I - APPENDIX II 14 - APPh-WDIX I Tab]e 1] A_,q,qJALSPOUSE'S BEh_EFIT PAYABLE AT AGE 65 on retirement income levels. These factors should oppo{tunlty for regulators to influence plan vesting (3.) B irs ao t_ ASSUMING VARIOUS AGES AT DEATH Ahq) SALARY LEVELS provlslons. This section reviews the evolution of federal oo be weighed along with alternative plan formation, ments or institute more restrictive provisions in 00 EBRt date of hire or age 22, service for benefit 44 38 TABLE 1 o". 32 5 612 715 27 e--4 30 47 28 I0 26 31 917 23 25 11 41 COYI_NT$ 42 21 39 48 2Z 3S 45 32 50 24 29 2O 16 37 5 regulation participation affecting LUMP SUM vesting VALUE and8U_Y OF vesting DEAIH and BENEF]_ identifies policies in a assessing range 48 49 13 40 33 46 36 19 of 18 I. Replacementother Rate Analysis plan characteristics, retirement benefits 4 POTENTIAL TABLE INCREASE 1 IN ANNUAL 34 accruals may be credited only from date of plan effectively required plans either to vest participants fully c_, _Do .....1- r-.. e'_ o'_ _ o"_ r-.. QO c.'_ r.-. r... potential changes in federal policy. return to the thefund. overallEvenimpact if on plans retirement are well-funded, incomes. the EXPRESSEDAS A PERCENTAGE TABLE 6 OF EMPLOYEE'S PAY RATE ii or more EB participants, RI we estimate that most mayO', decline. QD, _'_ _£D, Thus, O", ¢OI"-.. policy _O makers r..- ,-4 e,"i, should o-_ consider: SLI,_IARY OF QtlA CONTRIBUTIONS LIFICATIOh_ TABLE AND TERHINATI UNDER A-3 ON.'S SHORTER VESTING proportion of all membership. particiPants As who a result can ,expect even to ifreceive vesting a plan occurs after ten years of service or TABLEto A-2 vest participants partially provisions. The proposals offered TABLE 14 two safe harbor options: • Third, the model TABLE 7identifies those separating H. These POLICYanalyses IMPLICATIONS assumed that the defined benefit plans had totally adopting withinshorter oO their _0 0fertile vesting years. _ canc-J There be 0 40 weretoapproximately c.J50 ..7percent 0 7.6higher million for WOMEN afterAND ••approximately PENSIONS First, a shift itinestimates retirement two and TABLE TAthe BLone-half Ebenefits 33required years fromcontribution longer of service service for -- September to consistent SL_IMARY accentuate 2, ........................................................ 1983 benefits and the sustained effects from attachment of women's shorter toincreased the vesting workfolabor rce. fo outweighs rce Even attachment. under Social 1 theTwo periodic because regulations. the retroactive moostdistribution they As Better recent these service Ine/vcommunication er available consistent wo credits rked, ofstatistics or are atrends and worked large granted utilization coonly onntinue number under recent a short to of the pension eof joint volve, peri plan.luomp and participation dthe They durin survivor sum changing often g their benefits are options levels. role life. not of benefits sample information facts. differences were most according Sur these defined accrual not options their modified. veyclear of just of bills 2.2 gathers will This can benefit these ofLittle million •300 embarkin to aany -,.1 Under pro at priori improve then requires the "women, vary v age pension information the profit ided empirical plans gparticipants March ERISA the slightly which thirty plan the on with by their story inf with a1980 right aospecial retirement rmation. sharing break type career. sponsor e inwork more more v on is the idence Current their takes the of somewhat ,in pattern interests than than generosity plan who pre ser Nearly TABLE is income plans some respecti through Population valence half, I00 vwould available ice different. separate period in veparticpants 58 A-I security in occurs their 54.5 in be percent advocating ofa + work of Survey, more of1975.! reduction the percent onwhen current time. careers the the of receipt before effective of/in older arelationship 37 the that were plan plan. 19 j Epercent o ven 77 is b spurt Because women. of in women. particular participant is that not for ifi0 pensions profits; remarkably T all in Table so women. had of -23 years While between lar At elderly such many been geand the has 2the itset the ofno end would Vesting Appendix plan. provide employment a vparticipation result are esting plan that of This deem Certainly in in their aain Mr. Co Some it II). more high more 1979. analysis verage experience athe may working Pension Chairman, analysts and probability equitable Table comprehensive employee cost Another all refers recipiency w was private Plan life 13otoward men it looking on shdistribution to 5.6 ocond to is ws will suggests approved woearn and asector the million among urkers the cted pleasure at not end accurate current a relatively the prefer wh employers maternity pension. this TABLE of or by oof se elderly. for their 14pension group _idinger pension employers picture percent one the 5higher normal Eas or of vtype Employee encontributions much paternity Table recipiency women of where of sponsor of death for working pension working as plan 2 will Benefeit today's $i00 shows KBRI benefits leave over alevels benefit ages. recipients' million women pension (Table and that to elderly the Research more that were Table worker have among other. little plan. per I). would women income year 5older It benefit, not competitiveness. both. should operate Between consider • especially in actuarial a 1965 is vacuum. This whether andcosts 197 In among 4itinterest Americans fact, private is worth there more sector, jobs, rate substantially is mobile, areducing paid -- long worker an histo increasing tax ryassumption shorter vesting revenues, of taxpension rates andand service ofmoresix year vesting, the average increase would be approximately 2.4 (i) adoption i. ESTIMATED Prior more of to TRENDS ERISA full rapidly, vesting IN VESTED the after val PARTI ue CIPANTS, three of accruyears ed1965-1975 benefits or (2) may a prior to ten humberyears of of h_nberservice of Net Nwith umber fu Inll crease vesting in Net Ioccurring after ufirms' nit benefit clients. formulas. Consequently, A review although of a small large G)number plan data of participants estimated in step one who would not small regardless --;Iplans (-.,I ofthan ,._ theO_f uage "_ or C_ larger of the _ worker.l plans. o'_ c',4 f_,. / The _ O1, annual .ooo contribution to shorter o4 ,,-4 A. servlce Final Averag workers o4,.-Ie Salary -- the $I0,000 c-'_higher ,-4 costs ot potential a plan assuming decline in no benefits turnover TABLE 9 or frommortality. lower ratesThisof is Thus, although the primary purpose of this paper is to examine may illustrates be limited POTENTIAL the bypotential available INCREASE value assets. IN ANNUAL TABLE of 10As benefits CONTRIBUTIONS a result, that portability separated defined indicates contribution very service • lowplans whether benefit could have valshorter uesexpect formulas for thevesting, tocurre that accumulate nt age are tax 55integrated, incentives rpotentially equirement, Perpercent; iod but, Qualificatioit n could Terminationbe s substantially of Plans Number ofhigher Plans Annua inl individual b workers. It pe may PROBABILITY {d not entalso change. wasincrease used; OF TURNOVER the nuGIVEN mber Cof URRENT years of vested not more than 15 years. analyzed PATTERNShere PROBABILITY OF BENEFIT Change are probably ACCRUA from OF LTURNOVER S i0 UNDER representative A HYPOTHETICA GIVEN CURRENT L DEFINED of Raall AGE ngeBENEFIT AND" small for Low-High PENSION plans, graduated vesting schedule that achieves i00 percent vesting POTENTIAL INCREASE IN ANNUAL CONTRIBUTIONS workin representative g women between haveplans these received indicates ages in 1979. benefits that Women the who under typical had,-4 been prior defined with their vesting benefit increase required benefit toincreases fund a for shiftshorter from ten serviceyear workers vesting mayto INTRODUCTION These DISTRIBUTION ................................................... findings CWILIAN raise FI_IA OF LEVESTED LAB several OR FOPARTICIPANTS RCEimp PAR ortant TICIPATIOSEPARATING questions N RATES 9about the only income information one sources The plan If Industry some on done aspect lawcurrent that participation. explicitly ofcategory with are theof utilization more part analso prohibits retirement of arcane agetotal isand rimportant arithmetic ates discrimination employee service ofprogram join inbenefits of explaining t distribution defined andagainst sur characteristics must vbenefit ipatterns vor women also optbe pension ions ofinofpension plan pension is plans -- Ending women granted is families annual This be Securit time Certainl Institute pri stable. standards vate-sector pr still o ythese surve vAs ided in ley prior v R might evidenced were highly els the any Women ERISA uwere •to lings one ydata ,by w submit work based of to cannot receiving o to help. not the with rker shortened employment life were significant. modest D benefits. UNDER that aforce teby only on consumer stable less this insurance look collected Note, the a time tois at sample established ALTERNATIVE statement than to Da benefits. recent at during going te because work least however, provide Inter the fifty (fr through of there v inopatterns iewers' m Social current one to the effe households funding for cyears for a Appendix expose t that pension were late set VESTING the The Security Over immediate an will population the of instructions slightly o 1970s fof them record. Previo increase representing actual minimum age where II). prevalence the gain usto occurred AND reform toparticipation credit da Period the the more little, yEBRI of pension impact and pension will family retired process, than in Growth of can is inthe training if prices be life a firms participation be 39 anything, nonprofit, head U.S. system women required depends million delayed, and agreement insurance with was civilian vesting induced and to between fewer twomen from oadraw but upon have on much the vested arrangements we women policies The shows from increases firm up had efficient covered performed participation to levels more asswithin file uprevailing worked med participants age the than the are than by these break-in-ser be Participation and Another number looking the social operation 500 twenty that athe adopted. any are pension plan prior reports. hours