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Social Security &Other 

Public Pension Issues

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Reports | Articles

Reports

Report: How Much to Save for a Secure Retirement (November 2011)
Consult this simple model to estimate what percent of earnings an individual must save to ensure a financially secure retirement. Much depends on when the worker starts saving, when he or she retires, and how much is invested in retirement savings. Those who start saving early and work longer tend to save more than those who earn higher returns on investments.

Report: How Prepared are State and Local Workers for Retirement? (October 2011)
The report summarizes the results of a  test of the hypothesis that state-local workers have more than sufficient money for retirement. It shows that households with long-career state-local employees fall short of the target replacement rate of 80 percent of pre-retirement earnings. The author suggest that this is because employees who leave state-local employment claim an immediate benefit. The report claims that most households with a state-local worker contain a person employed in the private sector, which offers considerably lower replacement rates.

Report: Social Security COLAs Are a Protection, Not a Windfall (July 2011)
This report analyzes the merits of change to the Social Security COLA--cost of living adjustments--repeatedly suggested in recent debates. According to the author, the current price index actually understates the increasing costs that recipients face due to highly inflated medical care prices. Given that the new price index is only guaranteed to lower Social Security COLA, the proposed change is a mistake. It will do more harm than good for older populations, and will further erode retirees’ financial security. 

Report: Improving Public Pension Transparency (May 2011)
Many think that the costs of public pensions have become unsustainable and impose a significant slice on state and local budgets. This author targets the lack of transparency in pension funds' financial reporting systems. How can law makers know what kind of changes are needed to structure the best retirement benefits for their citizens, if they cannot answer the most basic questions, such as 'how much do we owe'?

Report: Black Women and Social Security in the US (May 2011)
Without Social Security benefits, six out of ten black women aged 75 and older would have incomes below the poverty line. Also, twenty-six percent of those who are Social Security beneficiaries receive disability benefits. Thus, the Social Security program is particularly beneficial for women and persons of color, most of whom rely on it for their income. Clearly, Social Security should be further strengthened to meet black women’s needs.

Report: The Underfunding of State and Local Pension Plans (May 2011)
The recent financial crisis and economic recession have left many states and localities with substantial budgetary difficulties for the next few years. However, the structural shortfalls in their pension plans evidence a problem that is likely to endure for much longer. This report discusses alternative approaches to assessing the size of those shortfalls and the implications of those approaches for funding decisions.

Report: Latinas and Social Security (April 2011)
Social Security is a fundamental source of income for Latinas, given that their life expectancy is higher than the majority of the population and they have worked in low-wage jobs without pensions. This report concludes that Social Security must be improved, especially for those who have limited sources of income.

Report: The Widening Gap: The Great Recession’s Impact on State Pension and Retiree Health Care Costs (April 11, 2011)
In the midst of the current Great Recession and severe investment downturns, the gap between what states have promised to their employees as retirement benefits and the money they have set aside to pay for retirement programs grew to at least $1.26 trillion in fiscal year 2009, resulting in a 26 percent increase in one year.

Report: The Social Security Early Retirement Benefit as a Safety Net (March 2011)
You will find the health and economic status of those who collect US Social Security retirement benefits prior to the full retirement age in this paper. Also, the report examines people who might be induced to apply for disability benefits (SSDI) or retire without income replacement if the availability of early retirement benefits were reduced. About one in five early retirees has health characteristics similar to SSDI beneficiaries, and thus might not be able to replace losses in income from benefits with labor income.

Report: Equity Returns in the Coming Decade (March 2011)
The majority of retirement savings is invested in corporate equity, attracted by the historically high average returns offered by stocks. However, important risks come with stocks, especially since the recent financial crisis. Forecasters expect sub par returns from stocks over much of the coming decade as the economy recovers slowly from the recent recession.

Report: The Origins and Severity of the Public Pension Crisis (February 2011)
The current shortfalls of US pensions have been assessed at nearly $1 trillion. Some analysts say that by using another method to measure these shortfalls, the current number would be three times this amount and therefore some public sector pensions should be reduced. However, what is true is that the shortfalls exist because of the downturn in the stock market following the collapse of the housing bubble, not inadequate contributions to pension funds. Most states face pension shortfalls that are manageable, especially if the stock market does not face another sudden reversal. 

Report : Beyond Normal: Raising the Retirement Age Is the Wrong Approach for Social Security (January 26, 2011) 
Some US economists want to raise the retirement age to meet an anticipated shortfall of Social Security funding over the next 75 years. However, the author says that there is no clear reason to focus only on work until an older age as opposed to work during the prime working-age years. Additionally, the idea of increasing retirement age ignores the fact that people start working at different ages and have different life expectancies. Extending the retirement age will impose the greatest hardship on low earners who have seen little or no gains in life expectancy.

