Category Archives: Benefits

Disability insurance plans: trends in employee access and employer costs

Source: Kristen Monaco, U.S. Bureau of Labor Statistics (BLS), Beyond the Numbers, Pay & Benefits, Vol. 4 No. 4, February 2015

From the summary:
Short- and long-term disability insurance programs replace some of the wages lost by people who cannot work because of a disabling injury or illness that is not work-related. Short-term disability insurance typically covers periods lasting less than 6 months, and long-term disability insurance lasts for the length of the disability or until retirement.

Those workers who are unable to work due to injury or illness and who do not have disability insurance coverage through their employers may seek benefits from Social Security Disability Insurance (SSDI). The number of SSDI claimants has grown over the past decade as younger workers and those in relatively low-skill, low-pay jobs have applied for benefits. This has prompted interest in the amount of coverage for workers in employer-provided disability insurance programs. This issue of Beyond the Numbers examines trends in employer-provided disability insurance coverage over time, explains the basic terms of coverage for typical plans, and estimates the costs to private employers.

Success Strategies for Well-Funded Pension Plans

Source: Center for State and Local Government Excellence, February 2015

From the abstract:
These case studies examine the public pension systems in four states with a long tradition of being well-funded to determine what successful practices they have in common.

The Center for State and Local Government Excellence examined the public pension systems in four states with a long tradition of being well-funded to determine what they have in common. The plans studied are: Delaware Public Employees’ Retirement System, Illinois Municipal Retirement Fund, Iowa Public Employees’ Retirement System, and North Carolina Retirement Systems.
While each of the defined benefit plans has a unique history and legal framework, they share these practices:
– a commitment to fund the annual required contribution in both good and bad financial times;
– conservative, realistic assumptions that are adjusted based on experience; and
– changes to benefit levels and contribution rates as needed.
The funded ratio for the plans studied ranges from 87.6 percent to 99.8 percent.

Crafting Enhanced Rights for the Religious Business Owner: An Examination of the Supreme Court Decision in Hobby Lobby

Source: James F. Morgan, Labor Law Journal, Vol. 65 no. 4, Winter 2014
(subscription required)

…This article first examines preliminary matters associated with the Hobby Lobby case in order to establish a context for the Court’s decision. The majority opinion, concurring opinion, and two dissenting opinions are the presented and analyzed, doctrinal, precedential, and practical aspects of the decisions are covered. This article concludes with reflections on selected potential implications flowing from the decision of the Court. Although the implications of the Hobby Lobby decision will serve as fodder for discussion within legal, religious, and academic circles for years if not decades to come, there is little debate that the Court’s approach provides a means for religious beliefs and practices to become more prominent in the world of commerce. …

Once a Troubled Rust-Belt City, Duluth Turns Its Finances Around

Source: Mark Ruff, Government Finance Review, Vol. 30 no. 6, December 2014

Before it changed course, the City of Duluth, Minnesota, suffered the same economic fate as other Rust Belt cities during the latter part of the 20th century. The region’s economic woes, its aging population, and its antiquated infrastructure weighed heavily on the city’s budget. But today, the city’s finances have stabilized and the economy is strong. To handle the influx of new workers at one of several new and expanded businesses, a major focus of the city’s current budget and staff resources is increasing the stock of new, moderately priced housing. Duluth’s 2014 general fund budget highlights include no property tax levy increase, a net increase in staff, and no draws on reserves. Bond ratings are up — AA from Standard & Poor’s and Aa2 from Moody’s. Of course, the city made several tough choices to get to this point….

Roanoke, Virginia, Ensures a Financially Sustainable Retirement Plan

Source: Ann Shawver, Government Finance Review, Vol. 30 no. 6, December 2014

The City of Roanoke, Virginia, revised its retirement benefits for future employees, giving them a choice between two new plans. The project — a smooth and successful process that involved stakeholders from beginning to end — had the full support of the seven-member city council. Although these benefit modifications are not drastic, the changes are expected to ultimately lower the city’s long-term contribution rate by 10 percentage points, to 15 percent of wages. In today’s dollars, that amounts to approximately $6 million. The main reasons for the project’s success are stakeholder involvement, good timing, and transparency. ….

Case Studies of State Pension Plans that Switched to Defined Contribution Plans

Source: National Institute on Retirement Security, Public Pension Resource Guide, February 2015

From the press release:
A series of new case studies finds that states that shifted retirement plans from defined benefit (DB) pension plans to defined contribution (DC) 401(k)-type individual accounts experienced higher costs. The case studies also indicate that the DB to DC switch exacerbated rather than solved any pension underfunding issues, and employees faced increased levels of retirement insecurity.

Case Studies of State Pension Plans that Switched to Defined Contribution Plans, by the National Institute on Retirement Security, presents summaries of changes in three states – Alaska, Michigan, and West Virginia – that made the switch from a DB pension to DC accounts. The case studies examine key issues that impact pension plans, including demographic changes, the cost of providing benefits, actuarially required contributions (ARC), plan funding levels and retirement security for employees.

The case studies indicate that the best way for a state to address any pension underfunding issue is to implement a responsible funding policy with full annual required contributions, and for states to evaluate assumptions and funding policies over time, making any appropriate adjustments. ….

…. In nearly all state and local pension plans, employees and employers share the responsibility for funding the pension plan. Investment returns also play an important role in funding retirement benefits. Nationally, employee contributions and investment returns cover about 75 percent of public pension retirement plan costs.