rate characteristics majority of of program hours worker contributions PROBABILITY cbut for uthe in rrently years of five of vplan with not ice The adjustment 1940 refers clearly the ser of who had If expenditures. years, debate service establish yet volder pension was ice provisions these not less enters to participants. not of flawed about during OF women done 69 over workers to reports their for than were percent system mour Tpension ent. very Uso twenty-five RNOVER Social that in the survey aplans work plan since who 1977 were ten 5However, employer in common, do had policy perent have Security patterns, data year Among providing in the had not sampled years GIVEN more mid-age times worked continue passage satisfied as on women in that per than which and defined on CU and the of on however, week, retirement the RRENT will will between when aten earnings federal present of service may we statistical service percentage age make ERISA for acti fare for they now be and suggest up the vaccruing employees pensions must eincome legal somewhat were accruals. and service workers to qwould below ages uite of many depend. basis, between that andof amore had for cases. regulat than administration o and tripled ryInvery , legislati the significant rising POTENTIAL burdens onaggregate, from that in forreductions only order INCREASE define new 6.the to 3 the percent increase plan for annual IN pensi age ANNUAL oof npension 45. formation all envir cost private oCONTRIBUTIONS nment. participation for sector all or Historicall workers defined employee byy, .7 to this service for all workers, Number which of may lead to higher work and wage AGE AND YEARS OF SERVICE: HIGHER TURNOVER ASSUMPTION after they may ten not FOR years VARIOUS meet of strict WORKERS service, statistical WITH SPECIFIED providingsampling AGES that AT EMPLOYMENT tests. the sumAND of the YEARS OF YearSERVICE: Vestinq INTERMEDIATE to: AverageTURNOVER ASSUMPTION Turnover Rates standards UNDER ALTERNATIVE and categorizes VESTING them FOR by the value of three plan Private with year ii vesting plans or more for frequently participants BY a AGE small FOR pay plan SELECTED inoff could 1980 YEARS accrbe uhad ed approximately anvested accrualbenefits rate 4.7 Prior WORKI_S WITH to tend AGELESS Dthe21 toTO enactment THAN be24 IN offset 10 1979 YEARS of NOT byOF the PARlower TSERVICE ICIPATING Employee benefits UNDER IN Retirement THEIR 3 for YEAR I_IPLOlonger YEIncome RS' difficult alternative role of to shorter operate participants, vesting vesting in requirements practice. the in earnings retirement -- the ofresults income each policy. presented participant,Because here AGE AND SERVICE PATTERNS _4 acc therel umulate aSocial ted retirement AGE Security fromAND byathe YEARS higher defined wage benefits. relative OFlabor base SERVICE: benefit and generosity costs; ToI0the plan LOWER percent orextent of with TURNOVER plan above the thatbenefit model it. ASSUMPTION the costs plan's formulas. of benefit plans WORKI_RS to AGED shift21contributions TO from24 IN ten1979 year WITH orcliff THEIR a combination I_IPLOYERS vesting LESS to offive THAN policies ONE year • actuarial cost method -- the individualUnchanging entry age UNDER ALTERNATIVE TABLE RETIRI_OF VESTING CONTENTS AT AGE 62 REQUIREMENTS Dec. 31annual , 1982 Most vesting defined 884,936 • level percentages benefit 144,963 of funding: plans 76S,881 afteradopted ten the 70,2years 00new greatervesting equals I0.1 the orrudegree les exceeds to of Active Participants A DEFINED CONTRIBUTION PLAN employer for fivetheir years vested or morebenefits. were selected For because example, each women in going had beenfrom with percent, which that are wascompared relatively service equivalent with workers. small. 3.3 to percent a 195 For Most unit 0-1979 example, for likely benefit larger defined this accrual plans. wobenefit uld However, rate occur plans of considered: INTRODUCTION • Could(I) life otherFULL insurance pension VESTING and (2) mechanisms BY lumpsum BENEFITdistributions. LEVEL more efficiently plans. isthere workedYet are Agethrough, women and at otherhave anitways becomes employer traditionally of clear achieving contribution that beenthe less the value Age likely obje at of formula. ctives Hire benefit to receive accruals identified In pensions these is than for many coverage. the work standards each the accrual an mostly edited last at THE economic represents scan these elderly Sec yleast u"facts" rity ages conclusions PROCESS twomen worked beneficiary force, yprovisions. because and tof he recei coverage Where environment, requirements fof obut rtmade agshould In Act significant yback eneral isOF estimated sixty-fi recent valso part ing an quarters Table ACQUIRING ofavailable about ofand in Pessential among be E the benefits this specified NSION impression example 1974 the vparticularl 6e56in high that the the and reflects retirement pension opercent results 1950s rat APLANS new to optimal (ERISA), PENSION ten outside turnover sixty-ni in of first least the that business is or that years the BY changing from participants yhad 60s tha public one interested employers pension step. benefits T............................. creati agriculture, nEyear. te. more rates NUR when othe the fmany retirement failure Eearnings Among ,the different exposure v In than e among there HAs strategies principal would widows Ouse the must evolution URS may in the the twenty rate area were 68.3 younger of pension Wmake adopt only credits plan. program Oare elderly of RKED statistics. industry suggests women percent of for active fewer this bein occur of federal aAND Although pension workers. programs women vesting matured, the togfamilies a by pension Sturnover be in left participants Esmaller U.S. it of Xthe entitled in cases reform The all is legislation schedule that in tworld their opension this where impractical tal 9plans. debate old civilian problem where rates. target such of age tprime othe for that over work a benefit shoul nonpartisan, working differently. security. twenty-five greater envir effective the While percent. unit than fifty-two specifically odages nment of 100 the level degree in benefit be We Aof employees DOL retirement weeks. These subsequent the has and fifty-one considered thank public direct research If ($I0 than United resulted sixty-four under ,As they arguments you The policy earlier that and income shown per for and States simulation only first the staff would almost only inthe in plan. sixty. in are research stay month security cohorts awould and according wage below, opportunit fairly regular light based 55ten best that various This Among eliminate percent or per organization of years on cfor oof we salar income can nsistent women. to the ycertain those achieve analysts women ran year the to the of be then ythe positions computed is submit the aval same ovThe calendar in their broader pattern break to preconceived er uof which e growth general. under eighty be expansion sur this the service)._ experience of periods recorded vin who sponsors ey. contact o occurred year, fstatement. service points only had vested objective pensi One So notions ofof a obeen about we in nresearch option will plan the have nonwork / in for the are described plan with pension trade benefits We ayear analyzed and one be More talking worker that offer similar and in their over of or andis ten Dec Memorandu vesting . 31,19.5 1981 m percent. for YEAR could 8Sponsors 16AND ,924 normal range As IN the THEIR (Annual mandated from 133 coI_[PLOYI_S' ,644 st method approximately Percent vesting 695,681PENSIONS Final was Increase) standards used PLANS 68,095 $600 Career for inBYERISA HOURS to all 10.9 $700 began the WORKED Dollars estimates; tomillion, AND takeSEX effect benefits II. Lumpfor Sum Val the ue as additional Percentage AND TURNOVER vested of Employee's ASSUMPTIONS participants Pay Rate Analysis are not offset _i 5funding Year _o__o_ Full at the time o° vesting 2.4% changes, 1.7-3.5% the greater Using data from the sources described above, we estimated 700 (700 percent (millions) vesting). ANALYSIS OFAlthough ALTERNATIVE VestedthesePartiproposals cipants aswere meet ERISA standards. For these plans, complying with the 10 year full vesting to three year full vesting, Dec.F. 31, because approximately are ANALYSIS 1980 permitted Death the 741,387 OFthro IRS POTENTIAL ugh $i0 torequires cash 120fewer per ,202 COSTS outmonth many increases 627,586 benefits 25 newper small in val 56, year 063ued plan defined 35of atbenefit 9.8 less service. benefit than 40amccrual plans $1,750 This above. ashorter ffecting vesting, private pension it will plans be important was the for Internal decision Revenuemakers Code. to analyses, we did not use the earnings for each administer • the emplothe yees newthro benefits ugh offsetting 9enerated reduby ctions shorterin the generous We estimated plans wo acc uld the umulated accumulate average by annual theproportionally affected earnings participants from higherBureau vested under of a under by reduthe ctions Age assumptions in overall ensuring ofpension adequate thisPaybenefits, analysis.L retirement Pay/retirement incomes. times Alternative Service incomes Age the percentage (Annual Percent Years increaseofIncrease) Service in annual contributions. 3 Year Full 3.3% 2.3-4.8% ERISA Age withdrawn model standards plantheypopulations tended may beto d_ indicative raise APPENDIX byYearspooling O0plan ofA Service ofcosts. (DO the future age Thepolicies act andual service cost under AgeYear at Active Percent ofVESTING Ultimate Vested_/ Benefit REQUIREMENTS Value a Percentage Accrued at of the Actives End of their Age employers it longdivides enough that the any number Years breaksof of inpersons Service service could who separate have had a direct with approximation is based upon converting many different types of without employees' TOTApermission. L This MEN option was WOM mprovided EN in tomen, working Altho useucreating gh shorter ages A than number the today. rates, concern it Welfare seems. of vesting, proposals about which Thisand the abenefit are equitable large Pension might included Annalso ualproportion treatment affect affects Plan Percentage in pending Disclosure the ofthe ofpensions relevance bills Increase small adequacy which Act on ofplans are the pre- ofintended basis may of 1958of wooutside Excessive without had accruals retirement our for system satisfies heavily u service there inter to Age ld eval the view; many worked further The utend ate was young itself weighted benefits. Availability the firms. Again vesting? young toward participation Mr. In one alabor benefit. one-time all to analytic home 1950 substantial order Chairman, worker the is offirms turning ten rise. mo Pension the going Table towards three bto ility The years income but latter full services Under assess of to 1955 pre to sometimes it 7vesting to Because period coverage Pension offer the interferes the and reflects va is accentuate the is Spart lence othe difference range cial more end aanalysis to to pensions pleasure of standards. 