Category Archives: Benefits

A Framework for Restructuring the Military Retirement System

Source: Roy A. Wallace, Lieutenant Colonel David S. Lyle, Dr. John Z. Smith, Strategic Studies Institute, U.S. Army War College, ISBN 1-58487-580-1, July 2013

The current military retirement system has been integral to sustaining the All Volunteer Force (AVF). Mounting federal budget challenges, however, have raised concern that the program may become fiscally unsustainable. While several restructuring proposals have emerged, none have considered the implications of these changes to the broader issue of manning an AVF. Changes to the existing system could create military personnel shortfalls, adversely affect servicemember and retiree well-being, and reduce public confidence in the Armed Forces. With the right analytical framework in place, however, a more holistic system restructuring is possible, one that avoids these negative effects while significantly reducing costs. A comprehensive framework is provided, as well as a proposal that stands to benefit both servicemembers in terms of value and the military in terms of overall cost savings. …Our proposal is called the 10-15-55 plan. Service members and the military contribute to a 401(k) account as soon as they enter service. At any point, a service member may leave the military with his or her contributions to the 401(k). At 10 years of service, the service member controls 50 percent of what the military contributed to the 401(k). That percentage increases by 10 percentage points each year for 5 years until the service member reaches 15 years of service, at which time the service member controls 100 percent of employer contributions. In addition to the 401(k) account, service members who continue to 20 years of service also receive the DB pension plan as it currently exists, with the exception that they may not receive payments until they turn 55 years of age. While all current service members would be grandfathered under the existing pension system, new entrants would be covered by the 10-15-55 proposal. The 10-15-55 proposal would likely be more desirable to new entrants than the existing pension plan because of the uncertainty that most new recruits face about serving a full 20-year career. When evaluated against the pension framework provided in this monograph, the 10-15-55 pension proposal has many attractive features. …
See also:
Executive Summary

Detroit’s Pension Problems: Not as Bad as They’re Portrayed

Source: Monique Morrissey, Economic Policy Institute, Working Economics blog, August 1, 2013

Detroit’s emergency manager, Kevyn Orr, claims Detroit owes $3.5 billion to its public pension funds. This is more than five times the $640 million the funds’ actuaries estimated in 2011, vaulting pensioners into the ranks of the city’s major creditors, which isn’t a good place to be. It also contributes to Orr’s claim that Detroit owes a total of $18 billion—half to retirees and workers—and that bankruptcy is the city’s only recourse….
Inflating Detroit’s Pension Liabilities, Part 2
Source: Monique Morrissey, Economic Policy Institute, Working Economics blog, August 5, 2013

Detroit: Pensions, Racism and Bankruptcy
Source: Ross Eisenbrey, Economic Policy Institute, Working Economics blog, August 5, 2013

Detroit’s current citizens and the public employees who serve them are not the cause of Detroit’s fiscal problems. They are the victims of forces beyond their control, including globalization, capital flight and racism. No one can, with any seriousness, blame Detroit’s librarians, social workers, garbage collection workers or street cleaners for the city’s catastrophic loss of population and tax base, the long decline and near-collapse of the Big 3 auto companies, or the 1967 riots, which launched a frantic exodus of businesses, white residents, and money from the City of Detroit to the suburbs….

The Danger of Wellness Programs: Don’t Become the Next Penn State

Source: Tom Emerick and Al Lewis, Harvard Business Review Blog Network, August 20, 2013

…This whole slow-motion debacle would have been completely avoidable at many points in the last week or two… if only Penn State’s administration had had access to a search engine and a calculator.

The search engine would have told it that even the major academic proponents of conventional wellness programs don’t think they save money, that vendors make up savings numbers, that the screens they insisted upon can’t even theoretically save money and a whole body of research opposes them, and that all the extra preventive doctor visits they required were useless. (The search engine also would have told the school’s administrators that this scheme was highly unpopular among their employees.)

