Notes on Social Security Reform

New papers from the Social Science Research Network

noreply@blogger.com (Andrew G. Biggs) — Fri, 17 May 2013 14:04:00 +0000

SOCIAL SECURITY, PENSIONS & RETIREMENT INCOME eJOURNAL

"Retirement Plan Participation and Asset Allocation, 2010"
EBRI Notes, Vol. 34, No. 4 (April 2013)

CRAIG COPELAND, Employee Benefit Research Institute (EBRI)
Email: COPELAND@EBRI.ORG

To establish current savings behavior, one necessary measurement of retirement preparation is identifying the percentage of workers with employment-based retirement plans, as well as understanding the characteristics of workers with and without access to such programs. The findings from this paper show that there has been a significant increase in the percentage of family heads with a defined contribution (DC) plan (typically a 401(k)-type plan) over time. The likelihood of a working family head participating in a retirement plan increased with the size of his or her employer. In 2010, among family heads working for employers with 10-19 employees, 22.4 percent participated in a plan, compared with 67.2 percent of family heads who worked for employers with 500 or more employees. In 2010, 18.9 percent of family heads who participated in an employment-based retirement plan had a defined benefit (DB) plan only, while 65.0 percent had a defined contribution (DC) plan only, and the remaining 16.1 percent had both a DB and a DC plan. This was a significant change from 1992, when 42.3 percent had a DB plan only, and 40.8 percent had a DC plan only. Asset allocation within a family head’s retirement plan seems to be affected by his or her ownership of other types of retirement plans. Those who own an IRA are more likely to be invested all in stocks if they also own a 401(k)-type of plan. Those who own a DB plan and a 401(k)-type plan are less likely to allocate their DC plan to all interest-earning assets. Due to the increased participation in DC plans, the manner in which participants allocate assets within these plans could have a significant effect upon the financial resources they ultimately will have available in retirement. The distribution of participants invested in each proportion of stocks was found not to vary significantly with age between ages 35-64, although higher educational attainment, income, and net worth were correlated with more investment in stocks. Taken together, this suggests that, even with increased experience, availability, and use of these types of plans, there remains a need for more financial education of participants.
The PDF for the above title, published in the April 2013 issue of EBRI Notes, also contains the fulltext of another April 2013 EBRI Notes article abstracted on SSRN: “Characteristics of the Population With Consumer-Driven and High-Deductible Health Plans, 2005-2012.”

"Social Policy and Program: From Principles to Design"

DAVID STANTON, Australian National University (ANU) - Crawford School of Public Policy
Email: davidstanton@rogers.com
ANDREW HERSCOVITCH, Australian Government Department of Families, Housing, Community Services and Indigenous Affairs
Email: hersca@grapewine.net.au

The paper outlines an approach to the assessment of policy options and program design. The core concepts of equity, effectiveness, employment, efficiency and economy are discussed. Real-world examples from Australian social policy are considered, including from areas such as retirement incomes; family allowances; dependency to work; disability support and health insurance. The delivery of social programs through the taxation system is also discussed.
There clearly is no one template for turning policy principles into programs. Many processes and players may be involved and unpredictability is ever-present. Most governments are interested in achieving policy as well as political outcomes. They are also more constrained by economic and social realities than is often assumed. This imposes some order and logic on program development.
From a policy adviser’s perspective, the key is ‘preparation meeting opportunity’. It is possible to insert rigour into the process if the issues have been anticipated, the research and analysis done, and the arguments assembled for ministers to consider.

"Superannuation Policies and Behavioural Effects: How Much Age Pension?"

JIE DING, Macquarie University
Email: jie.ding@mq.edu.au

This paper presents long term projections of the cost of public pensions in Australia, taking into account behavioural effects. I assume retirees will make financial decisions to maximise their lifetime utilities, and that their consumption and asset allocation would react to policy changes. I find that the future cost of the Age Pension is likely to be higher than estimated by Australian Treasury in 2010's Intergenerational Report. As future cohorts retire with more savings, they can allocate more money into owner-occupied properties while preparing for retirement and draw down their savings faster, to optimise their Age Pension entitlements. This paper also examines how projected future Age Pension costs are affected by various policy changes, including the legislated increase of superannuation guarantee from 9% to 12%, the possible changes of including the value of family home in the asset test, and indexing Age Pension payments to price inflation instead of wage inflation.