1960 Coverage magnitude of you refers be of is participation Security, of than the the of FOREWORD with ignored. known the life the on Percentage of changing working before half of in career. to this to ....................... the the effects the 1965 of the insurance tosubmit The the alternatives had earning more the or be Unless they value 1979 intensity career. sum first potentially related not in lowest This of potential this enduring one of of have survey women's oworked co of ne defined-contribution standard 1970 vactive characteristic Participants statement. erage or the inDefined quarter become issues. ofmore data smaller at gains employee-employer two that increased amon members for all. required plans. established. the accumulations 1975 benefit ohigher fexposure. gWe under firms I0 pension numbers credit IIEven join 1improving ;submit should labor full either Inplans and you among 1979 plan each are The be it inin pension agreement wage assumptions head about on each system this twel Changing maternity vwas beneficiary. or einformation potentially consecuti could policy salary oIt Break-In would ver participant, about is be and seve sometimes workers impossible be vtraced paternity eover personal nincreasing Service more For ty months. years the between over plans likely suffers to Provisions last behavior leave time. No of bexactly that the utage the ifbenefit two in participation for inste data were Long-term 30 years ages the that up predict percent athat fi accrues dsame of to Change vthese are etwenty-five one exists uto way. sed not that trends were during data rate ten year, from founded younger an were years For receiving among as are the the average example, well and I0 made not old on later women women period Year sixty-four, as fact. available available ainpension. the would by one today 1977, of earnings Full about effects Senator the continue will for 59 for working break 3 have of educational expansi the often employer vestingspecified onproposed rose for asprograms one sh totenure ogrowth is wn 27.1 model year to in for to reduce percent or Table TOTAL provide of more, the plan the 1.sample bywages, 61.8 vesting With a 1979. sound would of percent the 7women / standards information pensions excepti were MEN we ofall n_were Jparticipating under ofbasis analyzing. or thebelow ERISA. for 19 other 75-19 policy in 77 One WOMEN Here a$2,000.! employee pension peri reason we od,found / this benefits. Labor This Statistics' As analysis shown (Table estimates in the II) was table, of conducted aver if age a by planweekly Tillinghast with earnings thisfor benefit KBRI. for It Decassumptions . 31, 1979 •67will 2,045planprovide 1 funding 106 9231 different 571 level S232 estimates. -- it 46,3 036 was In assumed 4 8.8 addition, 5 that or More thethe consideration distributions 1Because byfrom Year the Full all IRS. thetherequired plans 4.1% in annual a relevant contribution 2.8-6.0% group oJ of that a impact varied COVERED C: among 21.3 Dec. initial 31,life 1958 cycle. age 50,569 and There service is not 3,062a distribution perfect 47 507 data set of av6, ailable 551 plan participants, to 15.9 develop such aplan iJ Age in contribtion Yearsrate Worked of five Between percent Ageson51wages and 60 below the Social ,-, approximately would of The theoccur number individ under income utwice al's of participants ato asmcombined oney individuals largepurchase as who vested this would during defined benefits same receive retirement shift contribution orbenefits .in assets o a_,Changes model upon could plan i isREQUIREMENTS also possible, FOR PRIVATE but morePENSIONS difficult to assess, pension SOURCE: benefits. ICF threeesti actmuates assumptions: allyExamples facc or umulate a of model (i) thisthe defined that trend apparently plan benefit include contributions modest plan the with minimum vested Ii manner vesting as schedules. Social $2,000-$3,000 Security tax increases. It is 9% possible that it _D does CI 35r...0not u-_ fully.19 _ address.09 _.otradeoffs .08 . among .06 . related .05 _ policy .0375 O years thus improve under on ofthese interest the •service thepolicy resulting agelevel rate. separating and changes ofcosts. service See would retirement Appendix with end Forof upa example, recei vested benefits. workers: A for vingmethodology. benefit aif cashone plans Todistribution. could assumes evaluate covering oexpect > that If the I_. 31 IV. , 1957 Group Life 43,615 Insurance 2,659as a Death 40 956Benefit 6,074 17.4 V. retirees. We Benefit estimated In andFinally, combination Contribution the the costs with administrative Formulas of Social faster Security vesting expenses and in associated pers defined onal _ 35vesting be_1 large Pensions ° ifpolicies DISTRIBUTION EARNINGS .34 this °OLDER are ° were DURING similar WOMEN .16 are additional OF IN VESTED YEAR °also to1977 Social .14 ° INPARTICIPA AND TABLE WHICH expense. sensitive ° YEARS Security T 7HEY .ii TNSOF WERE ° SEPARATING SOCIAL into ° that SPECIFIFEDAGES .08- workforce ° SECURITY meaningful WITH _ _° LESS .068 benefits age and single WOMEN thirty-four raises 35 Vested 1977 AND aemployer the set TH_experienced richest ofU.S. None .27 questions plans PENSION known I.i 1 the to .13 about than source SYSTI_M 3largest 10.3 4the among to of .ii potential 6labor information multiemployer 7 force 0.6 to.08 9effectiveness participation showing 10.4 .06 i0 combined plans. of0.5 rates these Social .048 In increase and1969, i0.iof Employee benefit where plan have could will participati pension percent preferred the result 1979. vestwaiting (see link an lost be the hired o in Over naccrual additional if highest expected This The form Table benefits because service consecutive higher heperiod the at ufuture las, was in concern and age 8). same pension plans. (see talking of credits toafter l0 towhy 35: potential Another its vest three about Table final years percent other some participation return Even portability under in about periods, with salary 12). the their individuals 2.6 with of for coverage availability to the act million, no the each Second, 1979 very the in uearnings pension current arial pension characteristics. most employer. rates subsequent sh employer's and are oor because rtinstances, break participation more during 81 and system, in 23.4 vassumptions, esting percent the interpretation or year percent, most For in plan record this then less service a the schedules workers For of worker by if decade. hinges successful service. benefit increased were he exceeded the 1989. rules. was gaining who long-term already of the and on But Also talking ishas pension benefits by the its than not Our , the not 85.7, plan because prior current stable tied ones about data [=.11community. private already proposals, pensions, discuss higher, benefits under purposes. qualified Surveythese data earned sector 72 reasonable were Security plans each No percent however, polic The utilized not subsequent may employee credits has Congress wage indexed, changes be policy or we regularly in more.2__ contributing because base provide the potentially annual could would options. anand earlier /grown assumption improve some ofaverage files endamore service general up represents at And analysis are receiving this anto annual before that annual yet the break, situation background of available had aearnings elderly's the women's arate lifetime noCommission it cash practical by is of onof to distribution. working clarifying I0 another retirement pensions financial $13,560. the percent began public effect patterns. to Uthat I:or liability. the income say their _ nor on better If help that the these doesin ,-4 separation defined that Except many credits Z was as u_ must 60 as benefit modified percent prior req be in ugranted ired c_participation ofto plan. to regular retirement oreflect to n ,a prevent nAo o'_ ndiscriminat nonagricultural shift shorter andfrom t'- odiscrimination ryvesting fromvesting. defined e'_ workers basis tenare ,toyear benefit who all important will there empl to_) oretire yees plans onewere -_only age inyear was the 25 no asor that shorter For the vesting Record may of itshave Hearinan g adverse of effect on additional vesting qualifiedstandards plans vestedduring workers of1980 ERISA, andwho 1981 changes terminate.l had 3.6 in times / IRSas Reven many Plans uparticipants e may Procedualso res, as " " Dec. the 31,then 1956higher be or administered 37,190 were younger costs more benefits $3,000-$4,000 made of parti workforces shorter 2,308 atcipants through that the vesting 34end wo 882uld typically one of usingmay result the account, 4,944 alead year; 6% experience from to: interest thus (2) 16 3% .5shorter that avoiding higher rate there vesting. and the options. 