L_ _ ,_ •,I (D 3 19 23 20 27 22 26 28 29 21 24 4 INTRODUCTION 16 12 i0 II 14 18 15 O_ 17 L_ Mr. Chairman, it is a pleasure to appear before you today. I appear tables, and enhance the protections for survivors and divorced spouses. In unstable were not early yet participating parts of most who could worker's potentially careers. benefit Under defined from contribution the reduced pension defined system benefitcould planbe traced sponsorsoverittime. is common Long-term practice trends that asonce wella worker as the contract have analyzed this information over the last two years these data 0 participating participants couples thein in most adefined pension who benefit plan contribution disproportionately, in 1979. plans In other newly in words, an qualified economic Senatorduring return Hatfield's 1979. sense, surviving widows than any of the jo TABLE int and 2 survivor provisions in any of the creations. this fashion While distillssimpleouteconomic the all theory of suggests the decreases that lower in incentives qualification, will Th While Figure e 1981 the2 Budget 1983 showsestimate Social similar Security of this dataparticular Amendments for defined tax did expeninclude diture contribution afosix r fiscal month plan had employers fewer to than adopt 10 acti empl ve oyee workers pensions for each or welfare beneficiary.benefitFor programs. plans oWhere ver prior year's Among While estimate. plan the evsponsors idence Again, onF__ISA the no level newasofoseen f the benefit Budget as the receipt materials inevitable mayor result be other incomplete public of the plans have already reached maturity as reflected by the fact that 12.5 in my capacity as Research Director of the Employee Benefit Research m certain of these instances _eq the ...... altruistic or political motivations that plans, participataion benefitprovi accruals sions. are somewhat more proportional. However, there is reaches age twenty-five that retroactive service credits are granted under effects of cylical variations and structural changes in the economy on plan are not available for public use. The DOL staff is concerned that since the estimate There from were theofspouse another the portion benefits 1.0 ofmillion provided workingparticipants bwomen y Social covered Securit in byyanewly .pension qualified was offdefined by 81 equity bills now under consideration. result qualifications in less PERCENT rand esponse, OF terminations. WORKERS it isPARTICIPATING impossible The patterns toIN evaluate SOCIAL are similar SECURITY the significance to those AND shown of tax for yea increases delay r 1981 in in was benefit terminations $14.7 indexation, billion. and The shifts none 1982 offrom Budget the other oneestimated typeindexing of plan the 1981 components to another. fiscal year were It twveoluntary nty-five plans years were old in established, 1977 nearlyhowehalf, ver, they 49 were percent,required had fewer to comply than fiwith ve dpolicy it ocuments conclusi process vexplain ely establishing the showsrevised that new the estimates.2 rules pensi/onto resolve system problems is becomingin the increasingl pension y percent of the young elderly families received a public pension in T-17 1979 PERCENT OF POPULATION OVER AGE 65 RECEIVING BENEFITS BY Institute. EBRI is a nonprofit organization dedicated to providing research suggest virtually Note, them no as evidence that policy theto options word suggest "potentially" have thatnot mobile been should workers submitted be stressed covered to theinlitmus under this context. test defined of participation theFORNEILATING plan. They P_NSION and often funding POLICY are not le WIvTH els granted INFORMATION couldprior be monitored. VOIDS to that time The partly implications because of data have been matched to the Social Security data that they cannot be made benefit plans. Newly qualified plans during 1980 and 1981 had 3.6 times as percent if A 19he 82 was survey talking by thabout e Department participation, of Labor orfocused 148 percent on the ifbenefits he was shows code modifications simply that policy withoutshifts undertaking SELECTED do effect substantive, YEARSthe the empirical pension rsystem esearch. in this tax EXPANDING touched. defined expenditure benefit Among POTENTIAL plans. for private OF theTHE The identical pensions PENSION numbercategory SYSTI and of _plan even ofqualifications state plans and at $25.6 localduring billion plans,the full --period aCPI 60 acti extensive ve participa reporting nts forandeach fiduciary beneficia requirements ry. The and evidencminimum e clearlystandards indicates of game. effective Perhaps in prothe vidingmost significant for the elderl lesson y's ofretirement TEFRA is the incochanged me securitperception y. The compared with 11.2 percent of the old elderly. By comparison, 26.0 percent and analysis which can serve as the basis for sound policy toward employee practicality. contribution