"CalPERS Funding Woes: Don't Blame the Stock Market"

MICHAEL J. SABIN, Consultant
Email: mike.sabin@att.net

Public-sector pension plans administered by CalPERS face scrutiny because of large unfunded liabilities. The current underfunding is usually blamed on investment losses that occurred during the recent economic downturn. This paper finds that the true culprit is inaccurate actuarial forecasting, not investment performance. The paper looks specifically at the history of the City of Sunnyvale's pension plans over the past seventeen years. It finds that the normal rate of contribution was too small to keep up with the growth in liabilities, even under the assumption that investments earn their anticipated return.

"The 401(k) Blame Game"

MARC FANDETTI, Meketa Investment Group
Email: mfandetti@meketagroup.com

Critics of excessive and opaque 401(k) fees, conflicts of interest, and poor plan design may be right as far as their argument goes; but the reason that 50 million Americans may ultimately be betrayed by their 401(k) is not that mutual fund managers are overpaid, and that some advisors receive commissions. Rather it is that the 401(k) idea “works” when incomes and stock prices are rising, and does not work when income growth and stock returns stall for a prolonged period.
The assumptions used by individuals and advisors in solving the “when can I retire” problem at the height of 401(k) euphoria were, in retrospect, far too optimistic. Stock returns have, until recently, been negative in real terms for a not insignificant period, median family income has regressed, and savings rates languish in the low single digits. It was not just amateur investors that planned poorly – many professionally managed pension funds also extrapolated naively from the experience of the second half of the twentieth century.
If the financial services industry is guilty of anything, it is the abetting and aiding of plan participants in their employment of unrealistic return expectations. It is well established equities have higher expected returns than bonds because their cash flows are less certain; returns are expected to be high, but they could be low, as in the 2000s. Advisors and participants seem to have forgotten about this last part.
On average, 401(k)s are a cheaper, more transparent, and better structured vehicle than at any point in their history. And while more can and should be done to improve them, regulatory reforms cannot salvage the retirement plans of millions of Americans.

"Participation to Pension Funds in Italy: The Role of Expectations and Financial Literacy"

PAOLO ZANGHIERI, Generali SpA
Email: paolo_zanghieri@generali.com

This paper seeks to assess the role of expectations on pension income and financial literacy in the decision of joining a pension fund, using a large household survey for Italy. The results confirm past evidence on the role of income and education, and find a strong role played by financial literacy. Forward looking thinking about the sources of income after retirement and forming not overly optimistic expectations on replacement rate are tightly related to enrollment. Finally participation to pension funds is found to depend strongly on the industry of employment. The results provide further evidence for the role of public powers in enhancing participation by providing information and financial education.

New articles from the Social Security Bulletin

noreply@blogger.com (Andrew G. Biggs) — Wed, 15 May 2013 13:09:00 +0000

Social Security Bulletin, Vol. 73 No. 2 (released May 2013)

Download entire publication

Subsequent Program Participation of Former Social Security Disability Insurance Beneficiaries and Supplemental Security Income Recipients Whose Eligibility Ceased Because of Medical Improvement

by Jeffrey Hemmeter and Michelle Stegman

This article examines subsequent participation in the Social Security Disability Insurance and Supplemental Security Income programs by individuals whose eligibility for those programs ceased because of medical improvement. The authors follow individuals whose eligibility ceased between 2003 and 2008 and calculate rates of program return for up to 8 years after the cessation decision. They also explore how return rates vary by certain personal and programmatic characteristics.