36 However _55 - _the .19 other .09reports _'_ _J_3,375 .08in this.06 %series 0 2,250 c_ .04 ,--will 4 provide _ 1,688 0.03 to a shift accum 3. ulate toAfter five aERISA year benefit vestingvalued from at ten less year than vesting$2,000. would reduce These impact The of threeaccelerated POTENTIAL sets of INCREASE vesting, turnover IN weass ANNused uUmptions AL CaONTRIB benefit UuTIONS sed simulation in these contrib 36 savings, ution3. pension If .33 plans no other CREDITS plans u.16 sing plan EA are aR.14 NED simple TABLE changes BETWEEN designed ii.10 defined 1937 occur, to and.08 1977 provide contrib shorter ution.068 retirement vestin9 cost APPENDIX 36 THANI10--YEWAERS PreRetirement .26 with OFshorter SERVICE .12 Death UNDER vesting Benefits .ii 3 YEAR ...................... may .08 FULLrepresent VESTING .06 BY BENEFIT a very -- .048 LEVE large L E.service. ANALYSIS InOFthis POTENTIAL analysis,BENEFITS the younger ....................... workforce reflects 10the provisions approximately comparison Also • butsuassumes ch there 87 as percent isa aplan participation goodrate on ofe.ofsingle return This dataof employer and set either i,-4 nvesting cludes percent plan surand vparticipants ey rules, ,- _._ an data from to estimated usingthey a affect benefitworkers' simulation opportunities model. toThisaccumumodel late Dec. vesting 31, 1955 produces 31,943 an 2even ,005 greater 29 938 difference, 1,769(1) almost 6.3 three times employers' motivations to establish a plan that, incur •reg potential ulations higher benefit was costs alternatives inefficiency relating Asandue accrual aeight to result, specifically the could of rates percent potentially managing consideration raise of to rate $5,vesting annual several lower $i0, of of return contributions and rates fordifferent shorter $20 ongoing ofonper retplan urn vesting plans month small in a moreand comprehensive the preliminary $4,000-$5,000 examination recommendations of retirement of income the 2% receipt President's thethese turnover cash distributions turnover rate in the and, are rolled fourth therefore, into yearIRAsof may then service tend some small to by but experience 20 marginal percent estimates analyses model. _tl37 l_Proposals m_are are This shown _based .18 model t_for in _ upon O_Tables oshortening .09 Oestimates 0ar'-,--I A-l, model o O0.08 A-2, defined private _the n ,_and .06 _ _ costs A-3. benefit 0 pension 0 .04ofplan plan a with .03 defined vesting a model. OneFor issueeach in the vesting policy alternative, debate over spousal the model death estimated benefits is the what fraction UNDER ALTERNATIVE of the accrued VESTING benefit REQUIREMENTS for these shorter June 30,37 income set quartile 1955the context based PI_CENT 30of ,046.31 workers for OF uponWOMEN our.15 1,later work 877(2) in WITHthe remarks. SOCIAL and .13 28sample 169(2)wage SECURITY with .10related 3,COVERED 290{2} the .0youngest 7EARNINGS benefit 13.2 DURING .0595 average formulas. age 3.who can others 61 that all The -These will only cohorts can 6change 5in 45 be be Unionization The vest entitlement acquiring analyses earned shown. accrued would latter under 35.5%with lead with an aBof would epension. tween of assumed age the 11.8% consistent to an the twenty-one receive three very eratic 1970 workforce and little 11.2 standards that aandsustained or very 1979 participation shalters 6% othe rt additional small their 14.7% requires tenure defined theparticipation cash periods process 7% in benefit this standard payment 26.8% a benefit joof special bthrough w emplo deli will that ould rate very.yprovison 5% be which ment likely is plans increased normally quite and the vest had calculate certain cash employee Therefore participating security le accounts. S39.0, is to of similar vested serious 37OvURC el the the central distributions E:of and ,a decline lifetime proposals instances and The maturity. break Co Security annual than on sound the 36.8 vtodifficult erage antidiscrimination the EBRI's the in .25 percent. in benefits inrequired business salary investment a other in birthrates and data those statistics service plan are Among charter actually pension deliberations rolled hand rate fbut breaks o.12 judgment Some rmeans defined for ,annual experience 1940-1970, had increase sug and toward the enhancing income into analysts retirement. in complete gpro not est. goes primary ser benefit may .10 vIRAs yet contribution isions the on v streams obeyond dictate of ice ffrom Most have the the seven then vested. end forfeiture concern the plans, should policy in U.S. defined-contribution pension .08 of suggested some on the retirement percent. restrictions the Rather the the Bureau Slightly which deliberations be isU.S. options small 1950s basis protections of credited likely to.06 that ,cover tax accrued of but portfolios. than amore they a of the on to code the pension marginal smaller actual as two job Census, be viewed benefits did than on stabilization though of and ,--out an plans ,development any .048 women. "0agree program proportion I.i the adequate of Under bills plan. aare as unless three onnot the an now the of were oparticipation. restrictions Nonparticipants years IRS (Table lder Agehave in with in ofI). any pla The service on ne This ssur in funding orthe vwith pattern ey within more Tax data to 2.2 Percent years vesti Act implement the of gathered pexpanded stated of _Without of 19.9 1976 service provisions the in tenure limiting early plan Covered ongoing whtime availability 1.0 o1979 wEarnings the ork statistical compared frame. provides use at 16.4 least of athas One these Age information program with 1,000 brought reason data 1.2 ho51 urs they is with for percent that on per research work it24.2 performs next accrual simulations fivepatterns. three years indicated then functions: ,Finally, can thatbeapproximately we expected assumedtoa receive 714percent percent a discount pension would have based raterealized simply for purposes by higherFinally, for defined in effect, this contribution analysis provides October showed aplans 4,generous 1983than thatseverance "for the definedallowance 7 benefit percent thatthose ariseestablished from maintaining in 1979. Newly morequalified liquid defined investments. contribution plans in 1982 or generallyper assets; topoli year Over the cies and$5,000 enforce of(3) inment service. that isolation oworker f individ from Als earnings uoal related ass benefit 1% umes increased policies rights. intmediate at such and Commission its relationship higher on Pension costs to Poli under cretirement y (PCPP) shorter inc that ome vesting• support adequacy. Plans shorter Jun(for e 30, 38 × 1954 example, 26,464 65 from .18 ten 1,585 percent .09 244,500 879 .08 to eight .05 4,20percent), 4 3,375.04 20.3 the cost 2,813 .03 of $10 Because periods unit benefit some have manyplans recently accrual defined may received rate. benefit simultaneously Approximately plans considerable bypossess approximately 94 public all percent of attention. 2.4 theofto increase In group recent in lifetheyears, insurance numberIRS can ofefforts pro workers vide. to TPF&C who Credits enspro uare revided Earned likely non-discrimination a usefulto illustration separate PENMOD contribution Nevertheless, 66 1977 - 70IITENURE differs 42.9 plan AND ser some SELECTED vice t¢OR from 21 under portion K 11.3 Pworkers. PERIODS A_qT_RNS some the of OF 8.2 24 OF act assumption I"HEIR WC_IEN uthe arial In AGED NORMAL elderly this 11.2 27models 39WORKING event, that TOhave 26.6 44in 30 DURING shorter LIVES shorter relatively that 1979itvesting vesting uses low ::_:138APPENDIX the 38 (average Census i. 50 Approach IIBureau's age --.31 .25 Analysis of March ......................................... 35.15 of u.12 )years) 1978 Alternative Percentage and.13 .10 May and 14 Vesting 1979 of the m .I0 Participants Current .08 older .................. 15 Population .07 workforce .06co Surveys I_.0595 8-- .048 represents ,-_ that 10 -- in unit multiemployer benefit Historical form Statistics plans._ ulas. / ofA the However, review United States part of (Washington, aof large this difference D.C., number of objective in itself, shorter vesting should be to short service Z workers 0 who terminate. 0 _ 0 m rOlplans. contribution rate was o lower for o earnings below o the _ o Social June 30, 1953 participation. 22,069 an annual 1,394 rate of See20seven 675 Appendi percent. x 3,657 A for a 21.Sdescription of > Specifically -.Nil vesting , periods. optionsas for incentives improving for retirement new plan income formation receipt ° or enhancement of covering retirement shorter income security service would workresult groups from such woulda combination also separated :_:1 vested workers O would have O accumulated O a _ vested O higher five withThis 39year cost a has vested characteristics--shorter vesting created 4.4.18 benefit percent. would an .09 interest andincrease "However, the.07in present service, from quantitative for.05plans values 2.4 younger .04 percent characterized analyses of workers, individual to.03of2.6bythe retirement (Table VII) income. of what For annuity example,valuesBureau would of be the produced Census at 2 times data affec 39 ts employer .31 contrib .15 utions, .13 rather.09 than .the 07 distribu.0595 tion of have 4.The and small. compensation million, level under facts. from 71 39 the Employers -Availability hiring 2. encouraged 45.0 75 quartile current of T 55 Results benefits oThis Table orto understand practices 10.3 might 63.8 package concern ERISA 38.5 .25 i0 may of percent, ofshows percent. to.......................................... even standards Pension choose plans substitute de that maintain about the velops. that 14.8 .12 had could pensi shorter to availability Coverage with Accumulating Inin oalready preretirement anyway. nmeet 1979 As inhibit 1979 administrative status 9.3 .I@ the employee this this there vested 29 vesting In oldest new Vested and oage cost fother were 15.1 earnings currently bargaining .07 job in interpretation class through Benefits their words, growth slightly average 26 periods Approximate included costs standards. 22.3 current .05 retired a somewhere agents, ifreduction more aage the pension of for than employer's w than data unions orkers majority (average II This Increase between retirement .04 I.I of were isERISA will and negotiate million central plan. of one- why ii more age representative Reducing purposes. participation, participation. pri behavior because enhancement defined themsel the relatively THE of the Agevthe ate person PROCESS participation inwork vpension contribution es service data during Pension 197 spent, an returns low ,force of 5On)Fuity Age ,yet levels ACQUIRING vesting retirement Among not participants, 1978 years p.Participation plans, will in rate is pro to 348.; "re-saved" and plan gcan itof the older be rams; and during ANone not earnings tenure for be employer income under the the PENSION other women, at available credited 197 positive 38 the for Ages Banker's with withdrawal 51-5 age pro security percent result from 1970s before especially retirment. Years vto twenty-five isions the differently for aspects U.S. 21indicates of in current would the or analysis Trust the quarters in 5-10 Bureau duration retirement, those Our ERISA oftax and result Years employer. unexpectedly for that studies of sample now excluded qualified ofexplicitly ofparticipation the the of from the retired, Social More Census, vested the indicate private issues such The of fr break plans than oSecurity high prohibit mhistorical plans, participants athe before pension pension combination in that and rates in prevalence ser vesting you over and v ofice dune select 30, may developed. additional broader service before of 1952calculating have the and has exposure • 18accruals Senate. been been ,289 uFirst, ltimate theto rendered present attrib under pensions. Thegiven 1problem ,271 uturnover table the tovalue the S.888 According anthat of employer. 