Of this 2.2.plans million devote nonparticipants early career accruals 48.5 percent to their had been ultimate on their retirement current funding £inancialofmarke the tcredit variatcan ions, be delayed, inflationbutand mostl otyherbecaus economic e of varia the high tionsturnover on the availableOne to of private the most analysts. important It makes elements no difference in the deliberations that the Social of the many talkingparticipants The about twocoverage. yearas freeze those Looking ofestablished theat contribution that segment in 1979. limits ofNewly the grefemale w qualified out workforce of a defined concern for country. provided This by medium does not and meanlarge that policy firms.changes The survey should was not limit be considered ed to firms or indexation 1956-1973 showed of posta retirement steady pattern benefits of does growth. not exist There today is also forthe allprecipitous practical that co percent verage, as theincrease. participation, universe ofThere pension vesting wasplans absolutely and ages,benefit thenorPopulation elati funding. explanation ve numb over ERISA er in of 65 recipie created the n budget ts the that pensionplan For covsponsors erage many policy andhave participati analysts on the on way thedata that mostpension suggest frustrating policy that aspect thisis being situati of the omade. n perceived shTEFRA ould of the young elderly families received a private pension while 19.6 percent Year Workers Participation Receiving Benefits benefits. EBRI as an institution does not take positions on public policy income security. In fact, there is casual evidence that suggest that the Reducing job lessPension than one Participation year, and 13.6 Ages percent to 21 worked less than 1,000 hours per rates among younger workers. financial health of plans could be understood. Security Nationaldata Commission is basicall on Social y of identical Security nature Reform was to that the matched availability to the and 1978 use of that the automatic CPI indexation of Social Security benefits would be will whom contribution even employing increase.4 pension passedat / plans accruals least and implemented. inI00 might 1982 or had 250 actually 1.4 workers It million does be depending meaningful suggest participants, that onthe the policy picture industry. and changes is their even The should defined better results be documents Pension purposes. decline Benefit in explaining Any theGuaranty proposal number the chang of Corporation orenewly d policy estimate qualified to to freeze ensure from plans opension nea level budget and contribuion of increase to vested the next. benefits inlimits plan The cost is continue broadly of pension to perceived improto ve the inaspublic the a tax future. fisc revenue is Inenhancement that the these next secti balooning charade on ofcost being this estimates testim played ony are by we of the old elderly were receiving a private pension benefit. issues. year as The shown proposals in Table to reduce 5. Among the ERISA workers participation in this agestandard categoryof whoage hadfrom been opposite is the case. In the near future there will be solid empirical Again, Yet these turning data are to the notanalysis made available of twenty-one in a readily to twent usable y-four-year-olds fashion. A Current good information. Population Survey Because which of this is publicly information available the and Commissioners which we have could usedall yet. benefit deliberated eliminated terminations of their Ascounterparts thesurvey, and Senate asduring part considered concerns included the qualified of the implementation with policies itself inlast Table care with year to so7,of as resolve pension had shows ERISA. to1.3that not the policy million Social The the unduly issues combination defined participants. Securit destabalize itcontribution may y financin ofwant welfare the The to g only indefinitely The explanation future 1940 willpotential that result we in ha of vethe the 57.8% fou direct npension d for dimunition the system 1980hin an gd es of1981 2.3% on theBudget itsprivate curre differences nt pension level when defined benefit plans terminate. FRISA also set limits on the amount of not policy look matched at advisors the potential by who comparable do implicati not onincreases understand of these in the the imprpension numbers ovements of system fobeneficiaries. r wor omen. its problems. Not Finally, defined-contribution plans, which are most prevalent in the UNITED STATES HOUSE OF REPRESENTATIVES 1950 64.5 17.0 I am pleased to address the Committee in regard to the various TABLE 5 twenty-five to twenty-one, in theory, will affect a significant segment of evidence to investigate this question. in 1979, the numbers are instructive. We had reached the point that 978,000 couple of years ago IRS developed a sampling and editing system to provide extensively agree on the innature analysis of the of pension current issues. situation. In effect, Chairmanalthough Greenspan information repeatedly situation. 