The calculator would have told them that their 43,000 covered lives probably incurred a total of only about 100 wellness-sensitive medical inpatient events, like heart attacks, of which a few might have taken place in people who were not previously diagnosed and were therefore at least theoretically avoidable, saving the tiniest fraction of their healthcare spending. …

When I’m Old and Gay / Retirement can be sweet for well-off LGBT elders, but it is fraught with perils for most

Source: Gabriel Arana, American Prospect, August 22, 2013

…Despite the stereotype of the affluent gay, more LGBT seniors live in poverty than their straight counterparts. Half reach retirement with only $10,000 in the bank. They are far less likely than younger gays to be partnered or married. They’re more likely to be childless and estranged from their birth families, leaving them to weather the challenges of retirement alone. Even those with long-term partners are at a disadvantage, despite recent legal breakthroughs. In June, the Supreme Court struck down the Defense of Marriage Act, putting some gay couples on equal legal footing with straight couples for the first time, but that’s little help to older gay couples who have missed out on decades’ worth of tax and insurance breaks.

All those factors leave queer seniors with fewer retirement options than their straight counterparts. Without the social support or financial means to ensure independence, they often become separated from their gay communities and “families of choice.” Whether they rely on home-care workers or move into assisted-living facilities paid for by Medicaid, they often encounter staff and residents who are not comfortable with gay people. Fearful of mistreatment, many feel compelled to go back into the closet-—particularly painful for members of the generation that invented the politics of coming out. For those who aren’t lucky enough to settle down in a place like Carefree Cove, the golden years can still look a lot like the pre-Stonewall years….

American Retirement Savings Could Be Much Better

Source: Rowland Davis and David Madland, Center for American Progress, August 2013

From the summary:
The personal retirement-savings plans that most Americans use, such as 401(k)s and Individual Retirement Accounts, or IRAs, are unnecessarily costly and needlessly risky. But instituting another kind of retirement plan that combines the best elements of both defined-contribution and defined-benefit plans—such as the Center for American Progress’s proposed Secure, Accessible, Flexible, and Efficient, or SAFE, Retirement Plan, or the related USA Retirement Funds proposal from Sen. Tom Harkin (D-IA)—could provide a more secure retirement at a far lower cost, according to a new analysis by the Center for American Progress.

These two proposals, also known as collective defined-contribution plans, improve upon the 401(k) model in a number of ways. As described in greater detail in a fall 2012 report, titled “Making Saving for Retirement Easier, Cheaper, and More Secure,” CAP’s SAFE Retirement Plan combines elements of a traditional pension—including regular lifetime payments in retirement, professional management, and pooled investing—with elements of a 401(k), such as predictable costs for employers and portability for workers. (see text box)

Our actuarial analysis finds that CAP’s SAFE Retirement Plan significantly outperforms both 401(k)s and IRAs on cost and risk measures. The results of our study are striking:
– The SAFE Plan costs only half as much for workers. A worker with a SAFE Plan would have to contribute only half as much of their paycheck as a worker saving in a typical 401(k) plan to have the same likelihood of maintaining their standard of living upon retirement.
– The SAFE Plan reduces risk dramatically. A worker with a SAFE Plan is nearly 2.3 times as likely to maintain their standard of living in retirement as a worker with a typical 401(k) account making identical contributions.
See also:

2013 Employer Health Benefits Survey

Source: Kaiser Family Foundation and the Health Research & Educational Trust, August 20, 2013

From the abstract:
This annual survey of employers provides a detailed look at trends in employer-sponsored health coverage, including premiums, employee contributions, cost-sharing provisions, and other relevant information. The 2013 survey included almost three thousand interviews with non-federal public and private firms.

