Category Archives: Benefits

The State Pension Funding Gap: 2014 – New accounting rules help provide a clearer picture

Source: Pew Charitable Trusts, Issue Brief, August 2016

From the overview:

The nation’s state-run retirement systems had a $934 billion gap in fiscal year 2014 between the pension benefits that governments have promised their workers and the funding available to meet those obligations. That represents a $35 billion decrease from the shortfall reported for fiscal 2013. The reduction in pension debt was driven primarily by strong investment results, with public plans in fiscal 2014 averaging a 17 percent rate of return.

This brief focuses on the most recent comprehensive data from all 50 states and does not reflect the impact of weaker investment performance in fiscal 2015, which averaged 3 percent. Performance has been even weaker in the first three quarters of fiscal 2016, with negative average returns. Preliminary data from fiscal 2015 point to increases in unfunded liabilities for the majority of states. Total pension debt is expected to be over $1 trillion for state plans, an increase of more than 10 percent from fiscal 2014…..
State by State data

The Impact of Construction Dues in Minnesota: An Organizational and Individual-Level Analysis

Source: Midwest Economic Policy Institute (MEPI), August 16, 2016

From the summary:
In Minnesota, construction workers are productive, high-skilled, and well-paid. Over 30 percent of these workers are members of a union. To maintain and increase membership, trade unions in Minnesota must continually demonstrate how workers benefit from contributing dues.

An analysis by the Midwest Economic Policy Institute (MEPI), The Impact of Construction Dues in Minnesota: An Organizational and Individual-Level Analysis, finds that construction unions in Minnesota offer many positive benefits to members:
– Union membership increases the after-tax income of construction workers by $7,720 annually;
– Unions increase construction worker health insurance coverage by 13.1 percentage points; Minnesota’s construction unions spend 75.5 percent of dues and fees on bargaining and representation;
– Only 1.4 percent of all membership dues and fees collected by construction unions in Minnesota are spent on political activities and lobbying – or $17.47 annually per member;
– and For every $1 paid in dues and fees, an estimated $5.59 is returned to members in the construction industry in after-tax income. ….

The world is getting better at paid maternity leave. The U.S. is not.

Source; Melissa Etehad and Jeremy C.F. Lin, Washington Post, August 13, 2016

….. [I]n the United States bearing a child comes at a high price for many women. Despite having one of the world’s most advanced economies, the United States lags far behind other countries in its policies for expectant mothers. In addition to being the only highly competitive country where mothers are not guaranteed paid leave, it sits in stark contrast to countries such as Cuba and Mongolia that offer expectant mothers one year or more of paid leave……

Paid Maternal Leave Around the World

Who let the dogs in? A look at pet-friendly workplaces

Source: Christa L Wilkin, Paul Fairlie, Souha R. Ezzedeen, International Journal of Workplace Health Management, Vol. 9 no. 1, 2016
(subscription required)

From the abstract:
Purpose – The purpose of this paper is to present an overview of the pet-friendliness trend, because despite its growth, there has been little research on the benefits and potential risks of pet-friendly workplaces.

Design/methodology/approach – A general review is provided on pet ownership figures in North America and the benefits and drawbacks of pet ownership. Pet-friendly policies and practices are described, highlighting their potentially positive impact on well-being and performance. Possible concerns with pet-friendly workplaces are examined. The paper offers recommendations for organizations that are potentially interested in becoming pet-friendly.

Findings – Many households in North America have pets that are considered genuine members of the family. As a result, workplaces are increasingly becoming “pet-friendly” by instituting policies that are sensitive to pet ownership. The scope of pet-friendly policies and practices ranges from simple to more complex measures. Adopting these measures can result in benefits that include enhanced attraction and recruitment, improved employee retention, enhanced employee health, increased employee productivity, and positive bottom-line results. But there are also concerns regarding health and safety, property damage, distractions, and religious preferences.