Report : Recessions, Retirement, and Social Security (2011)
Researchers find that the current high rate of US unemployment will lead some older individuals to withdraw from the labor force early, to claim Social Security benefits early, and then to receive a lower retirement income. Old workers, over age 62 when Social Security benefits are available, may consider early retirement. These effects are strongest for less educated workers. These findings highlight the importance of services for the well-being of older workers who have lost their jobs in the present recession and may suffer lower income for many years as a result.


Report: US: Challenges and Opportunities for Age Verification in Low and Middle-income Countries (2011)
What are the challenges and practical considerations for the design and implementation of new registration systems?Often government authorities chose to categorize people on the basis of age because it is administratively simpler and easier to implement on anational scale than registration systems based on income or poverty level. Can this be discriminatory?

Report: Recessions, Wealth Destruction, and the Timing of Retirement (December 2010)

Recessions affect the timing of retirements due to a weak job market and losses in household wealth. A weak economy causes accelerating retirements that would otherwise have occurred later. Falling household wealth reduces the resources available to pay for retirement. This report shows the collective data on old-age labor supply as well as a time series of data on unemployment, stock and bond returns, and house appreciation. This information helps economists estimate the effect of the business cycle on Social Security benefit acceptance and exits from the labor force.

Report: Family Matters: Public Policy and Interdependence of Generations (2010)
Generations United (GI) promotes an intergenerational approach to policy making especially during economic downturns. This study demonstrates that the number of such households have increased; Social Security checks have helped not only grandparents but also grandchildren, particularly following the 2008 financial crisis.



Articles


Media Fail to Tell Full “Tax Holiday” Story (December 25, 2011)
Major media outlets have largely ignored their responsibility to address another perspective that numerous progressive experts have argued for since the tax holiday proposal was accepted last year by the Obama administration. These experts believe that although the economy needs a financial transfusion, President Obama could have achieved the same thing more efficiently and without weakening the firewall between the Social Security Trust Fund and U.S. tax dollars by aggressively advocating the Making Work Pay program.


Changing Social Security in the Name of Stimulus (December 13, 2011)
Former President Roosevelt created Social Security in the depth of the worldwide Economic Depression. Social Security lifts millions of Americans out of poverty, but it also requires all participants to contribute and it delivers fair benefits to all. Politicians promoting the payroll tax holiday are ultimately placing the Social Security program in competition with other federal spending.  Is this the only way to create the much-needed stimulus for the economy and US citizens?


More Californians Say Public Pensions Too Generous (December 7, 2011)

A Field Poll found that 41 percent of voters in California believe that pension benefits received by public employees are too high, and that a majority of people are in favor of raising the retirement age for new government workers and imposing limits on the amount of public employee benefits. The poll also showed that the idea is mostly supported by Republicans whereas it is much less popular among Democratic voters.
Senators Barbara Mikulski and Brown introduced the Consumer Price Index for Elderly Consumers Act, which would modify the annual cost-of-living adjustment formula (COLA) for social security to reflect the expenses of seniors more accurately. This is opposed to the current method of calculation that does not account for inflation. Thus, social security recipients did not receive a COLA in 2010 and 2011 although the price of necessities has risen. Even though seniors will receive a COLA in 2012, the increase is less than it should be. Senator Mikulski emphasized that the Super Committee must maintain the social contract between the American people and the government.

 According to the latest survey conducted by Wells Fargo, an increasing number of Americans believe they will have to work until they are 80 years old before they can truly retire. Some Americans even think that they can never retire to enjoy a leisurely life. More than half of the respondents feel that they need to work beyond retirement in order to sustain themselves financially, while a minority of respondents comment that they will voluntarily work beyond retirement.

State Pension Fund’s Portfolio Falls 11% (November 9, 2011)
The European debt crisis and the United States’ worrying fiscal situation caused assets in Hawaii’s largest public pension fund (the Employees’ Retirement System) to plunge by $1.4 billion in the July-September quarter. This is because people generally remain risk averse. The ERS fund currently provides retirement, disability and survivor benefits to more than 111,000 active, retired and inactive vested state and county employees.

Michigan State House Approves Changes to Retirement Plans for State Employees (November 4, 2011)
The Republican-controlled State House approved changes to retirement plans for state employees, putting an end to guaranteed retiree health care for new employees effective January 1, 2012. Current employees can opt to remain in the present scheme but will be required to contribute four percent of their wages to retirement. New employees will be placed under a 401(k)-type system to which the state would contribute a matching payment of up to two percent.

Fewer Americans Confident About Retirement Savings, Survey Finds (November 3, 2011)
The Sun Life Financial Unretirement Index Survey finds that the sluggish economy is dampening US citizens' confidence in their retirement savings. Only a quarter of working people in the US are confident that they will have sufficient retirement savings, while two-thirds believe they will need to work at least three years longer than they had planned. The survey also reveals less faith in the durability of government benefits.  A sad tale.

