Source: Fitch Ratings, March 22, 2007
As the first deadline for implementation of Governmental Accounting Standards Board Statement No. 45 (GASB 45) approaches, Fitch Ratings has further developed its thinking on the credit implications for state and local governments of providing long-term funding for other post-employment benefits (OPEB). This report follows up on Fitch Research in June 2005 titled “The Not So Golden Years (Credit Implications of GASB 45)” (available on Fitch’s web site at www.fitchratings.com). It focuses on how the various approaches to managing and funding the liability will affect Fitch’s credit analysis, rather than on meeting the reporting deadlines set forth by GASB 45, as Fitch expects such compliance from issuers it rates. Failure to comply will be considered a weak management practice. This report also examines several governments that have taken prudent actions related to OPEB.
Source: Hewitt Associates: Frank McArdle, Amy Atchison, and Dale Yamamoto, Kaiser Family Foundation: Michelle Kitchman Strollo and Tricia Neuman, Findings from the Kaiser/Hewitt 2006 Survey on Retiree Health Benefits, December 2006
Employers continue to play an important role in providing health insurance coverage for pre-65 and age 65+ (Medicare-eligible) retirees. Employer-sponsored plans help bridge the gap in coverage for workers and spouses who retire before they turn age 65 and are eligible for Medicare. Today, an estimated 3.8 million early retirees (ages 55 to 64) and dependents receive health coverage from an employer or union. Without these benefits, early retirees often face significant challenges finding affordable coverage in the individual market, leading some to return to the workforce to gain access to health insurance. Employer plans also provide highly-valued supplemental benefits to more than 12 million retirees now on Medicare. For retirees on Medicare, employer plans remain an important source of prescription drug coverage, and provide additional cost-sharing protections, including limits on retirees’ out-of-pocket expenses.
Source: Craig Palosky, Larry Levitt, and Maurissa Kanter, Kaiser Family Foundation, Wednesday, December 13, 2006
Out-of-Pocket Costs for Retirees Continue to Rise for Employer Health Coverage
About One in 10 Firms Eliminate Retiree Health Benefits for Future Retirees
As the new Medicare drug benefit nears its second year, nearly eight in 10 large employers expect to continue to offer drug coverage to their retirees and accept subsidies from the federal government to offset some of those costs, according to a new survey of 302 large private-sector employers conducted by the Kaiser Family Foundation and Hewitt Associates.
Source: Craig Copeland, EBRI Issue Brief, no. 302, February 2007
Although there has been extensive analysis of the accumulation of retirement assets in the United States, limited research has been done on how quickly Americans use their assets in retirement. Utilizing data from the Health and Retirement Study (HRS), this Issue Brief examines those currently between ages 65 and 75 to determine their levels of wealth in retirement, how those levels have changed, and to see if this group is on track for a financially secure retirement.
Source: Jonathan Walters, Governing, Vol. 20 no. 5, February 2007
Call it the six stages of GASB 45: anger, denial, sorrow, acceptance, study and action. That’s been the general response to a new set of governmental accounting rules that ask state and local governments to spell out the costs of their promises to provide retired employees with health care as well as other post-employment benefits.
Source: Thomas Geoghegan, In These Times, December 2006, Vol. 30 no. 12
Now that the Democrats run Congress, the question becomes, “What should they do?” Yes, raise the minimum wage. And yes, fix the Medicare drug program. But will this bind a new majority to the party?…
… But what the Democrats don’t have is a serious commitment—the political nerve—to make people happier in the only way they can: by raising people’s taxes. How happy more of us would be if only we could pay higher taxes! More of us at last could joyfully retire.
In May 2005, the Paris-based Organization for Economic Cooperation and Development (OECD) put out a sort of Michelin Guide to the pensions of the world’s 30 wealthiest nations: the United States, Ireland and their ilk. While the United States is rich, comparatively it’s a beggar at the bottom, with a Burger King-type pension, paying on average 39 percent of after-tax income at retirement. Others pay about 70 percent on average. Germany, Sweden: pick a country. Some pay even more.