Practical implications – The range of pet-friendly measures could apply to any workplace that is interested in improving their efforts toward recruitment, retention, and productivity, among others.
Who Let The Dogs In? More Companies Welcome Pets At Work
Source: Yuki Noguchi, NPR, All Things Considered, August 8, 2016

14 rules for creating a bring-your-dog-to-work policy
Source: Jennifer Lonoff Schiff, CIO, November 2, 2015
Pet-loving business owners, as well as dog (and cat) experts, share their advice on allowing dogs and other pets at the office.

Pooch at work: a novel stress buster for employees working in stressful environment
Source: Purushottam Bung, Journal of Advances in Business Management, Vol. 2 no. 1, 2016

From the abstract:
Stress is an integral part of every human being. Without stress, life appears to be dull and boring; whereas too much of it can be dangerous. Hans Selye. M.D., a pioneer researcher in ‘stress and stress management’ defines stress as “The nonspecific response of the body to any demand made on it (When external demands exceed resources).” As the fast developing countries like India which are experiencing significant economic progress, the stress levels with which people work in general is also increasing significantly. This has led to sharp rise in the stress related chronic health disorders (Physiological and psychological) like; anxiety disorders, attention deficit, hyperactivity, essential hypertension, epilepsy, headache, insomnia, chronic muscular pain, etc. The conventional stress management techniques/strategies like; aerobics, yoga, meditation, prayer, imagery, self-hypnosis (Autogenic Training), biofeedback, long silent walk, soothing music, etc., have been proved successful yet incomplete. Getting a new friend, i.e. cats and dogs, have proved to be highly stress relieving. Pets provide excellent social support, stress relief and other health benefits – perhaps more than human beings. Firms, especially, which are into service sector can think of keeping these new friends, i.e. cats and dogs (Of selected breed after necessary training) in their work places so that employees can spend some good time with these pets (Hugging, cuddling, stroking and playing), which has proved to be one of the most effective ‘stress busters.’ It does not cost much for the firms to maintain these pets at work places. Whereas benefits derived in terms of reduced stress levels of employees which ultimately make the employees more creative, focused and optimistic is just amazing.

Critters in the cube farm: Perceived psychological and organizational effects of pets in the workplace
Source: Meredith Wells, Rose Perrine, Journal of Occupational Health Psychology, Vol 6 no. 1, January 2001
(subscription required)

From the abstract:
This article reports the findings of an exploratory study examining the perceived functions and psychological and organizational effects of pets in the workplace. Participants were 193 employees from 31 companies allowing pets in the workplace who completed anonymous questionnaires. Results indicated that participants perceived pets in the workplace to reduce stress and to positively affect employee health and the organization. Participants who brought their pets to work perceived greater benefits than participants who did not bring their pets to work and participants who did not own pets.

State and Local Government Contributions to Statewide Pension Plans: FY14

Source: National Association of State Retirement Administrators (NASRA), Issue Brief, July 2016

Pension benefits for employees of state and local government are paid from trusts to which public employees and their employers contribute while they are working. Timely contributions are vital to the funding and sustainability of these plans, and over time yield investment earnings that account for the largest share of pension revenues. Failing to pay required contributions results in higher future costs, due to the foregone investment earnings that the contributions would have generated.

Nationally, contributions made by state and local governments to pension trust funds in recent years account for around four percent of all spending. Pension spending levels, however, vary widely among states and are actuarially sufficient for some pension plans and insufficient for others. Unlike employees, who must always contribute the amount prescribed in statute or by plan rules, some public employers—states, cities, etc.—have discretion to set the contributions they make to public pension plans. The result of this disparity in contribution governance arrangements is a wide range of experience among public employers concerning required contributions. Overall, however, the experience for FY 14 reflects an improved effort among state and local governments to make the full actuarially determined pension contribution, as well as a decline in the rate of growth of pension costs.

This brief describes how contributions are determined; the recent public employer contribution experience; and trends in employer contributions over time.