1960 This was a matter 88.9of grave concern during 62.3the deliberations on of address newly tax is positive PROPOSALS system qualification benefits maturity. bydeductible qualified Alicia the over accomplishments TO provided extremely time Among Mu M3DIFY trends nplans contributions nein 11 defined both PRIVATE by who differ have serious employers, wr of absolute ites affected benefit the PENSION from that problem that private terms athose more PROVISIONS plans, plan the over of pension and than "Re sponsor shown informational and vised relative which twice above system. for could estimates cover asto defined pensions, many Social make voids twopeople, benefit employ that to Security. out mayaof now both plans make pension higher, three exist men in the Furthermore, _ the discussions _ of ,0**radical .. reform to the federal tax system and onl private y issector the , unreliability may be contributingof the moretaxtoexpenditure the elderly's estimates retirement ignored, income SPECIAL COb_¢iI TTEE ON AGING 1970 89.5 85.5 legislative proposals and H.R.2090 in particular, that seek to provide more WORKERSAGED 21 TO 24 IN 1979 NOT PARTICIPATING IN THEIR EMPLOYERS' the workforce. In May 1979 there were ii.i million workers between the ages Joint and Survivor Changes of annual them files would of have thesebecome data onparticipants a timely basis. underThey thedevH.R.2090 eloped aparticipation public use in this critical area. that TEFRA that came could defined during back effectively 1975 contribution 1982. to theThere improve point qualifications is89.8 our now inunderstanding some the concern early duringin deliberations of1977 theprivate 90.4 pension exceeded pension community that the pre-ERISA until policy thatthe and trust and women, therefore inSince The ain worker's reduction the each movepassage of realistic, behalf the of the last and of margi established E140 RISA four nalpercent years, intax1974, provisions rate as combined would assumptions. the Tax be for contribuion affected these Equity These contribution by limits andreducing indicate Fiscal when prisingular vate pension focus on participa joint nts,and survivor 38 percent selection of theover tax-qualified ly simplistic.plans Groupinlife considerations continuing The federal antidiof scrimination the debt effectiveness situation provision have of sretirement led many in the toprograms conclude U.S. often taxthat code overlook TEFRA andwasthe thea security than the statistics suggest. Most defined-contribution plans are PENSION PLANS BY HEARING TENUREON AND HOURS WORKED 1980 91.0 89.8 equitable treatment of women by pension programs. Before turning explicitly of twenty-one and twenty-four in the United States. Of these, 5.I million, If reducing the participation standard will not result in provision. file of theIf one 1977half planofyear thesereports workerswhich ultimately we havevest usedunder extensively their current for has CONCLUSION the Commissioners contribution been collected could limitat agree freeze public onmaythe expense extend facts beyond itofisthe not thepresent and two will year dilemma period not bethat specified generally it would the Responsibility limits amultiple lesubsta vpension els. ntially toplans There increase participation Act was are largeover r(T eoffered vEenFR tax time aA)standard tremendous expenditure may ofto1982 cause keep to contains up surge aage for with reduction twenty-one. pri in the vinflation. ate plan most increations plans."1 significant some/benefits, during The changes explanatio but 1978it nthat for is operation insurance, at the either end ofpurchased 1982 werethrough less thaor n provided five yearsby old the and employer 73 percent is more precursor relative participation,state to more of vesting maturity tax law andof changes othertheprovisions pension affectingsystem. pensions. in ERISAA With explicitly retirement the publication prohibit program not themselves annuity programs; at withdrawal or retirement, vested Nkanber WOMEN'S PENSION EQUITY SOURCE: Coverage data for 1940-1970, from U.S. Bureau of the Census, to these proposals, however, I will provide some general background on Z _ .,_ I=_ t-_ c,_ _o _- o_,_) o_._- c_ oo oo oo _:_ or 46.4 percent were working for an employer (millions) who did not Percent have a pension plan plan significantly then about greater 489,000 pension wouldbenefits get benefits. to mostIf women onlythen one what quarter options vestcanthen be analy in TtEic FRA.puAny rposes. extended No frsubsequent eeze in the TABLE annual contribution 6 fileslimits are yet willavailable mean that to the the ao available that employer-sponsored highly was be only higher impossible unlikely exceeded to marginal theto that bypension retirement rates defined discuss the were 125 policy contribution percent reasonable plans. used anal to limit generate yThe sis plan policy will changes communit creations thelead options. 