17 018 age benefits provision to we assumptions onare to and theCensus concerned atas 2,347 service generally various compared data toabout ages. 68.3 16.0 distribution calculate tois percent current more that policy liberal law. ofplan ofOur is year. their vesting Accordingstatus evaluated to ERISA's in 1979.in legislative 8/relation In all hist likelihood to ory, its , these ability thestandards furtherto were maturing affect selected of the Security had 1.4 million wage participants, base. Total Consequently, and their defined for benefit the 100% analysis counterpartshere, qualified we Because Despitethe the tendthe methodology. costs portability to absence of be administering of more maycomprehensive not vulnerable lead pensionto regulatory because benefits the mostof standards, doeffective the not 0_0 However, there are potentially significant ¢) practical will benefit be explored below $3,000. in the Study Under of aRetirement benefit Program formula Coverage twice as percent. i/costs 40Majorand studies younger, benefits .18 of associated the .09 shortincidence .07 service withof.05 these workers increases alternative .04 with in the.03 higher vesting Social June higher benefits benefits. 30, 1951 1937 turnover--we salary. for15,899 This this This 1977assumption examined group benefit, 1,125of Under asseparated the yo reflects a 14uUnit 671 potential know,Benefit will vested the 2,517(3) not cost Formula manner participants. be increases influenced of: 20.7in I0 Years which directly undermoneyby indicate 76 31 to - 80 35 that,41.9in 46.1% 1978, 12.6 approximately 47.5% 12.1 13.3 53.3% 14 percent 20.2 50.6%of the elderly requires costs. 40 ha 40 of ve 47 beenyamong ears). matched Change .31 .25 some to The Social .15 types .12 mid-range Security of.13 .i0 Annual plans. administrati group.09 .07 veincludes IRS records. Reven .07 .05 inueall Aggregate 13/plans Proced .0595 The .04ures Social in the the Age SOURCE: otherin Wyatt death 60 EBRI Statistical Percent Top Tabulations benefits income of50Women Abstract survey unless in Who of the which of Worked indicated May the less case in 1979 United 54Each neither expensive Current States Year that44 aggregate BetweeenAges Population 1981 theadministrative (Washington, typical costs Survey. 16nordefinedand participation For youngrequirements er women who areofincreasingly multiemployer working outside plans theprior home the to plan likelihood choice.participants of benefit andreceipt a select at retirement. and ultimate These assumed However, potential • a Finally contribution because ,effects themostrate model raise defined of calculates important 5 percent contribution qthe on uestions earnings annual plans about cost have below of some thethe _- vary with the ._ size of ._ the :> benefit, 1, relatively :> _ low benefits ::_ -- forthcoming the This numberfrom paper proportionately of vested presents the Employee workers a quantitative largerincreased Benefit number analysis Research of rapidly workersprior of Institute affected• the tobenefits ERISA. .bane 30,barriers 1950 13,899 to the implementation ........ of portability arrangements on of policy Security changes. payroll There is taxnotare: yet evidence George to suggest Perry, that "Changing such rolloLabor vers generous proposals. 41 [_as this, _turnover OThis .18 0approximately 0 toanalysis u_ 0 tnpatterns, .09 _ C. ._ -,_ tFinal o considers o o.07 77 Average thepercent 0_ costs the ,.Salary .05 a-,_ degree Ccould of$50,000 separated .040increase to which _ .03 vested by shorter as theseERISA. offered assumptions. age before at hire the or firm year For swas this ofwell servcase, ice. established. the cost increase for the purchase had F. 36 return 1977 federal toANALYSIS incomes 40 accrue plans re21 venues - ., to _OF below 30might thePOTENTIAL would 48.3 indithe 31 v_J adjust idual b- e 40 official affected. :>COSTS --to 53.0 but 41shorter -.......................... so50 poverty _ do 53.5 the 50 vesting. :> adverse - line.L 60 52.8 /effects _ Profit Although of P_ market sharingthe 16 ._ sometimes 41baby are of quarter to wage Only 81 likelyfull-time EBRI's orgenerally about boom and oFrom be vand er The require One employee women, charter assured 1.2 one-half i0 employment of proposals .31 gi 51.2 _.million vthe Year the enand through benefit new asingle million, largest goes lump-sum .Lworkers .15 to r --outside 11.4 plans , areduce trade-offs. most beyond defined ten or _distribution. twenty-one the frustrating seeking Percentage .13 year 14.5 2the the tohome benefit ERISA age deliberations 4.LThey Jpercent ,..for _cohort to tax .09 participation 12.7 generally plan. elements twenty-four extended In _,q ofumany of alification Most the on women .06 of periods advocate 9.4 instances any .twenty-one _defined the years -.-standard _in Ann bills pension the uwas al old liberal the contribution now .051 population. "_to relatively of towere 0employer policy before age adopt pension working the Social discrimination equals workers operation yparticipation credit. 41 middle system ounger the Security has w in 65 The 90 Employers' today. For Second, The quartiles omen atduration the stagnated. percent the ultimate example, results on can .25 twenty-one against fu data end Arthur the These nexpect ding of compensation would of allow basis of and in goal data women According the 1982 Young our .12 t1977, oarrangements receive topre-break of one of has could fare simulations were twenty-four in plans Tenure and ERISA's $i,000 to the an quite costs to Company, provide trace less .10 less design previous is with average 102 service. of standards. to than differentl include than are the covered age can produce a Current and under five a more earnings shown .07 group research y,$2,000 administration wages If age beearnings years comprehensive contract 74 benefits Employer ain who developed. worker itof and patterns Table lump .05 by had old is expenses 41. the could to imp sum returns been and that 14. othe Employee rtant distribution of of and 73 Although help with result Two 23 workers Department pension for percent .04 Also, to accurate things totheir an employee Benefit lin ooover kwere four the as are the at ofa benefit being purposes. civilian because of policy :deliberated workers As D.C., plan changes, (1) While a result newly 1982), with meeting ERISA without hired equal ofp.does ii the 326. participation the w benefits not oor informational rkers benefit Beneficiary require more have at ofstandards the high that participants the gliches data endworkers jfacts. oboffor were turn ain ofull 1940-1960, ver the under We participating are pension career in rates; age convinced 1980 from twent ofarea (2)foU.S. in y rty had -five on ythat oaung plan policy an be Other last simulations ERISAyear and Potential had pension also 1.3Policy indicate million expansion Options participants. that will female improve S.916 labor The thisforce newly situation participation qualified even plans further. is have turnover p, _, v table,_ it estimates _._v I-_ the number _J'--- of'_ persons 0 role vesting Social r_ of Security collective prior to wage tenbargaining years base SOURCE: and of i0 service, in percent Table determining these 3.above estimates the it. appropriate _ may m tend (EBRI). would and be Res costs ults proportionately the of ofplan alternative the bycover subtracting amore ge shorter expensive study the vesting will value for provide requirements the of forfeitures sponsor a useful based to Asan shown equitable in Table basis.I, growth Differences in theinnumber plan of design vestedmay partici- make it workers would have accumulated a benefit valued at less than vesting 42 These Marketsmay analyses _.lead and .18 to Inflation", 4Jwere _-.-higher .09 cond I._ uretirement cted .07 Brookin@s ._, _---for.05 income _prototypes Papers .03 .l_benefits. _.-, on of "_ .0225 defined Economic O model 21-25 defined benefit much 61-65 as plan 6.7 19.9to shifting 12.118.2 percent. from i0 14.4 to As 5shown year 47.5 below, vesting the plans would tend to adjust in a different way. ;I 42 41 to 45 .31 55.0.15 $5/month .13 61.0 / $10 .09 / 63.3 month/ .06 $20 61.0 /. month/ .051. Juneeven 30, Work proportion Security I42 differen / 1949shorter Patterns Totals ceBureau record 12 may ,865 vesting declines inn .25 higher oof data taverage sum the 5-8 proCensus, exactly than vides investment .12 Years 711 ifagereq covered in-kind because Historical uassumed ired 12,.10 154 10-14 earnings liquidity ofby benefits Years rounding St for atistics .07 ERISA and the 896 15 error. quarters or required in older are of .05 More order the 8considered, .0years and of United co toto vyounger erage .04 States implement obtainthe age accrual situation Fullrate isVesting significantly which To:wasdifferent equivalent Change than for totheir a unit moContrib ther's benefit utions generation. accrual The The PENMOD in II eachmodel age-and-service estimated thecell increase that are in expected annual plan to mix of pension • Pension plan plans provisions. 