Outcome Variation in the Social Security Disability Insurance Program: The Role of Primary Diagnoses

by Javier Meseguer

This article investigates the role that primary impairments play in explaining heterogeneity in disability decisions. Using claimant-level data within a hierarchical framework, the author explores variation in outcomes along three dimensions: state of origin, adjudicative stage, and primary diagnosis. The findings indicate that the impairments account for a substantial portion of claimant-level variation in initial allowances. Furthermore, the author finds that the predictions of an initial and a final allowance are highly correlated when applicants are grouped by impairment. In other words, diagnoses that are more likely to result in an initial allowance also tend to be more likely to receive a final allowance.

The Impact of Retirement Account Distributions on Measures of Family Income

by Howard M. Iams and Patrick J. Purcell

The income of the aged is composed largely of Social Security benefits, asset income, and pension income. Over the past three decades, the primary form of employer-sponsored pension has shifted from the traditional defined benefit plan to defined contribution plans, such as the 401(k). That trend creates problems for measuring the income of the aged because most household surveys of income either do not collect information about distributions from defined contribution retirement accounts or do not include those distributions in their summary measures of income. This article examines the impact of including distributions from retirement accounts on the estimated income of families headed by persons aged 65 or older.

Contribution Dynamics in Defined Contribution Pension Plans During the Great Recession of 2007–2009

by Irena Dushi, Howard M. Iams, and Christopher R. Tamborini

The authors investigate the extent of changes in workers' participation and contributions to defined contribution (DC) plans during the Great Recession of 2007–2009. Using longitudinal information from Social Security W-2 tax records matched to a nationally representative sample of respondents from the Survey of Income and Program Participation, they find that the recent economic downturn had a considerable impact on workers' participation and contributions to DC plans. A sizable segment of 2007 participants (39 percent) decreased their contributions to DCplans by more than 10 percent during the Great Recession. The findings also highlight the interrelationship between the dynamics in DC contributions and earnings changes.

Matt Miller: Expand Social Security

noreply@blogger.com (Andrew G. Biggs) — Fri, 10 May 2013 14:06:00 +0000

Wiring for the Washington Post, Matt Miller speaks favorably of the New America Foundation proposal for expanded Social Security, an additional flat dollar benefit that would increase the size and cost of the program by around 75 percent.

I’m not a fan of the idea – as I discuss here, I think it will cost too much while hurting the economy – but Miller hits on a second issue, of how to pay for it. Miller says,

One way to fund it would be through a chunk of the proceeds from the value-added tax that’s almost certainly coming in an aging America.

This highlights Washington’s perennial problem: starting a new program before you’ve paid for the ones you’ve already got. We’re already well short of the revenues we need to pay for the Social Security, Medicare and Medicaid programs we’ve got, and the shortfalls in those entitlements would be enough to swallow up pretty much the whole of any politically-palatable VAT plan. To start allocating the proceeds of a tax we don’t even have to a new entitlement before sorting out how to pay for the underfunded entitlements already on the books seems ill-advised.

Munnell: Don’t Scrap the Cap

noreply@blogger.com (Andrew G. Biggs) — Thu, 25 Apr 2013 18:10:00 +0000

Boston College Professor Alicia Munnell, writing for Marketwatch, argues that progressives should think twice about trying to fix social Security by “scrapping the cap,” that is, the $114,000 ceiling on which payroll taxes are levied and benefits are calculated. While eliminating the cap may seem fair in one sense – that high earners would “pay taxes for the full year” – it also would mean that high earners would pay a lot more in taxes than they’d ever receive back in benefits. In Social Security’s context, which tries to not be too progressive, that approach could backfire.

It’s a thoughtful piece – check out the whole thing here.

Chained CPI: A sucker’s deal for Republicans?

noreply@blogger.com (Andrew G. Biggs) — Wed, 24 Apr 2013 01:01:00 +0000

I’ve previously written that I think the chained CPI isn’t great policy – it cuts benefits where they might be higher and leaves benefits alone where maybe they should be cut. But over at Real Clear Markets, I argue that the things the GOP would need to give up in order to get the chained CPI – namely, a lot of tax increases – make it a pretty bad deal from their perspective.