1982 yincluded to .in Budget aThe large 1982. Congress And in estimates elimination TEFRAwill This before spike could is the weprevalent re less This While than concern than ERISA ten even about has yeapensions. rshad the old. many availability Among ramifications Pensions the uni and are verse interpretation for to provide the of pri tax-qualified vincome ateof pension pension security defined system dataat becomes of discrimination the 1984 Historical mature Federal against whenStatistics Budget thewomen relationship there of inthe is thenew United design between evidence States andthe that administration (Washington, percentage the pension D.C., of ofsystem workers pension 1975), may participants are generally given a lump-sum distribution. In many instances -- OI _ _ _ _ NN_ 0 p. 348.; for 1975 from U.S. Bureau of the Census, Statistical pensions that help set the context for my later remarks. as shown in Table 4. Another 2.6 million or 23.4 percent were already JUNE 14, 1983 pursued? about public 245,000 norIn the does would process IRS receive haof ve any seeking benefits. funding outto potential If implement one looks the measures, at ongoing the vesting policymakers statistical rates capacity affect in defined plans ofcontribution pension both substantively programs plan creations to maintain and administratively. was pre-retirement a lagged response living Sincetoparts standards the number of Twill EFRA of improve most plausible. ofCommission plans. haWORKI_S vthis e notsituation What In began been AGEDfact, issystematically 21 interesting their TO bythe 24 clarifying serious lower IN 1979 islimits measured. that and WITH thedifficult restrictions there for THEIR single One EMPLOYERS is deliberations notable absolutely plans in the Lmay ESSexception encourage Tax Tno HAN onAct published ONE the of issome 1976 policy the contribution plans at the end of 1982, 39 perent had been qualified in the isparticipating again plans retirement. central . become Abstract Yet to aEBRI's itLife stabilizes target is of insurance clear charter of theover the thatUnited and budget is time elderl to goes yprovide relataive States process. beyond men are money 1981 the to much the deliberations (Washington, tomore percentage a survivor likely D.C., of toin onthe the receive any 1982 elderly event bills ), p. aof the employer will arrange for conversion of the distribution into an annuity Z Total Non- THE MACRO YEAR EFFECTS ANDOF INPENSION THEIR EMPLOYERS' POLICY PENSION PLANS BY HOURS WORKED 326. Beneficiary data for 1940-1960, from U.S. Bureau of the participating in a plan but had not yet vested. Slightly more than I.I should understand participants that various groups of women 2.2 will be affected i00.5 differently. among the thirty-one to thirty-five year old pension participants in 1979, progr documentation have be diminished amnot theybeen demarkedly von eloped. fully the actual over implemented, time. rates The used it is linkage topremature generate of theto either freeze assume thein that 1981 TEFRA the orto1982 fthe ull tha defined sponsors t limits benefit tothe setuse plan up secondary ofterminations these data plansfor that where research occurred they had purposes. durin onlyg the one implementation in the past. of last effect options fiveofCensus, years ERISA they did and onHistorical agree 56 plan percent on formation the Statistics hadfacts. been andqualified of termination. the since United 1972. ForStates example, The (Washington, pension Figure 1 now recei pension a worker's before ving This than benefits. death, concern thetheir Senate. expeciall arises female The because y problem prior counterparts, oftothat the retirement. precipitous we and are N that concerned Since increase theylife about receive ininsurance theisrelated larger that pays program, but the plan itself seldom pays pension benefits in the traditional STATI_ENT OF* I.tl TOTAL D.C., 1975), p. 357; for 1970, from Social Security Bulletin (March Let me begin by asking you to move back in time ten years. In June Less than one million or 10.3 percent had already vested in their current employer's plan. Our analyses at EBRI have substantiated the widely known fact that the work between potential ramifications Second, 30 freeze and 40 of Arthur in percent this post-entitlement Young legislation wereandvested Company, indexation under are Number under yet their contract understood. of Social pension toSecurity the plan. InDepart fact, This benefits mentany of is Budget shows ERISA.the The estimates. PBGC's number withholding studies of defined Notprovisions of only defined benefit doeshave benefit _plans mnell apparently that plan ignore were terminations this caused granted completely atax-qualification during lot of throughout 1976, problems 1977 