'qqomenare 's Pension designed InEquity" addition primarily , theyto provide raise to overstate the actual impact on a typical plan. As a result, basis hold,forcreating Inadefined subseq estimated man uent contribution _incentive Q;.,_ in Studythe for of third plans, _ plans Retirement _ -,_ step the to make value from_Income lump the Q._ of-,-_vested estimate sum Adequacy, benefit _ Ebenefits of $3,00pants up occur 0.on Activity, regularly, far service. outstrippe 1970:3, howedvIt er. pp. dthe Our oes own 411-448; growth not experience in address Robert active with the Gordon, aparticipation. lter EBRI native plan "Inflation is that vesting This most in difficult • current • toDo establish the vesting added practices costs mutually : of shorter the acceptable more vestin restri portability 9ctive or other benefit 43 and additional defined .18 .08 contribution costs .07 of shorter plans .05 with vesting .03 ii can or.0225 more vary June would 30,26-30 1948 be2. approximately ERISA 11,742 66-70 484 27.7 6.7 percent. 11,258(4) 16.8 TABLES This 1,888 11.8 compares 20.1 43.7 with an losses. 31 - 35 It is12.1% conceivable NA that two workers NA with NA almost identical work careers 43The 46 twenty-four rare. retirement, Research twenty-five workforces tobaby 50For boomers' Firm result Institute example, year to health, .31 size twenty-one, isof olds mothers is faster (EBRI) of life, 63.1 only might also women .14would disability more vesting in closely 12 year get aged theory, reasonable have slightly .12 years, of 61.9 sixty-one (See related benefits been will Appendix higher year explanations twenty-five .08 affect the to or 65.1 and pension over of benefits II). increase avarious significant in .06 (in plan toyear 1977 of 63.2 under thirt other stable $availability. of fewer billi yin -four the benefits segment .051 pension othan ns) lower costs some half ofandthe had Is advance issue will deliberations w employer for plans Congress. included less suppl policy. omen's i. anthan arrange edo ment of employer determination lifetime Defined picture not prior The as In ten The the adequa _y participants ha for demographic years often vincome to problem ewith 1979, w con of cythe automatic oBenefit rkpension old. vare aersion patterns break employer security pension that is colored characteristics under letters. Among recipients' provisions we of equalling still Plans provided pension and are the ain by the plan which concerned hdistribution misstated o............................ universe a wpre-break it programs For they to major income by they does of convert _Social are the example were 1.4 or of about require _ levels concern misleading workforce co tax into service changing. vnot Security, the ered ,is Oqualified an yet that accumulated than that annuity then 88.2 new participating are to years any information. policy individual after percent defined now many of plans program, of the is assets shifting aservice of frequently minimum clearly policy savings, are and pri but For to17vinto an ate of rate years. employer quarters w without plans. Labor, 43 the process apparent in orkers 1979. 2. periods ofcollected the Then als Yet is Results approximately from for of If (Washington, oThe dealing reducing it credit facts, of we change athe aging .25 is specified year greater can program table. clear policy with being or j trace of othe bsD.C., more. the that the .ii data participation frequently earned. tenures. portability deliberations First, h$i0 obaby w197 insufficient elderly w from Of o5per rkers boom ),these the .i0 aComparing p. and month men alone sample largest with 3standards about 57 will man may are information ; ycould alternative for of .07 per one-half be much accruals have tenures adroughly 1970, vmisleading ersely or account year more little adjusting with on fr .05 of million likely career o400 m of which for retirement interest Social previous affect with private service. another were to patterns the tothe Security recei analyze in .04 men work pension the potential income i0 pensi vand epercent fare rates This oa n co S.affected stabilizing. Receiving Group life more a Pension separate than insurance Table worktwice 0Ii Benefit and on atas inpage wage many 2any times 38people, related year. indicates salary 0 both would retirement women men provide are and women now 0 income workaing higher in each _J lifebenefits. enough of theto last Employee contributions hired at caused age 40: by shorter vesting by first calculating distributions. In addition, the additional administrative important some caution questions should be aboutused the in interpreting business purpose the overall of pension impact also Aug. 31, reflects forthcoming 1946 three 9,370frommajor EBRI. --factors: 9,370(4) the general 1,584 growth 20.3 and matura- proposals ac arrangements cumulated based required byamong upon young, annual age, different short such contributions asservice employers. full and assuming workers immediate In no addition, under turnover vesting shorter the at 44Recession The Instit the .18 upolicies te and currentRecovery', hopes .08discourage vesting that .07the Bro schedule, okings new results .05 planPapers the of.03 formation this greater onanalysis .0225 Economic and the the of estimated participants, 31-35 increase 71-75 substantially as of well 2.428.0 percent as under for 21.3 for atheseparate intermediate model 10.9 plan groupage, used39.9 of service in defined this _/ Value 36 Aggregate To - 40ofestimate Age BVested - 1980 at i0.I contributions Benefits - the Employee NA increased service Benefit to defined NAcost service Research benefit of Ase NA aInstitute tvesting, service Hire plans in we 1975 first 44 credited SOURCE: 51 to2. 55 Defined EBRI for each .31 tabulations ofContrib 79.4 the.14 u years tion of Social 1937 .12 71.8 Plans through Security....................... .08 68.9 1977. administrative Each .06 person's 65.9 data matched age .051in 1977 to21 sometimes'req Worked makers. extent approximately Evto ery uBulletin ired which In Yearaddition, women twice (March totake 90.3% as adopt 1981), even onhigh stable, p. 4though /40 for 73;enduring for 82.8% vesting. themany 1975-80 younger work lowfrom Under patterns income workforce. 74.3% Social 4the /40 retirees Security current vestingsystem may approximation 44 .25 of is return based.ii upon or theconverting .09 adequacy.06 many of plan .04 different assets.032 types in some of Dec. 31, 1_4 annuities J 7,786 and would begin -- at death 7,786(4) rather 5,839 than normal300.0retirement the annual contribution under one vesting schedule. Then, the To the extent that policy makers seek to improve plans. on workers defined To who the leave contribution extent and receive •. that plans. cash shorter distributions vestingdo not coupled roll them with E intothese costs age would 45. The tendres retirement ults to have of this a benefits relatively analysis associated slarger uggest impact that: with on them? small If tion vesting potential of all may orrequirements pension mortality be larger plans, calc foruthan late greater the d inincrease in eq liquidity the uivalent first in the in step. defined plan proportion assets benefit ofto alternative Activity,potential 2. vesting Alternative 1971:1, cost schedules pp. vestin impact 105"166; will 9 of proposals beshorter John a useful A.should vesting. Brittain, contribution .,-i be examined For"Theto andbenefit turnover were 45 plans estimated Death assumptions. analysis. with .17 ten to1920 .08 be or These InN fewer Street, approximately addition, estimates .07 25 participants. N.W. a.04 shift are$20.7 35 quite from .03Data billion. sensitive i0 for year 4.0225 0 these toIfto calculated Miss 41 36-40 ed- 45 1 Year the 76-80 8.7 required 6.1 29.6 17.8%annual18.9 NAplan 9.0 contribution NA13.7 15.3 37.8 under one Sept. 45 1vest. During participation workforce. at ,sector, twenty 56104to least 2 4/o 60 40to 1979 unionized ten Encouraging thirty Vesting 1aIn ,947 years v.30 standards. erage Mayyears nonagricultural 1979 of 93.7 private the Social .13 earlier there -creation - Thissector Security were represents and .ii 87.8 1wage of ,9co II.I their 47(1.9% 4additional v )earnings erage and million labor about .08 salary was 79.7 1,credits force 288pension workers lowest, 0.7employees. percent .05 participation during between plans 75.1 2 195.0 6.1 S0.5-0.6 ofpercent, Only would the allthe .0425 prior pension rate 60.0 ages result inwas percent forty of firms in allwould being contribution and Table under perquisites. the beyond one annuity 600,000 current [-,participants ,and the useways touwhich to >, such improve monies uare retirement I>put when ,= received. incomes. possible that, despite the relatively _,a _: .Ia 4amodest increase in can expect to receive some benefit. However, camein from pension Payroll assumption twocontribution plans. Tax major Shorter ofRollback", For sources: seven vesting ofexample, a percent small Social requirements (i)prior•to planaper Security than large, year, ERISA, ofmayarepresentative Administration, large current also plans lead plan. inannual plans the tend hours to 4. bePossible ofTotal younger, service Future thatwith would Alternatives shorter be_ creditable service to _ theand individual higher ifturnover, such leave were SOURCEcation :work 19entitled, Charles 77. than D. Table ismatched Spencer level their granted year 4AAssociates sh of counterparts oto ws Private ultimate to the when thatfor Social full o 1930 due ne-third retirement Pension in toand Security acknowledgement older 1975, o F_]JRI immediate f cohorts income th Forecasting data tabul oseations o that security vand er ofvesting within eight they is IRS ydprovided amade. Model cannot ta had each for could 1976 no be age by This (October, co made vered cohort different bestudy available women as although extent number when appreciate, with than The in same account year twenty-one 53defined process the this pattern a for fellow of offor This objective If Private-sector women's concern small people standard contribution workers makes aof the is worker lump-sum I0 acquiring .14 maturing reflected working percent U.S. we changing being plan would retiring first with employers distribution plans. employment of asought or .07 increase likely -- provide pension work the data looking less larger twowas patterns The pension less vest years in becomes an .05 grew than employers greater May phenomenon for analyzed the analytical competitive under work. system 1983 later as pension inone complicated, much benefit current only .04 Current at provide An also is year between participation explanation the one here with alternative leading receipt. results law. bottom Population generation. .03 higher of foreign however, 1975 And, to are service, of in for co higher and wa The due undercounting competition vrate ay Sur erage. market when the 1979 probably Among to ultimate .0225 vto eyrecipiency over phenomenon look these the as and being Pension the the it at aging in cost had years who percent. participating pensions had increasing showed the accruals. aform 1960, inplan comparison vretire been alue for tenure for but that with are policy example, by ohad £social in In the accumulated who appropriate Sex fact, their in the tonot work analysis. would actual a -,-I program next pension only yet employer if patterns (DO have vested. five the Social 5.5 benefits. compensation expenditures. plan participation _I-_ years percent lost prior of Secureity at Slightly older service will that to Upon ofL_ vehicles age women receive private time benefits withdrawal credits more standards twenty-two, were out Uthan %and, sector a pension of under on significantly were I.I 39.2 fr thus, the om only workers the million reduced million the based record. whether current years plan were 4or upon 4different to -- working after employers the Similar 10.3 32 age vested; their percent their data than this elderly 53 Congress recei Reducing als .,_o vingdecided .19 benefits. the Q; Q;participation that ,--_,.