Annual premiums for employer-sponsored family health coverage reached $16,351 this year, up 4 percent from last year, with workers on average paying $4,565 towards the cost of their coverage, according to the Kaiser Family Foundation/Health Research & Educational Trust (HRET) 2013 Employer Health Benefits Survey.
See also:
Press release

2013 Workplace Benefits Report: Employees’ Views on Achieving Financial Wellness

Source: Bank of America/Merrill Lynch, AR1D1838, 2013

From the press release:
Bank of America Merrill Lynch today announced findings from its 2013 Workplace Benefits Report, a study of the increasingly significant role financial benefit plans play in helping the American workforce achieve financial wellness. Based on a nationwide survey of more than 1,000 employees from companies of all sizes, this research offers new insights into the availability, utilization and evolution of these workplace benefits – from 401(k) plans and health savings accounts (HSAs) to financial advice and education.

Key findings include:
• More needs to be done to help employees confidently transition into retirement
• Tax – advantaged saving for medical expenses is becoming the norm, though many are saving less for retirement as a result of rising healthcare costs
• 401(k) contribution rates indicate that the majority of younger workers may be comfortable with an automatic deferral of 5 percent
• One out of four “pre-retirees” – employees who indicate being within five years of retirement – expects to have less than $250,000 saved
• Workers are willing to give up portions of their salary for guaranteed retirement income
• Employees are looking to their employers for access to one-on-one advice from a financial professional
See also:
Download the Presentation

Report: Paid sick leave doesn’t scare away new business

Source: Katie Mcdonough, Salon, June 20, 2013

An audit of Washington, DC’s paid sick leave program reveals skeptics were wrong about its impact on businesses.
Audit of the Accrued Sick and Safe Leave Act of 2008
Source: Yolanda Branche, Office of the District of Columbia Auditor, June 19, 2013

DC’s Paid Sick Leave Law Had No Negative Effect On Businesses
Source: Bryce Covert, ThinkProgress, June 20, 2013

Policies to Reduce Influenza in the Workplace: Impact Assessments Using an Agent-Based Model
Source: Supriya Kumar, John J. Grefenstette, David Galloway, Steven M. Albert, Donald S. Burke, American Journal of Public Health, Posted online on 13 Jun 2013
(subscription required)

Detroit Bankruptcy Takes Aim at Pensions

Source: Jane Slaughter, Labor Notes, July 19, 2013

…Orr sprung the hurry-up filing yesterday because union pension fund attorneys were scheduled to be in court on Monday, arguing for an injunction against bankruptcy. The state constitution appears to protect public employee pensions: “The accrued financial benefits of each pension plan and retirement system of the state and its political subdivisions shall be a contractual obligation thereof and shall not be diminished or impaired thereby.” But proponents of making city workers bite the bullet note that bankruptcy judges have wide latitude to break contracts. …

Policies to Reduce Influenza in the Workplace: Impact Assessments Using an Agent-Based Model

Source: Supriya Kumar, John J. Grefenstette, David Galloway, Steven M. Albert, Donald S. Burke, American Journal of Public Health, Posted online on 13 Jun 2013
(subscription required)

From the abstract:
Objectives. We examined the impact of access to paid sick days (PSDs) and stay-at-home behavior on the influenza attack rate in workplaces.

Methods. We used an agent-based model of Allegheny County, Pennsylvania, with PSD data from the US Bureau of Labor Statistics, standard influenza epidemic parameters, and the probability of staying home when ill. We compared the influenza attack rate among employees resulting from workplace transmission, focusing on the effects of presenteeism (going to work when ill).

Results. In a simulated influenza epidemic the attack rate among employees owing to workplace transmission was 11.54%. A large proportion (72.00%) of this attack rate resulted from exposure to employees engaging in presenteeism. Universal PSDs reduced workplace infections by 5.86%. Providing 1 or 2 “flu days”—allowing employees with influenza to stay home—reduced workplace infections by 25.33% and 39.22%, respectively.

Conclusions. PSDs reduce influenza transmission owing to presenteeism and, hence, the burden of influenza illness in workplaces.
See also:
Universal Paid Sick Leave Reduces Spread of Flu, According to Pitt Simulation
Source: Press Release, UPMC/University of Pittsburgh Schools of the Health Sciences, June 13, 2013