The case studies provide in-depth details for the following states:
– In Alaska, legislation was enacted in 2005 that moved all employees hired after July 1, 2006 into DC accounts. At the time, the state faced a combined unfunded liability of $5.7 billion for its two DB pension plans and retiree health care trust. The unfunded liability was the result of the state’s failure to adequately fund pensions over time, stock market declines and actuarial errors. Although the DC switch was sold as a way to slow down the increasing unfunded liability, the total unfunded liability more than doubled, ballooning to $12.4 billion by 2014. In 2014, the state made a $3 billion contribution to reduce the underfunding. Legislation has been introduced to move back to a DB pension plan.
– In Michigan, the DB pension plan was overfunded at 109% in 1997. The state then closed the pension plan to new state employees who were offered DC accounts. The state thought it would save money with the switch, but the pension plan amassed a significant unfunded liability following the closure of the pension plan. By 2012, the funded status dropped to about 60% with $6.2 billion in unfunded liabilities. In recent years, the state has been more disciplined about funding the pension plan, making nearly 80% of the ARC from 2008-2013.
– In West Virginia, the state closed the teacher retirement system in 1991 to new employees in the hopes it would address underfunding caused by the failure of the state and school boards to make adequate contributions to the pension. As the pension’s funded status continued to deteriorate, retirement insecurity increased for teachers with the new DC accounts. Legislation was enacted to move back to the DB plan after a study found that providing equivalent benefits would be less expensive in the DB than in the DC plan. By 2008, new teachers were again covered by the pension, and most teachers who were moved to the DC plan opted to return to the pension. After reopening the DB pension, the state was disciplined about catching up on past contributions, and the plan funding level has increased by more than 100 percent since 2005. The teacher pension plan is expected to achieve full funding by 2034. ….
Download the case studies here.
Download a PowerPoint summary here.

Public Pension Plan Update

Source: Julia Zuckerman, Joanne Jacobson, Xerox Corporation and Buck Consultants, FYI – For Your Information, Volume 38 Issue 21, February 3, 2015

Public pension liability remains a hot, fast-moving, and fluid topic. Recent state and local legislation altering public pension rights has attracted a slew of legal challenges, the results of which have varied. Below we discuss several recent, major developments in the public pension sphere. Specifically, we examine legal challenges to pension reform passed by the state of New Hampshire, state of Illinois, and city of Atlanta; how Detroit’s art collection enabled the bankrupt city to drastically reduce pension cuts; and the treatment of pension debt in two California municipal bankruptcy proceedings. …

The Satanic Temple, Scott Walker, and Contraception: A Partial Account of Hobby Lobby’s Implications for State Law

Source: Kara Loewentheil, Columbia Law School, Columbia Public Law Research Paper No. 14-426, November 9, 2014

From the abstract:
Reaction to the Supreme Court’s opinion in Hobby Lobby v. Burwell was swift and extreme from almost all quarters. Members of the Satanic Temple, a religious group focused on personal autonomy, individual freedom, and ethical action, announced that they would henceforth be objecting to so-called “informed consent” statutes in the abortion services context. Wisconsin Governor Scott Walker’s administration, on the other hand, announced that he would no longer be enforcing Wisconsin’s contraceptive equity law because it was “preempted” by the Supreme Court’s decision. In this Article, I demonstrate that Scott Walker’s administration and the Satanic Temple have more in common than it might superficially appear.
In fact, there are three common threads that tie their (seemingly diametrical) efforts together. First, both Scott Walker’s administration and the Satanists read Hobby Lobby too broadly. Rather than creating an era of religious exemptions on demand, Hobby Lobby should be read to have a limited impact on state law, even as persuasive authority. Second, both Scott Walker’s administration and the Satanists fail to appreciate the continuing relevance and impact of many other state and federal laws that continue to provide protection for reproductive rights, including contraceptive access. Third, Scott Walker’s administration and the Satanists share a common strategy of attempting to use claims of religious objection to regulation affecting women’s reproductive rights as a tool for political mobilization of their respective – and antithetical – political communities. In this, however, they are closer to the mark: Hobby Lobby does open up new possibilities for claims of exemption. Politically conservative exemptions have been well-represented in the social, political and legal discourse around the Hobby Lobby fallout. But what has been less appreciated is that however open the regime is for culturally conservative religious objections, it is equally open for progressive religious objections as well.

In tracing these three common threads between SW and the Satanists, the purpose of this Article is both descriptive and analytic. Analytically, it seeks to unearth the serious point behind the Satanists seemingly facetious accommodation campaign: conservatives do not have a monopoly on accommodation. Progressives, too, can look to religious objection claims under RFRA as a means of effecting change in the legal system. For these efforts to be effective, however, we have to be clear – descriptively – about what Hobby Lobby does and does not do.

This Article explores these questions in four parts. In Part I, it provides a brief refresher on RFRA, Hobby Lobby, and Wheaton College. In Part II, it uses the lens of the Walker Administration’s inaccurate understanding of preemption and RFRA to maps the overlapping regulatory regimes requiring insurance coverage of contraceptives and analyze the implications of the Hobby Lobby decision. In doing so it demonstrates that state-mandated contraceptive coverage continues in force even for religiously-affiliated organizations and closely-held corporations that might be eligible for a religious accommodation from the ACA’s contraceptive coverage requirement. In Part III, using the lens of the Satanic Temple’s “exemption” form, it outlines the obstacles to DIY exemption or accommodation efforts. In Part IV, it explores the underlying idea that individual citizens may make religious objections to the law for progressive purposes, focusing on how such objections might operate when levied against state limitations on the exercise of reproductive rights and access to reproductive health care.