-_ .08employers.06 Q;standards Q; co,--_ uld,-_ exclude .04or adjusting _ from _;.03 ,--_ participati ,-_break-in on .024 service those 53considered actuarial .23 either .12 newer cost plans method, .09 or.06 an older intermediate .04 plans in .034 very turnover high not workers mean that tend there will to bebeoverstated. a commensurate increase in the ultimate receipt of vesting for a Similarly, number of different the benefits population for 25groups to 29andyearunderoldsa i to 1982 aggregate and tBT pensi . Wgto o kTE n distribute Icosts, plans. - Benefit the Under funds 1% impact toERISA, or accrual 3% purchase on minimum some $.29 groups rates, annuities to vesting $ .89of plan workers for standards $.1theto integration and $.3 directly firms based to..c: make on E )4 an H_analysis their .c: j:: tn participation of ..c: ..defined c: ._ benefit standards pl m ansO with more sampl manufacturing e 1979). Office oearnings f defined of of andResearch benefit $13,560, communications and and and defined Statistics, a plan industry with contribution were aAugust contribution more plans 1979; likely with rate Daniel to of was l/ conducted See Appendix by theA for professional a description staff ofof the ICF model Incorporated plan usedin in small representative defined benefit of allplans smallmay plans, also tend they to may benotmoremeetheavily strict Table approximately 54 9 Workers high .14four Aged as 21percent .06 i0 to 24toin per .04 1979 12 year Not percent Participating .03for workers for .02 manywith.015 33 defined five _/population twenty-four, pattern actuaries 54 I vehicles. / This Retirement inassumption predict any that Evas en.18 specific Income was seen among that comparable inOpportunities those by was Table attained .08 2010 women used 9,when toayear .06 the between slightly tothe insegment ofan reduce baby age Aging age.04 smaller boom isof sixty-one thus America: the the generation portion, determinable. workforce .03 complexity andCoverage se46.7 begins venty that percent, .024 and was to inofretire 1977 Benefit the had 54 .22 .ii .08 .05 .04 .034 I/ ICF turnover ForIncorporated, defined I_ ass industries. um_ption - contribution m :> :a >And These Private a_- 6%plans, res _interest u:lts >Pension :> weimply _estimated - rate. Forecasting that _ :> :>Plan shorter that assets 0aModel, 0typical vesting are were approximated from the benefit amount for a 27 number of alternative turnover assumptions. These populations i mayt_rIN cI.ontr be Ao Final Tl Esignificant. Some IIthe Pay=analysts Plan provisions, type = of 30% argue 3IItvesting tfinal oisthat 4%also retirement 5defined earns provisi possible $.89 forcontribution ons to 30 $1.18 years eligibility that usedservice. the plans by$.3 impact offer plan to provisions, $.a 4sponsors. may much be • eligibility provisions: the more restrictive the i_/ TheHamermesh, estimated restrictive. "Newcharge Estimates for If of calculating the pension Incidence the plan of value offerings the of Payroll a and i00 U.S. or more interests I_participants; GOas - well _ _>as :> theand world _)- (2) markets. m _>data :> on _0- a _large _> _> number 0 0 of statistical cooperation itself. or more five the years analysis. percent sampling withofstaff service. ontests. These earnings of EBRI, results and belowwith are thedirectly theSocial aid related of Security comments to wage the differences Entitlement are more likely in (Washington, contribution career to havepatterns earnings D.C.: plans ofThe onolder Employee aand regular versus those Benefit basis younger defined asResearch women theybenefit age. isInstitute, toAscompare these plans1981), affected not conducted may protection break-in-service earnings SOURCE: women rates had the offer remainder of Table standardized (October, 55analysis. the be already number taken by aged then pension i0 baby taht at EBRI First, shorter types would of Workers bymore of is fifty-six all vboom, fewer plan the this ested 1979) co a tabulation pension of .14 be bey of vdesirable ERISA Because erage. rules. Census ,new decade. the Aged rules programs: ocounted in the nd vesting tobeneficiaries their number pension requires 195 young 21 sponsored are sixty Bureau .06 of We Three 7goal to .as Although many current Social are applied elderly, who defined 24 than plans T hours in and but employer he extensive convinced in would 1977 table plans .04 Security jointly 1979 it larger employer's of participation on across are ,by benefit those is population ser benefit 93.7 als characteristics created -not disclosure othe vShort that are ice a sponsored administrative recently percent .03 plans. diverse sh and the ofor plan. afrom ws because Service Pension more primary defined somewhat sur in purposes that age had of work vareaching byeys. .02 That pension An information well-funded of no twenty-one affecting the EBRI emplo contribution. larger force, covered leaves data analysis the and yFor of o and unger retirement yer determining program cost-benefit matched example, portion a the Welfare about this goal. .015 common earnings by elderl Department private of is ythan to 2.2 age, the ofYoung if a women. are ctwenty-second vesting trough. today's rose in ontributi the available only ons previous status younger Stated The Under to5 percentage private total t_on can birthdays -alternatively, the inworking eleven survey 1979. usually defined number _analysts. _::,,points years. . :data :were age >.As be of benefit women. the cashed new sets considered. 38 ¢through :_The Most -pension percent pension but plan Congress oBecause tof _ut:it _196S. ,.the whereas ;the system _>of participants isFurthermore, new working worker older well could During t_matures workers - the known women improve isbenefit women the _ insulated that _;that were only it :>have late :;>.were is this would underreporting women will young already becoming 1960s participating situation from have n 0 owho people tprivateplans 0 market be reached had resulted payable by who been isor ina plan w would rules twenty-two, oIn rkerscontributed 1980, will be wh For omore not are the example aresult vesting within burdensome number , approximately in consider five standards significantly of yearsfor Social shorter owere fsuch nseven o Security rmal greater reduced plans. vesting retirement percent and pension to five thealternatives benefits age years relati of vwhen eaverage andto rates first the most cash of empl annual were women. worker oout yed. 5555 assu.med 21 .18 to.i.07 ibe equal .0.06 7 to .0 the .04 5 benefit .04 .02 liabilities .0.016 34 of i- l/Ipension n additi Harrybenefits on,Davis year the or and benefit old. conditional Arnold levels,Strasser nature however. , ofERISA "federal Private alreadytPension aprovides x deferral that Plans, years for i/ Money Income and Poverty Status of Families and Persons in and 2/ the ICF select Incorporated, and ultimate A Private turnover Pension assumptionsForecasting are described Model, greatest ESTINATE 2. Career on III= Pay those contributory Planemployers = 40% 3Icareerandaverage requirements, workers earns $.89 least for 30able years and to service. $.3 afford portability it. participation rates decline under a policy of plans participant's with Tax," fewplan's Southern er than benefit current Economic 100 participants in participation Journal a defined , (1979); obtained rules, benefitandfrom the plan Janice act less uarial varies Halpern the relative generosity of plan benefits. from base. numerous MarchAlso 1978 otherassumes and employee May 1979 immediate Current benefit Population participation. professionals. Surveys. See Appendix a typical SOURCE: p. Benefit 56 36. The small ICF Pr Part oaccrual gram, estimates icipants .14 planof Department any for (ten .06meaningful a model or of .04 defined fewer work Labor.benefit related participants) .03 benefit plan.02withrequires II from or.015 34 more a the been contributing only that this about in only their ass I0 one umption percent tojob intheless fourprogram. ofthan had would retired worked one imply, year. worker after Abeneficiaries the slightly it passa tends ge larger ofwill to ERISA. portion have understate spouses Inof short, the women the until suggested by the IRS for consideration. For example, in April 5656 the United .20 .17 States: .10 .07 1978, .0.05 6 Current.0.03 5 Population .0.02 3 Survey .02 .016 55 Series workers' plan1960-1969--An contrib earnings. utions Overview', This and in estimate vestment Monthly wasincome Labor based Review, provides upon anJuly, analysis an 1970. indirectof retired and separated vested participants. See below. (October, Other key1979), assumptions sponsored used by in these the analyses Pension were: and Welfare smoother 3. Unchanging path ofarrangements Dollars benefit Times accruals Service will over Plan also the career = have $I0 per than a month those substantial per shown yearinofTable impact12, and A forAliacia description shorter H. Munnell, vesting, of the methodology. "The policy Inflation makers ary willImpact have ofto and consistent shift. benefit mconsulting impact trends _ 0 _continue I=on IU OJfirms. costs to evolve _ 0 of mThe I_the QJ shorter _changing data ) RIon 0vesting. role m small _ of GJ _)women plans Although in OJthe _)were Changing until Table Dallas these women Ii retirement L. Break-In-Service Tenure would Salisbury and inhave mWork ostsuffered instances. Provisions Patterns credit ofIfWomen losses the cAged ontributi due35to onto breaks 44accumulati in service on isthan rolled our samplew necessary consideration actual million should firms Census characteristic of Filling 2o/men Health ofIbid., were and work be Bureau's small workers Information The clarifying receiving and small to p. copatterns nsiderably ultimately earlier are Human 39. shared plans firms or annual firm 19.9 pensions Voids Services the of analysis by produce March age, women m acquire percent used restrictions most ore firm will than Income likel of suggested jobs employers. here yaof different size, pension, gather the the and Supplement toinindicates old have wages. and twenty-one the that such elderly. ages participation industry w Tax it orked information Considering to across was Actto their that than aclassificati In oftwenty-four combination fact common 1976 the Current alone the fortheir during o limiting lder periods the is cost Population oyear n. financial not first of elderly 1979, Further employer the olds in of time. their use of break when with began increasingly pensions. are vif participation widely. 