system inAs this One 1981), a result of count p. the ryof73; single today thefor informational ismost 1975-80 quite frustrating young from gliches but Social itin elements isthe Security poised pension oftothe Bulletin make area, pension a major (b_rch policy policy "tax benefits,expenditure" For example, on average, estimate consider then inSocial the womenSecurity .1984These budget. and differences theTable relative 1 inrates shows theofthe pen worker sion tax policy sense. immediatel is There ybeing many is strong survivors deliberated evidence arewithout better that these off thewith plans benefit the do lump notof report sum thelife facts. themsel benefit vesWe are than as year on current 1983), p. 105. (thousands) Percent 1973, the prime source of regulation of employer-sponsored welfare and That leaves about 2.2 millionSYLVESTER workers J. or SCHIEBER 19.9 percent of the twenty-one to job I.I 48.5 patterns was inconsistent of older women in thewere firstsignificantly place. different than those of today's Labor, probabl her quantified and 1978 book ycollected an indicated onassessment outside private progra thatmestimate pensions of dlarge ataTEfrom FRAnumbers of butat a the sample she thisof also percentage point these of failsin roughly plans time to of explain were isthe 400 anreplaced exercise pri her twent vate conclusion yby -one pension innewly the to contribution status and concern eachamong toof thethe the reti recipient years rement between population. income1956 security andThe1982. of provisions the The elderly number in iTEFRA n of coming newly that deliberations often are colored by misstated or misleading information. For convinced participation expenditure experiences processthat is dealing estimates ofand without men recipiency and with the due women the facts, among to haveinsufficient the the created policy treatment elderly. some deliberations information concern Table of employer 2 about will shows onsponsored the which bethat misleading equitable toworker plans analyze paying a deferred retirement annuit I. y benefits under the in pension many instances program. becauseThistheyis not provide to suggest lump sum that RESEARCH DIRECTOR " d There is not comparable time series data on pensions but there is pension programs was the Internal Revenue Code. The Federal Welfare and twenty-four-year-olds younger working Working age women. less working Because for anolder employer womenwith haveaalready pension reached in whichorthey are twenty-four- that fine qualified the artWhat higher ofdefined year-old crystal manytaxpeople contribution ball nonparticipants rate do gazing. assumptions notplans. understand Some thatused elements could is inthat be theof expected there 1982 the new are Budget tolaw fourvest estimate have elements in nottheir are yet of years. plans require durin the g 1978 benefit with payors approximately to annually 600,000notify benefici beneficiaries aries. The da that ta from they can the qualified distributions.5 included in /plans the had lastgrown four federal steadilybudgets. over the period between 1956 and 1973. example, participation treatment Senator ofTotal pensions rateMark in 1940 onO.theHatifeld was basis about ofintwenty-five sex his I, . 136 remarks times introducing the i00.0 percentage S.918 on March of with instances current the potential policies do not that arise or alternative ill-advised where erroneous or options. ineffectual decisions To but a are certain expensive made extent, bypolicies pension more than I000 hours Pension pension Plan planDisclosure data shown Act had in been Tableenacted 3 that inindicates 1958 and amended a similar inmaturation 1962. In I f TABLE 4 ,. i Social Security that are indexed. First, the maximum taxable income levels nearing retirement, So ERISA per year not virtually only affected nothing can the 0.3 be le done velstoofoffset plan 12.6 qualifications the lack of early and 1979 "therefore been change employer's implemented. their more Hours withholding plan realistic." Worked by Even 1989. ifstatus There there But the have is may TABLE certainly ones make been 1 who adjustments the will no arecent priori vestin under confusion reason anticipation H.R.2090 toanbelieve annual will of pension ERISA Ifwas benefici thesigned maturing aries into of was law thematched on pension Labor tosystem Day Social of is 1974 Security leading and was administration to largely higher recipiency implemented record 24, elderl information 198y3One stated: recei issueexists ving that "Inbenefits than fact, remains isonly in brought to that 21 be percent resolv year. to bear ed of As is onwomen whether analysis the workers program theof the pension are matured, relevant covered system, this policy by will be the ultimate result. This result could end up harming the intended participants. This lump-sum It does distribution suggest the phenomenon prevalencealso of the