How Can We Realize the Value That Annuities Offer in a 401(k) World?

Source: Steven A. Sass, Center for Retirement Research at Boston College, IB#16-12, July 2016

The brief’s key findings are:
• A growing number of people are entering retirement with more 401(k) savings and less annuity income from Social Security and traditional pensions.
• Annuities assure a lifelong income stream and – compared to other draw-down options – can provide attractive payouts, which can help cover late-life health costs.
• But few individuals buy annuities, partly due to behavioral barriers such as the complexity of valuing the product and the way that draw-down options are framed.
• Options for overcoming these barriers include:
• educating individuals to focus more on the income they can draw from their nest egg, rather than its size; and
• automatically putting a portion of 401(k) assets in an annuity, perhaps an Advanced Life Deferred Annuity that kicks in later in retirement.

Pension Participation, Wealth, and Income: 1992-2010

Source: Alicia H. Munnell, Wenliang Hou, Anthony Webb and Yinji Li, Center for Retirement Research at Boston College, WP#2016-3, July 2016

From the abstract:
Using data from the 1992, 1998, 2004, and 2010 waves of the Health and Retirement Study (HRS), this paper compares pension participation, pension wealth, projected retirement income, and replacement rates attributable to past service, by pension type for households ages 51-56. The analysis includes workers’ pension coverage during both current and past jobs. Defined contribution (DC) wealth is simply the current account balance. DC income is calculated by projecting current plan balances to retirement, assuming no further contributions, and assuming that households then annuitize. Defined benefit (DB) wealth and income are calculated by apportioning projected benefits to past and future service.

This paper found that:
• Overall participation is significantly lower in 2010 than in previous waves; the increase in DC participation has not offset the decline in DB participation.
• Both mean and median pension wealth in 2010 were larger than in 1992, but lower than in 1998 and 2004.
• DC wealth is more skewed towards the top quartile than DB wealth. In 2010, the top quartile held 35 percent of DB compared to 52 percent of DC wealth.
• Because DC participants must purchase an actuarially unfair annuity and faced low annuity rates from falling interest rates, the shift to DC plans has produced a decline in the ratio of income to wealth.
• The decline in the income-to-wealth ratio would have been even greater if expected retirement ages had not increased.
• But, despite later retirement, the ratio of projected retirement income to the highest five years of 51-56 earnings declined substantially from 1998-2010 because earnings have risen.

The policy implications of this paper are:
• Employer-sponsored plans are providing less today than in the past, so policymakers should consider ways to improve coverage and outcomes.
• When restoring balance to Social Security finances, policymakers need to recognize that future retirees will be more dependent on Social Security than those in the past.

How Not to Die Hungry: Turn Your 401(k) Into a Pension

Source: Ben Steverman, Bloomberg, August 2, 2016

The golden age of retirement is coming to an end. Now it gets complicated. …. Company after company has repudiated traditional pensions, pushing younger workers into 401(k)-style retirement plans. For diligent savers, a 401(k) can accumulate a big balance, but when the time comes to start using it, things will get a lot more complicated than it was for their parents. ….

Overpaid or Underpaid? Public Employee Compensation in the State of Alaska

Source: Mouhcine Guettabi and Matthew Berman, University of Alaska Anchorage, Institute of Social and Economic Research, ID: 1675, July 2016

From the summary:
Are state workers better paid than their counterparts in private industry? That question is likely to come up more often, as the state deals with a huge budget shortfall. The answer is generally no, but there are exceptions.

We analyzed the question in two ways, using different data sources for cash wages but the same assumptions about benefit levels. Using two sources helped us better answer the question, and each yielded the same broad conclusion: state workers are not on average paid more.

That’s true, whether we consider just wages, or total compensation—wages plus benefits. But there are significant differences in pay and total compensation of public and private workers in individual occupations. We did this research for the Alaska Department of Administration (see back page). Below we summarize our findings, and inside report more details…..