Andrew Biggs: Cut payroll taxes for workers 65 and older

noreply@blogger.com (Andrew G. Biggs) — Tue, 23 Apr 2013 19:08:00 +0000

Here is some video from last month's AEI event on improving fairness encouraging longer work lives through Social Security and Medicare policy. Check out the whole event here.

CBO testimony on the chained CPI

noreply@blogger.com (Andrew G. Biggs) — Fri, 19 Apr 2013 15:17:00 +0000

Jeffrey Kling of the Congressional Budget Office testified at the Social Security subcommittee of the House Ways and Means Committee on the chained CPI. You can read his testimony here.

I don’t believe the other testimony is available online at the Committee’s website, but I’ll post it when I find it.

Expanding Social Security is a bad idea

noreply@blogger.com (Andrew G. Biggs) — Tue, 16 Apr 2013 17:51:00 +0000

My comments on the New America Foundation proposal for expanded Social Security, over at The American, AEI’s online magazine.

My take on the Chained CPI: A bad deal all around

noreply@blogger.com (Andrew G. Biggs) — Mon, 15 Apr 2013 13:14:00 +0000

I write that:

The Chain-Weighted Consumer Price Index (or chained CPI, for short), which President Obama included as part of his formal budget proposal, seems like a no-brainer for any White House–GOP grand bargain on the budget deficit. After all, the chained CPI is a better measure of inflation than the indices the federal government currently uses, and this simple technical fix would reduce entitlement spending and increase tax revenues by a combined $340 billion over ten years, providing something for both sides to like and dislike. Yet as pressing as federal deficits and debt are, the chained CPI is bad policy that both liberals and conservatives may come to regret.

Check it out, over at National Review.

Are you entitled to your entitlement benefits?

noreply@blogger.com (Andrew G. Biggs) — Mon, 08 Apr 2013 13:55:00 +0000

The argument against cutting Social Security and Medicare is that Americans “earned” those benefits through the taxes they paid over the years. But did they? The New York Times looks at the issue here.

I ran some numbers on Medicare benefits here.

New papers from the Social Science Research Network

noreply@blogger.com (Andrew G. Biggs) — Fri, 05 Apr 2013 18:58:00 +0000

SOCIAL SECURITY, PENSIONS & RETIREMENT INCOME eJOURNAL

"The 2013 Retirement Confidence Survey: Perceived Savings Needs Outpace Reality for Many"
EBRI Issue Brief, Number 384, March 2013

RUTH HELMAN, Mathew Greenwald & Associates
Email: RUTHHELMAN@GREENWALDRESEARCH.COM
NEVIN E. ADAMS, Employee Benefit Research Institute (EBRI)
Email: nadams@ebri.org
CRAIG COPELAND, Employee Benefit Research Institute (EBRI)
Email: COPELAND@EBRI.ORG
JACK VANDERHEI, Employee Benefit Research Institute (EBRI)
Email: vanderhei@ebri.org