results probleminmay undercounting be more rare I'--t phenomenon. Among all defined benefit plans with more than i00 particpants the context of 1983, however, this legislation was a cake walk. The per Year Less 0 PENSION STATUS OF WORKI_S AGED 21 TO 24 IN 1979 career terminations accrualsitfor alsothese affected women.the relative balance between defined benefit affair. that T(the EFRA,any contribution there set are of limits, assumptions not data i£ you yet iswill) available moreare realistic indexed for assessing by thanwage another those growth adjustments. without each year. an rates likely more vestFEDERAL under of theRL_ current young elderly, LOSS ERISAESTIMATES standards those rece FOR anyway. ntly "TAX EXPENDITURES" reaching In other words, retirement DUE TO somewhere age, data. duringWhile 1975,no1976 research and reports 1977. The havenumber been rele of newly ased by qualified DOL utilizing plans declined these difference athan s it often is currentl assumed. declined y configured, to less than canfour adequatel times y in meet 1950 theand challenge then gradually of providing moved beneficiaries theissues. number Than We of and pension can 1,000 cite the beneficiaries two entire specific nationon examples by population 158 increasing wheresurveys. information the cost13.9 For of is our example being products , or the has pension plans compared to 49 percent of men."_/ The May 1979 Current 0 o SOURCE: EBRI Tabulations of the May 1979 Current Population Survey. NFr EXCLUSION OF PENSION CONTRIBUTIONS AND EARNINGS PRESENTED IN in 1977 _that had been set up within the prior five _ years, '_ 69 percent had more Taft-Hartley Act of 1947 had imposed certain restrictions on collectively c _ Number There has never been any discussion of freezing the Social Security *This and Thedefined does Certainly viewnot s contribution expressed mean, better however, communication inplans. this that statement This certain and is shown utilization are directional those in Fiof gure of implications the joint 3 author whichandand shows cannot survivor do the not be analytical The private basis onpension which tosystem SELECTED evaluate today FEDERAL them. is in BUDGETS Such turmoil. analysisIn large was notmeasure, availablethe should between data precipitously they beone-quarter rec would eivingduring show pensions and average this one-half pension than period million, theand benefits old has oronly elderly. 2in to1978 approached 4 percent based In fact pre-ERISA on of actual the during twenty-one program 1979, levels toward been and collected reached butequality has not in been theavailable mid-1970s. or is Itnot tookavailable Social Security in a meaningful about meaningful EXPANDING IRA 1,000 income PROVISIONS orsecurity more TO NONWORKING for women orSPOUSES 978 if there are particular 86.1 adjustments and Population Censusdecreasing Bureau's Surveyannual competitiveness conducted March by Income the of Census Supplement U.S. companies, Bureau to their found ultimately Current that 1S.0 Population costing million _ _ ._ (millions) Percent necessarily reflect the views of the Employee Benefit Research m Institute, than ten_active workers for each beneficiary _and 56 ._ percent had more than i i i i _ _._ bargained multiemployer plans but these primarily related to joint Z _ ! .r-.I I I I I (].) net contribution itsgrowth Trustees, in both limits. members, typesSecond, or ofother plansa staff. worker's over the period earningsbein aregindexed discussed. at retirement The net options to hypothesized. compare can improve the Lowering 1981the andretirement 1982 the Budgets. Section income 415 There security contribution is also of older limits a lack women. will of reduce While analysisthe the according to with during plan twenty-four- their creation the to last employer theyear-olds data _rcouple ch indicates one 1980of might or Curyears. more rethat ntgetyears, Population over slightly Thethe figure 978,000 last higher Suralso vey, couple were benefits shows 37working of percent years theunder number at of the least H.R.2090. elderly ofsystem 1,000 plan data thirty-five Budget that in needcomparison to y beears madeuntil to to assure actual beneficiaries theSocial equitable FISCAL made Security YEAR up treatment a benefits segment of women of on . the the There basis retired are of a _ or-t women Surform vey were for gathers participating policy information analysis. inona pension the prevalence plan at of the thatreceipt time out of ofpensions 59.2 million and AmericansThejobs, expansion reducing of tax full revenues, IRA eligibility and increasing to nonworking social spouses program is a b 1980 1981 1982 1983 1984 twenty active participants for each beneficiary. For plans that were five to administration of plans by labor and management. SOURCE: EBRI Tabulations of the May 1979 Current Population Survey. Total Workersl/ II.I I00.0 plan to account growth