State May Eye Retirement Savings (November 2, 2011)
In July 2011, the State of Florida Retirement System (FRS) will require public employees to contribute five percent to the system, resulting in a paycheck decrease of three percent. Florida became vulnerable because it  was the only state that did not require an employee contribution. County administrations have been using these retirement savings to reduce their budget deficits. Nonetheless, Governor Risk Scott has floated a legislative proposal to take these savings from local governments to eliminate the FRS' unfunded liability. It is unlikely that his proposal will be approved.

Perry Offers Plan to ‘Save Social Security’ (October 25, 2011)
Governor Rick Perry of Texas responded to the criticism that he views social security as a Ponzi scheme, spelling out changes to the federal retirement program that he said would “save social security for future generations.”  He proposed allowing young workers to invest a portion of their payroll tax in private accounts. He reiterated his idea that states should be given the freedom to allow their government employees to opt out of the program. He also stated that he would work with Congress to increase the retirement age for younger workers.

Retired Public Workers Oppose RI Pension Changes (October 24, 2011)
Under current law, most public retirees see a pension increase of up to 3 percent a year. But a pension overhaul proposal from Governor Lincoln Chafee and Treasurer Gina Raimondo would suspend the increases until the state meets specific funding targets, possibly only in 2030. Supporters of the plan reminded public retirees of what the economic downturn has done to retirement accounts of non-public workers. Public retirees are concerned about the detrimental effects of inflation on their future cost of living. A vote on the legislation is likely weeks away.

RI Gov., Treasurer to Lawmakers: Pass Pension Bill (October 24, 2011)
Rhode Island Governor Lincoln Chafee and Treasurer Gina Raimondo warmed lawmakers of dire consequences if they do not pass their public pension overhaul proposal. Chafee and Raimondo claimed that the proposal would save taxpayers billions of dollars while making the retirement system work for public workers. Their proposal would set up a new retirement system that combines 401(k)-style accounts with traditional pensions. It would also increase retirement ages and suspend cost-of-living pension increases for most retires for 19 years.

General Assembly Urged to Increase Pension Funding (October 20, 2011)
The Virginia Education Association urged the General Assembly to fund the State’s pension system and allow the State to distribute benefits to an increasing number of retirees. Virginia Education Association President, Kitty Boitnott, requested the General Assembly to raise the State contribution rate to its employee pension plan. Instead, the General Assembly opted to require employees hired before July 1, 2010, to pay 5 percent of their salaries into their pensions in exchange for a 5 percent raise. Boitnott is convinced that the General Assembly has not met the recommended State contribution rates from the Virginia Retirement System’s Board of Trustees for the most of the past two decades.  Is your State meeting its contributions to public pensions?

NYC Pension Funds are Cost-Effective: Report (October 20, 2011)
The NYC comptroller showed that traditional pension plans are more cost-effective for New York City public employees because they pay significantly less to receive the same retirement benefits as those used in the private sector.  The report also said that some of the cost savings enjoyed by public pensions stem from their investment expertise and their leverage as institutional investors. While many local and state governments are considering a move to defined contribution plans on the grounds that they will save money, the report claimed that government pensions can cost more than one-third less than plans used in the private sector.

Elderly Bankruptcy Filings at All-Time High (October 7, 2011)
An increasing number of retired Americans are seeking relief in bankruptcy court. Experts cited a number of factors that contribute to the problem, including high-interest credit card debt and overwhelming medical expenses.

A Cut in Social Security would be Devastating for the Elderly Latinos in the United States (September 21, 2011)
(Article in Spanish)
Several civil rights groups warned that a reform of the Social Security system that involves cuts in benefits would have a devastating effect on the elderly and retired Latinos in the country, especially for the poor or low income. If the cut is implemented, out of the the 2.2 million Latinos who receive benefits, some 800,000 of them would then live in poverty.


Social Security's Problems Are Solvable (August 20, 2011)
Social Security has been one of the most debated programs during the recent federal budget negotiations. The talks have focused on cutting off Social Security, causing worries among older people that they might not receive the checks that make up the majority of their income. This author suggests alternative ways of reducing the Social Security deficit, such as lifting the cap on wages, increasing the retirement age for full benefits and easing immigration restrictions to permit hiring more highly-qualified foreign workers.

NYC Residents May Lose Medicaid, Social Security on U.S. Default, Liu Says  (July 29, 2011)
City Comptroller John Liu gave several statements as regard to the point that New York City may confront $3 billion less a month in social security. He said it would impact the city’s Medicaid population of close to 3 million individuals. An emergency “Debt Ceiling Task Force”, as an urgent innovation, was recommended to deal with the risk of the debt limit extension.