57 ariations potential the nearing their they in liberalizing participation ser Participants were employer in It It retirement, veffective ice the is also costs twenty-one. .14 may has getting value retirement requires for age occurred. be using of in virtually of five had even .06 as providing shorter asssets a By detailed been or low and 6% smaller. comparision more Ininterest reduced nothing vesting .04 other in asretirement vesting years statements the ,$5 By words, to pension provisions. can rate were comparision, or the .03 age be in and income as S.19 cohort included on done twenty-one trust all benefit the high would .02 to for of levels By of fund. newly affect in women 1970 the permit as accrual in the the elderly. qualified of 1979 more $i00 analysis. early twenty-five liabilities estimates up .015 rates would than to per career This one pension ofhave Further, serious option P-60, adjusted problem virtually As m No. a _result 0in to 120, mnothing these include _ of W(November _J the data. can all gro_ wing be benefits 0 done m1979). availabilit ,_ _tovalued _J affect y RIat 0the ofless r_ pensi Ipensions = _than on _J plans $5,S00, of women Wan (Uthe increasing on the 5757 .2.17 0 .10 .07 .0.05 6 .0.03 5 .0.02 3 .02 .016 55 ofthe of1980, ser percentage vicethebeyond IRSage ofproposed twenty-two earnings are newcontributed toshorter be countedvesting for to vesting a representative safe purposes, harbor service.Appendix A for a description of the methodology. Benefit Program, Department of Labor. obtained Exec person, Increases utive from based Director benefit determine in upon the consulting Social reports whether Security byfirms several the Payroll in potential different benefit Tax', consultlng New parts increase England of in NA - Not available service "_ 0- 0 for • • purposes "_3 _- 0 of Q; Q;vesting "_- 0. 0 is _ credited _ ._ ,._from Y58/ .14 .06 .04 .03 .02 .015 $5, $I0, and $20 per month per year of service. Also assumes 14.6 verypresented percent recently There During worked older here. is1979 not less women comparable than have 1,000 nottime worked hours series per outside data year.on the pensions home for but sufficient there 38 is 14 receiving 4// Social BureauaSecurity: of spouse National benefit Perspectives Affairs, ratherBNA than onPension Preserving their own Reporter, entitlement. the System Vo. 607(Washington, The (April increases 4, 1983)in 587/ Ibid., pp..20 59-61. .i0 .06 .05 .03 .0255 58 .17 .07 .05 .03 .02 .016 groups. and thus are preferable. They argue that a combined policy of converting 4. Death benefit (1l _ l:l.. = w 50% _ _ of accrued (11 _ r_ benefit, ,Lj _ I._ reduced _1 I:= 1:1._,by_ factor I_ of _ .9 _- for the country Economicand Review were selected (March/April, so as 1980). to be representative of the workforce will be true Such Efficient 0is exposing for -,_ an women ultimate andthem as effective well result to -,_ the asends deli men. pension very up hurting system of retirement -,_ to theaintended much benefits greater beneficiaries and _ degree than and year working w The sufficient accruals Table 13 the constraints, and omen. / unionization survey the For of12for childbirth Putting funding As for a these In immediate Annual will more toaan order these it supplement assure employer data elicit may detailed aside status status Sponsors torelated participation. women. not for the clarify foinformation of rwith of be research description receipt toBenefit the these leave realistic the reducing athis memployee's pension oment plans. with of purposes. process Payable onbenefits. of cthe or ono the nsiderati in wise these Finally, fRISA break we prevalence workforce which atobegin Age nto data pension inthey expect 65 the ser oour see falso were and vreports sur ice participation analysis them Social viv level affects occurring not or torequire yet also Security: benefits, ofwith the participating 41 lump provide if employer's age the detailed the sum it years been characteristics simulation three-fourths int plans D.C.: 59 o 607.less an younger have The IRA These This For than given results ,Employee then many particular of matched .14 had 1that mpension the participation workers illion. would only ydetermined Benefit oung data 46.1 age .06 suggest. plan one w Byare orkers group perent Research plan comparision, participants to the the more .04 However, may have of supply with richest women Institute, be than made no preferred were or there was known covered the twice .03 availability significant very chosen in were 1982 source asplans earnings. tomany consistent ).02 I.I because the pp. of with million people, prother of 48-49. oprogram gress pensions. regular While they year-to-year because participants .015 both towere information ward thevesting men they toward their and _overwhelming share / I-b-i-d., of thep. majority w44. ork force ofisworkers participating who would in become at leasteligible one pensi for on added program benefits other threshold of retirement or already retired. _hat options, then, can be pursued 59regardless of.a20pension.plan's i0 actual .06 participation .05 standard. .03 Among .0255 some 59 0 -,_.17 .07 -,-_ .05 6 .03-,-_ .02 .016 _ 2 assumed 0 joint -,-_ and survivor -,._ election, payable -,._ for life of spouse _ 0 _- r_ :3_ 0 n cO _ 0 CL _ E - 12 Table / U.S. 13 Bureau Illustrated of theAnnuities Census, Historical Statistics of the United43States 60 0 0 0 0 0 0 pension women workin plangdata outside thatthe indicates home will a similar comparably maturation increasephenomenon. their pension Among claims. all 609Pers periods II 5 /// Social pectives See Social during Retirement Security: Security: on0 their Preserving Income normal Perspectives Perspectives 0Opportunities the workin System, g 0on on ages,Preserving KBRI, Preserving innor an0pp. Aging consistently 289-291. the theAmerica, System, 0System, enou EBRI, EBRI, gEBRI, h toward Chapter p.p. 0 55.56. the3. 60 O 0 O 0 0 0 defined benefit plans to defined contribution plans and shorter vesting will commencing L9 = 0when = employee _ = would 0 have 4" reached < = age0 65.C co earlier cohorts of women. The expansion of the pension system itself is going definition Table 14 Great Patterns of four care terms of must Benefit also that Accrual be are taken crucial-inDefined to assessing understanding Benefit the accuracy the pension of44the issues -(Washington, women, decision standard pension sh the distributions schedules. 61 ouldentire be incoverage to it clear each nation has Ninet offer D.C.: from of also that ywithout 0athe by retirement percent U.S. pension been many increasing lastadded Government proposed older were four 0program. plans tax w years. the in omen that plans incentives A-2 Printing and cost 0dothe The the nof with ot disposal break-in basic our qualify Office, vesting, and 0products some question service 1975) of in relaxation earl their these 0and p. that y rules decreasing retirement o assets. 132. wnpolicy behalf of beexisting 0makers Itour oris TO who employee Because work retirement the than disclosures / Ibid. end could patterns Social ,of ofCertainly returns potentially p. the inc their Securit of ome 52, ofparticipation the ywomen childbearing to .security. 56. better types work. benefit The inof communication these Ma Other assets and If yyears from 19age the 7vesting proposals, 9ythe held ranges and Current buy 17reduced and their in provisions a who car, pension utilization Pincluding opulati recorded participation have take onportfolios. sufficient in athe most Sur vacati tenure of vEconomic ey ojoint nplans provisions. would (CPS) tenure oOur rand the pa Equity pr have estimates ysurvivor oto actual vides offmake fallen Act Of in to anticipate showing appropriate improve defined combined women's contribution their policies Social career pension would will Security plans ¢D benefits bedovetail newly enhanced andqualified inpension most the by better near neatly income during term analysis withstreams. and 1979. a particular inand the There These agreement future? were type dataanother on of could the 61 0 0 0 0 0 0 defined benfit plan sponsors, onceA-4 a worker reaches age twenty-five, 61 O 0 A-I O 0 0 0 ks. A-6 E _ c E _ c 2_ E _ c w D 5. Underlying annual rate of inflation A-3 = 5%. A-5 662 / Ibid., p. 49. 0 0 0 0 0 0 7 62 0 0 0 0 0 0 5 62 • 0 0 • 8O 0 O 0 16 3 ii 10 9 = 63 0 0 2O 0 0 0 0 • _, . . 63we take up here. 0 0 0 0 0 0 63 O O O O 0 0 21 24 14 15 26 23 ii 18 22 25 12 64 0 0 0 19 0 0 0 64 0 0 0 0 0 0 64 O O O 0 0 0 EMPLOYEE BENEFIT RESEARCH INSTITUTE EMPLOYEE BENEFIT RESEARCH INSTITUTE 2121 K Street. NV¢/Suite 86Ol_,'ashington. DC 20037/Telephone (2021 659-0670 2121 K Street, N\V Suite _bO \kashington, 1)( 200+7 lelcphone (202) 654-0670 _r_ -_'_ - _ _._ _ _ L_al

Volume T-23

Pages 99

EBRI Testimony

Oct 4, 1983

Dallas Salisbury

Financial Wellbeing Retirement