foriswage defined growthhere ovas er the hisnumber or herofcareer. newly qualified These indexed plans wain ges each are information explaining pension terminations had recovered contribution eon venin current from greater each theof utilization initial discrepancies and the benefit years shock over (in rates between relative of millions) this ERISA ofperiod. the joint and to1983 had salary and and Again begun survivor 1984 for to the Budgets. expand some number options highly again. The of is families hours per wereyear. receiving So it U at is ,,,,,,Jless least than oneonepension million where workers, theor family 8.9 percent head U wasof This administrative population series represents of issues thatrecord was about thatcomparable have .1 data. percent beenSimilar to discussed ofthe alldatsegment pension aforare some avail of participants. time able the that onworkforce sur arevey now The dthat at finding abasic sets was working the annualwomen. First, levelsERISA Stated ofrequires alternatively, benefits. extensive Interviewers' 38disclosure percent instructions of of information workingandwomen by training private were expenditures. potential means of expanding the retirement income security of women. The _ O_ 0 Not Covered -- 5.1 46.4 13 t--i ten years By the old end in of 1977,1973, 59 percent according had ten to or Securities more active Exchange participants Commission for year used minus to compute the number the ofinitial plan terminations benefit entitlement in that year. under Prior Social toSecurity. 1974 the estimated terminations compensated The economics fiscal Participants executives increased of high 1982inflation and markedly taxprofessionals. expenditure during during the the due Iflatter period these to net reductions 1970s exclusion that ERISA and of occur, the was employer extended being some betw scanty theeentwenty-one the the general ages to of impression twenty-four sixty-five isage that andgroup sixty-nine. many (see widows Table are Among being 6)thethat elderly leftwould in families old become age contributing 1981 theirBudget way L_ intto o athe h$ost program. 12,925 of legislati $ 14,740 ve initiatives. While it is clear that the question but specifically it is well thatdirect known policymakers that that underreporting only should regular consider is income a serio is uiss to problem whether be recorded initthese isindat worth the a. participating pensions. Itinalso a requires plan indetailed 1979. statements Another 5.6on million the levels or 14 of percent liabilities of Congress The should mere fact be aware that reducing that the utilization pension participation of IRAs is strongly standards correlated to age Not Vested 2.6 23.4 01. each 1982beneficiary.3__ Budget /19,785 23,605 $ 27,905 estimates, private pension trusts held assets worth $183 billion. A few Vested I.I 10.3 Third, the Social Security benefit formula is itself indexed by wage growth. pension net pension recession growth contributions plans in of defined may the be early modified and benefit 1980s trust plans have to fund keep caused had earnings pension consistently problems was contribution 75.7that exceeded percent have rates higher the been for growth largely in middle thein where without the benefits. head was overThe seventy prevalence years of of life age insurance 30 percentcoverage were among receivinpension g a pension 1983 implemented. Budget participants Also the number under H.R.2090. of 23,390 annual 25,765 This terminations would $ 27,500 has raiseremained the somewhat pension substantially inter pension view;These situation one-time matched increasing is income dat improving, a are pension isthe tobills richest administration be such ignored. known as H.R.2090 source Unless burdens ofsuggest defined-contribution program for that such inform at a small aleast tion working and the women funding werestatus coveredofbythese a plan plans. but not Finally, yet participants. the reports require Among detailed women twenty-one with family wouldincome. raise overall Among families pension with participation annual incomes rates by below 1 percent $20,000does per u•. __ _ (_l_l_l_o_l ;_l=_I - __ _o u Nonparticipants 2.2 19.9 1984 2/ For Budget Among a complete olderdiscussi plansonthe of situation underlyingwas45,280 significantly reasons f49,700 or the different. increase $ 56,560Two in this out highly publicized cases 0 of "_ 0.,_inadequate 0_-_ OLI_ 0funding, 0,-_ 0 poor administration and and lower income workers •in ,-__ _line _ with _ the _ lower _ I::_J rates U that 0 would result for . _ defined 1984 handled. This Budget is contribution accomplished The thanshock in theplans. through of 1983TEFRA Since the Budget. is indexing 1975, being The howe projected applied ofver, what theto are growth opposite a often system in has referred this that been category hastrue. tobeen as pension. participation higher in recent rate byyears