This paper presents key findings from the 23rd annual Retirement Confidence Survey (RCS), a survey that gauges the views and attitudes of working-age and retired Americans regarding retirement, their preparations for retirement, their confidence with regard to various aspects of retirement, and related issues. The percentage of workers confident about having enough money for a comfortable retirement is essentially unchanged from the record lows observed in 2011. While more than half express some level of confidence (13 percent are very confident and 38 percent are somewhat confident), 28 percent are not at all confident (up from 23 percent in 2012 but statistically equivalent to 27 percent in 2011), and 21 percent are not too confident. Retiree confidence in having a financially secure retirement is also unchanged, with 18 percent very confident and 14 percent not at all confident. One reason that retirement confidence has remained low despite a brightening economic outlook may be that some workers may be waking up to a realization of just how much they may need to save. Asked how much they believe they will need to save to achieve a financially secure retirement, a striking number of workers cite large savings targets: 20 percent say they need to save between 20 and 29 percent of their income and nearly one-quarter (23 percent) indicate they need to save 30 percent or more. Aggressive as those savings targets appear to be, they may not be based on a careful analysis of their individual circumstances. Only 46 percent report they and/or their spouse have tried to calculate how much money they will need to have saved by the time they retire so that they can live comfortably in retirement. Retirement savings may be taking a back seat to more immediate financial concerns: Just 2 percent of workers and 4 percent of retirees identify saving or planning for retirement as the most pressing financial issue facing most Americans today. Both workers and retirees are most likely to identify job uncertainty (30 percent of workers and 27 percent of retirees) and making ends meet (12 percent each). Cost of living and day-to-day expenses head the list of reasons why workers do not contribute (or contribute more) to their employer’s plan, with 41 percent of eligible workers citing this factor. Debt may be another factor standing in the way; 55 percent of workers and 39 percent of retirees report having a problem with their level of debt, and only half (50 percent of workers and 52 percent of retirees) say they could definitely come up with $2,000 if an unexpected need arose within the next month. Worker confidence in the affordability of various aspects of retirement continues to decline. Just 23 percent of workers (and 28 percent of retirees) report they have obtained investment advice from a professional financial advisor who was paid through fees or commissions. The 2013 Retirement Confidence Survey was co-sponsored by the Employee Benefit Research Institute (EBRI), a private, nonprofit, nonpartisan public-policy-research organization; and Mathew Greenwald & Associates, Inc., a Washington, DC-based market research firm. The survey was conducted in January 2013 through 20-minute telephone interviews with 1,254 individuals (1,003 workers and 251 retirees) age 25 and older in the United States.

"Exchanging Delayed Social Security Benefits for Lump Sums: Could this Incentivize Longer Work Careers?"
Michigan Retirement Research Center Research Paper No. 2012-266

JINGJING CHAI, Goethe University Frankfurt - Department of Finance
Email: chai@finance.uni-frankfurt.de
RAIMOND MAURER, Goethe University Frankfurt - Finance Department
Email: Rmaurer@wiwi.uni-frankfurt.de
OLIVIA S. MITCHELL, University of Pennsylvania - The Wharton School, National Bureau of Economic Research (NBER)
Email: mitchelo@wharton.upenn.edu
RALPH ROGALLA, Goethe University Frankfurt - Department of Finance
Email: rogalla@wiwi.uni-frankfurt.de

Social Security benefits are currently provided as a lifelong benefit stream, though some workers would be willing to trade a portion of their annuity streams in exchange for a lump sum amount. This paper explores whether allowing people to receive a lump sum as a payment for delayed retirement rather than as an addition to their lifetime Social Security benefits might induce them to work longer. We model the factors that influence how people trade off a Social Security stream for a lump sum, and we also examine the consequences of such tradeoffs for work, retirement, and life cycle wellbeing. Our base case indicates that workers given the chance to receive their delayed retirement credit as a lump sum payment would boost their average retirement age by l.5-2 years. This will interest policymakers seeking to reform the Social Security system without raising costs or cutting benefits, while enhancing the incentives to delay retirement.

"Reforming the Taxation of Retirement Income"
Virginia Tax Review, Vol. 32, No. 2, pp. 327-366, 2012
Illinois Program in Law, Behavior and Social Science Paper No. LBSS13-23

RICHARD L. KAPLAN, University of Illinois College of Law
Email: rkaplan@illinois.edu

Legal and financial analyses abound about various means of saving for retirement and the tax advantages that they present, but very little attention has been paid to how retirement income is generated and the tax consequences that pertain to its generation. This article fills that void by examining the three major sources of retirement income: Social Security, employment-based retirement plans, and personal savings. For each of these sources, this article considers how retirement income is generated, sets forth the applicable federal income tax treatment, and proposes reforms to make the pertinent tax rules more sensible. Among its recommendations are simplifying how Social Security retirement benefits are taxed, bifurcating defined contribution plan withdrawals into capital gains and ordinary income components, repealing certain exceptions to the early distribution penalty, reducing the delayed distribution penalty and adjusting the age at which it is triggered, and changing the residential gain exclusion to avoid unanticipated problems with reverse mortgages.

