indicates nsion and rly noting: e-th Employe creation at investment reti system rement th rthat ecadvanc hange as fi Plans multiple "outlay gure earnings) eaofduring whole sworke funded are until plan equivalent" rs; secu isthis has private strong re sponso 1984 lybeen Congress rfunded ship and pensions today discussed, exceeds ..1985, . wasAll ThFor but einc psrthe eovide sevidence re poit single plans, asing nsors "can taxa voluntee gin over would rowing single 88 .rlead .2 army percent employer to. a cash ofdefined payment, union members benefit havinginplans the the relevant and effect 16 percent ofworkforce creating (8.5 million) covered a severance are as to 1982. for defined benefit pension plans. In the absence of major policy and slowest million annual of 95.4 grow million th rateworke inrs histo werery civilian, (Table 2)non . -agDu ricultu ring ral the prio employees r eight futu allowing growing re. numb analysis Determination, performance er of Ameof rica's is who consistency, borne celderly, reated by the these private and employe care accounts r. employe can assu and r rsponso ethe thdeg rat edree threetirement to private which be expenditu indicates as significant expected a means Private re,"th continuation, and of wi -at to th pcontribution rmo one ovision crit rreti ove eate eemploy might will re reffectiv ment ee new 1,000 of rsemain argue given edis lifetime lyincome to apa rruption erst th ticipants chang meeting national rat ong consid .epall benefits s, rograms er if Withholding, employe taxpaye ing must savings each, curto re rrmake bse.th ntenhanc account eunderstood andAs policies abalance areeemployee faor significant benefiting, efo proportion conomic .r example, ove areof ne r emaintained, ds dignity; 78 wag positive not of cpe through ereat rtotal cjust eeand nt s excess employer in compa multie red Employ ofmploye to_er d30 efined 60 r billion pe sponso rdefined cent benefit redwas of cont th ben deeir fin plans erfit ibuted ednonunion plans th beere ne.to fitIRAs counterparts 30 ispension pealso rin centcalendar .plans th(15 e .8pmay rosp 1982 million) ebe ct by a of crucial asaremany plan in pay plan. Were the cash-out level raised to _3,500, as some in the Senate economic change, this trend can be expected to continue. and pension ages income 25- pcomponent r64 ogramsworking are of playing th moeresystem than a majo 1,000 remains r role hourst sran ong, dperrepyea and resent r gand rows with a stronger major thei.r success current . inst cont th national eyrrument ibution represent savings, offor tonew all holding this savings pension defined nation down . reserves gove benefit inrnment making rplan epres outlays; ented pathe rticipants economic 12 thr .7ough . percent On inc and rave eased inrage, indus 1950, savings trial this 20.3 single employer defined contribution plans and one percent (.5 million) in - preplanned wealth accumulation over the workers' full careers perc employer ent inmore 1970, thanandone30.year 9 pe .rcent in 1980. Research indicates that each tmultie ransitions mployer univers nowdefin ine epdrog ofre cont ss plans .ribution was 81plans percent . funded in 1981, as compared to EMPLOYEE BENEFIT RESEARCH INSTITUTE 1920 N _treet, N\V _Suitc 520/'_,Vashington, DC 20036/Telephon__, (202_ 659-0670