one percentage than had point been occurring across theprior totalto work theforce. passage and benefit participants showing tax someexpenditure policymakers gain. combined as part estimate Social feel of aSecurity see diversified moreEBRI needs Issue andto benefits pension Brief be done. Npackage o. income 1Under 7, "Retirement may the streams. make general the PrThese ogram low rubric rates data Tax of plan lump-sum distributions are converted to an annuity, they never show up between disclosures the ages of the oftypes twenty-five ' of assets andheld sixtin y-four pension in wage portfolios. or salaryOur positions 0 estimates not year meanonly thatabout there5will percent be aparticipate commensurate in IRAs. increaseIninfamilies the ultimate withreceipt incomes U,.O_D,_ U,.O U,ZD ,.0 I:,O 0 ' t UJ of SOURCES: three of Special thoseAnalysis plans that G of were thetwenty-one Budget ofto thetwenty-fi United States ve years Government old in 1977 for occasional Expenditures: embezzlement A Case of recei Unsubstantiated, ved wide publicity. Undocumented,To remedy Arbitrarthese y Numbers," problems (n i LO It should also be noted that most of this difference is attributable of buffetted the the taxhighly formula expenditure Figure compensated. for bend 4 shows most points. wasthe of 254.8 the pattern Finally last percent , of tennet years. the higher total benefits The in plans the system themselves created 1984has Budget over been are than the indexed extremely 1956 in theto to SOURCE: KBRI Tabulations of the May 1979 Current Population Survey. April implementation 1985. TheFiscal total ofYears number ERISA. 1981-1984 ofDuring new pension (Washington, 1976,participants the number D.C.: of that Office defined would of Management benefit have resulted plans and of on pension joint the survand equity ey as survivor retirement issues,selection weprogram are now a benefits. smaller seeing problem efforts than to reduce it seems mandatory on its could One provide of thea most moredifficult comprehensive aspects of andputting accurate thispicture issue inof context pension is of whoare pension hadthat beenbenefits itwith may itheir cost or,benefit private employer _ levels. sector for i oneemployers ERISA iyear already ior asmore, lmuch provides 61.8 asO$100 that i percent years million were ofper between $20,000 and $50,000, about one-quarter contribute to an IRA. About Budget). and to increase pension participant and beneficiary rights, Congress enacted 0 _ 0 0 o9 0 '_ 0 _ 0 (].) 0 _ 0 u l_ u E: u E: o _ o C_u :3 _:_ 1982 resilient account period. None foruntil of pricethe The now increases. federal and netmaytotal agencies survive plansthat Tcreated EFRA regulate relatiincludes vely or monitor unscathed. the netpension growth Thenprograms in again, both terminated exceeded the number of plans newly qualified, a phenomenon unique to i/ higher Totals may private not sum pension exactly receipt because among of the rounding young error. elderly. The older public surface. ifparticipation 3/theSyl participation vester Increasing standards, J. Schieber, the age tax had provide Social deductibility been shorter Security: reducedvelimits sting to Perspectives age schedules, ontwenty-one employer on movprovided in ePreserving 1979 to unisex would life the explaining recipients'that income benefit levels accruals than any under of the defined clearlybenefit flawed survey plans data are on heavil which y service year to beyond file these age reports. twenty-twoIfarethese to be reports counted were for sampled vesting on apurposes, statistical 55 percent of families whose income is over $50,000 contribute to an IRA. Q 1/ Alicia H. Munnell, The Economics of Private Pensions (Washington, D.C.: _ o° _ System, (Washington, D.C.: The Employee Benefit Research Institute, 1982) p. 5/ Ibid., p. 56. the Employee 3::Retirement Income Security Act •,-_Zin _-_Z1974. 0._ ERISA 0 did not require 6/ Bureau of National Affairs, BNA Pension Reporter, Vol. 607 (April 4, 55. T_e defined haveBrookings ever benefit Pidentified Institution, and defined and1982) contribution evaluated p. 44. the plans. factorsThethat aggpr regomote ationpension of plansplan in it may not. i il l. _t0 l __ _i 1.0 _ l.tl in the post-depression era. insurance have been might less go thanfurther 1 million. in providing By comparison, retirementthere income weresecurity I.i million for we weighted now must toward depend. the endWhile of the thecareer DOL research -- thus staff minimizing and various the analysts effects ofunder the I_83) p. 607. regardless basis, edited of a and pension made available plan's actual to the participation public, the evolution standard. Among of the manyU.S. The expansion of IRAs for nonworking spouses might ultimately benefit those o __ _ 4/ Ibid., p. 52, 56. EMPLOYEE BENEFIT RESEARCH INSTITUTE IL)20 N Street, Nx.V Suite 520 \Vashington, DC 20036 Telephone (202) 659-0670