Category Archives: Benefits

“Who is a Veteran?” — Basic Eligibility for Veterans’ Benefits

Source: Scott D. Szymendera, Congressional Research Service, R42324, May 25, 2016

The U.S. Department of Veterans Affairs (VA) offers a broad range of benefits to U.S. Armed Forces veterans and certain members of their families. Among these benefits are various types of financial assistance, including monthly cash payments to disabled veterans, health care, education, and housing. Basic criteria must be met to be eligible to receive any of the benefits administered by the VA.

This report examines the basic eligibility criteria for VA administered veterans’ benefits, including the issue of eligibility of members of the National Guard and reserve components….

2016 Employee Benefits: Looking Back at 20 Years of Employee Benefits Offerings in the U.S.

Source: Society for Human Resource Management (SHRM), 2016

From the overview:
This is the 20th anniversary edition of SHRM’s annual Employee Benefits research report, which looks at benefits prevalence and trends in the U.S. Comparisons were made with the 1996 data where possible, as well as over the past five years.
– 88% of organizations offered professional membership benefits in 2016, a 23 percentage point increase compared with 1996.
– Over the past year, the percentage of organizations offering health savings accounts increased from 43% to 50%.
– Compared with five years ago, more organizations are offering monetary bonus benefits such as employee referral bonuses, spot/bonus awards, sign-on bonuses for executives and nonexecutives, as well as retention bonuses for nonexecutives.
– Telecommuting benefits have seen a threefold increase over the past two decades, from 20% in 1996 to 60% in 2016.
Executive Summary
Overview of Paid Leave Benefits

New Estimates of Offer and Take-up of Employer-Sponsored Insurance

Source: Joelle Abramowitz, Brett O’Hara, U.S. Census Bureau, Working Papers, June 2016

These research files on offer and take-up of employer-sponsored health insurance coverage are based on new questions asked in the 2014 & 2015 CPS ASEC. …. This analysis uses new questions in the Current Population Survey Annual Social and Economic Supplement to examine rates of offer and take-up of employer-sponsored health insurance over early 2014 and early 2015, as well as reasons reported for why individuals did not enroll. We find increases in offer and eligible rates of 0.5 and 0.9 percentage points, respectively, and a decrease in the take-up rate of 1.5 percentage points, while the coverage rate remained stable. We further find an increase in the proportion of workers covered by another plan and decreases in the proportions eligible for coverage but having a pre-existing condition, employed as contract or temporary employees not allowed in the plan, and who have not yet worked for an employer long enough…

Low returns, fee scrutiny drive rise of pension fund insourcing

Source: Christine Williamson, Pensions & Investments, June 13, 2016

An unexpected alignment of factors has made now a very good time for pension funds to insource some or more of their investment portfolios.

The combination of a low-return environment for the foreseeable future, far closer — and often more public — scrutiny of money manager fees and a need to better control investments is fueling interest in bringing assets in-house for the first time for some plans and expanding internal management for experienced investment departments. ….

….The average cost of internal management is eight basis points compared with 46 basis points for external management, according to the most recent survey of large pension funds by CEM Benchmarking Inc.
The dollars saved by pension plans experienced at insourcing investment management are substantial, pension fund officials said.

– State of Wisconsin Investment Board, Madison, which manages the $91 billion Wisconsin Retirement System, for example, saved $63 million in external fees in 2015. SWIB gradually has increased the proportion of insourced assets to 59% of total assets in 2015 from 51% in 2011.
– Michigan Department of Treasury, Bureau of Investments, which manages the $60 billion Michigan Retirement Systems, East Lansing, saves a net $20 million to $30 million per year through managing 35% of the total portfolio internally.
– Employees Retirement System of Texas, Austin, pays fewer than 10 basis points for investment management and administration of the $25 billion pension fund, with the cost of internally managed assets four times less than external manager fees. About 60% of ERS’ assets are managed internally.
– Michigan MERS runs its entire investment division at a cost of 1.5 basis points per year, including the 20% of assets that are managed internally. External manager costs averaged 35 basis points in 2014…..

Significant Reforms to State Retirement Systems

Source: Keith Brainard, National Association of State Retirement Administrators (NASRA), Spotlight On, June 2016

From the introduction:
Although states have a history of making adjustments to their workforce retirement programs, changes to public pension plan design and financing have never been more numerous or significant than in the years following the Great Recession. The global stock market crash sharply reduced state and local pension fund asset values, from $3.2 trillion at the end of 2007 to $2.1 trillion in March 2009, and due to this loss, pension costs increased. These higher costs hit state and local governments right as the economic recession began to severely lower their revenues. These events played a major role in prompting changes to public pension plans and financing that were unprecedented in number, scope and magnitude.

Toward a 21st-Century Labor Movement

Source: David Rolf, American Prospect, April 18, 2016

The old model of collective bargaining can’t be resurrected. Herewith, some new models of how workers can win and wield power. ….

…..Borrowing from labor law in other countries, from U.S. history, and from promising experiments happening in the United States today, there are several potential overlapping strategies for how future forms of worker power might operate and that suggest what U.S. labor policy might eventually look like. • Geographic and/or sectoral bargaining. …..
• Worker ownership. …..
• Control of work-distribution platforms. …..
• Labor standards enforcement. …..
• Certification and labeling. …..
• Benefits administration. …..

The State of American Vacation 2016: How Vacation Became A Casualty of Our Work Culture

Source: Project: Time Off, June 2016

From the summary:
Over the past fifteen years, American workers have been taking less and less vacation. Could the trend line finally be changing course?

Project: Time Off’s latest research suggests America’s vacation deprivation era is not yet over. In fact, it may be getting worse.

The way Americans work has irreversibly changed. We are connected like never before, to each other and to the office. It is time to decide whether vacation time will become a casualty of the new working world or if we will take action to win back America’s Lost Week.

2015 Annual Survey of Public Pensions

Source: U.S. Census Bureau, Census Bureau News, CB16-TPS.112, June 14, 2016

The Annual Survey of Public Pensions provides a comprehensive look at the financial activity of the nation’s state and locally administered defined benefit pension systems, including cash and investment holdings, receipts, payments, pension obligations and membership information. Statistics are available at the national level and for individual states.

Total contributions were $180.2 billion in 2015, increasing 7.9 percent from $167.0 billion in 2014. Government contributions accounted for the bulk of them ($131.7 billion in 2015, increasing 8.3 percent from $121.5 billion in 2014), with employee contributions at $48.5 billion in 2015, climbing 6.5 percent from $45.5 billion in 2014. The other component of total revenue ─ earnings on investments ─ declined 68.4 percent, from $534.4 billion in 2014 to $168.7 billion in 2015. Earnings on investments include both realized and unrealized gains, and therefore reflect market fluctuations.

The total number of beneficiaries increased 4.3 percent to 10.0 million people in 2015 (from 9,559,956 people in 2014 to 9,971,726 in 2015). The payments they received rose 5.1 percent from $272.5 billion in 2014 to $286.5 billion in 2015.

Meanwhile, total assets increased 3.0 percent, from $3.7 trillion in 2014 to $3.8 trillion in 2015.

Public Pension Funding Practices: How These Practices Can Lead to Significant Underfunding or Significant Contribution Increases When Plans Invest in Risky Assets

Source: Donald J. Boyd, Yimeng Yin, Nelson A. Rockefeller Institute of Government, Pension Simulation Project Policy Brief, June 2016

Public pension funds provide benefits to nearly 10 million people, invest over $3.6 trillion in assets, and are deeply underfunded. A new Rockefeller Institute report and policy brief put a spotlight on how the methods that public retirement systems and governments use to fund pensions are affected by investment return volatility. The analysis concludes that a typical 75-percent funded public pension plan has a one in six chance of falling below 40-percent funded within the next 30 years, a crisis level currently faced by only a few major plans. The research brief and associated report are the beginning of a series from the Rockefeller Institute of Government’s Pension Simulation Project.

Impacts of Conflicts of Interest in the Financial Services Industry

Source: Jeremy Burke, Angela Hung, Jack Clift, Steven Garber, Joanne Yoong, RAND Corporation, RAND Working Paper Series WR-1076, February 4, 2015

From the abstract:
Americans are increasingly being asked to take responsibility for their own retirement security. However, many people are ill-equipped to make financial decisions and have turned to professional financial advisors for help. While financial advisors often provide valuable services, it can be difficult for individual investors to evaluate the advice they receive and to identify when it has been influenced by a conflict of interest. In this literature review, we examine if and how financial advisors are influenced by their compensation schemes and how this influence impacts retail investors’ financial well-being. We find empirical evidence suggesting that financial advisors act opportunistically to the detriment of their clients. However, the current body of literature generally cannot account for selection issues and the intangible benefits financial advisors provide.

In our broader review of conflicts of interest in the financial services industry, we find considerable evidence that investment analysts were excessively optimistic prior to regulation seeking to mitigate bias. There is mixed evidence on how this excessive optimism impacted investors, though the literature generally concludes that retail investors were more acutely impacted, as compared to institutional investors. We also find evidence that conflicts of interest extend to mutual fund management, with actively managed funds imposing sizeable trading costs and brokerage commissions which are not easily observed by retail investors.

Regulation and disclosure are often suggested methods for reducing bias. We find evidence that regulation designed to mitigate conflicts of interest can help reduce the prevalence of biased advice, but regulation that penalizes bad advice may be less effective because bias may be unconscious. Disclosure is unlikely to be an effective strategy if employed in isolation, but may be an important part of a comprehensive mitigation strategy.