"Reform Proposals for Replenishing Retirement Savings"
SPP Research Paper No. 6-9

JACK MINTZ, University of Calgary - The School of Public Policy, CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
Email: jmmintz@ucalgary.ca
THOMAS A. WILSON, University of Toronto - Department of Economics
Email: twilson@chass.utoronto.ca

The 2008-2009 economic crisis dealt a serious blow to Canadians’ retirement savings. While markets have since partially recovered, the ratio of Canadians’ household net-worth relative to disposable income still remains below where it was in 2007. So much wealth that workers had accumulated to prepare for retirement has been wiped away, while the years since 2008 that might have otherwise been spent compounding retirement savings have been spent, instead, on trying to recover losses in a low-interest-rate environment that has limited returns. With large waves of older workers approaching retirement age, and these future retirees projected to live longer than previous cohorts, Canada now faces the very realistic scenario that a significant number of people will reach retirement age without the funds they will need to provide a comfortable post-working-life income.
Canadian policy-makers may not have the ability to restore that destroyed wealth. And with most governments already struggling to resolve serious deficits, the situation is not likely to be ameliorated with anything that requires additional spending, or that could reduce tax revenues. But there are policy reforms available that can help at least in better preparing the coming waves of retirees for a financially secure retirement. The reforms need not be far-reaching to have a meaningful impact. And they need not be costly, either.
They can include a modest expansion of the Canada Pension Plan (CPP) to allow larger contributions — shared by employers and employees, or covered entirely by employees — that would, in turn, allow retiring workers to draw a larger maximum pension, rather than having to rely on the guaranteed income supplement (GIS). CPP contributions could also be made deductible from taxable income, like RRSP investments, to encourage workers to maximize contributions. To minimize an increase in payroll taxes, the eligibility age for CPP benefits could be increased to 67 years of age, similar to old-age security eligibility. Meanwhile, the tax treatment of group RRSPs — for which employer contributions are currently subject to payroll taxes — should be made the same as it is for defined-contribution registered pension plans (RPPs).
There is also the option of increasing the age limit for RPP and RRSP contributions, from 71 to 75 years, to reflect the increase in life expectancies. RRSP contributions can be altered to allow lifetime averaging, allowing workers to take advantage of additional contribution room. Contribution limits on Tax-Free Savings Accounts should be increased as well. Policy-makers should also look at creating a capital-gains deferral account, to allow investors to sell off underperforming assets, without fear of triggering a tax bill, as long as they reinvest the proceeds. The freedom to unlock unwanted investments, and make better ones, will improve revenue prospects for investors and the government.
Many of these reforms can be phased in gradually, to assess their effects on government revenue and savers’ behaviour. But they all appear to have the potential to encourage increased saving, without significantly harming long-term government revenue, helping Canadians better prepare for comfortable retirements, even after the serious wealth destruction that accompanied the recent economic crisis.

"Public Employee Pensions in Missouri: A Looming Crisis"
Show-Me Institute Policy Study, No. 36, March 2013

ANDREW G. BIGGS, American Enterprise Institute
Email: andrew.biggs@aei.org

This paper describes how public employee pensions currently measure their financial health; discusses the consensus among economists that current accounting rules significantly understate pension liabilities and overstate pension funding levels; and describes how pension financing would appear using accounting rules similar to those required for private sector pensions or for public employee plans in other countries. Following that is discussion of objections to fair market valuation. Finally, we discuss the costs and benefits of potential reforms, including shifting to defined contribution or cash balance pension structures.

Not saving enough? Blame it on your grammar…

noreply@blogger.com (Andrew G. Biggs) — Fri, 05 Apr 2013 18:06:00 +0000

New from the American Economic Review.

The Effect of Language on Economic Behavior: Evidence from Savings Rates, Health Behaviors, and Retirement Assets

M. Keith Chen

Languages differ widely in the ways they encode time. I test the hypothesis that the languages that grammatically associate the future and the present, foster future-oriented behavior. This prediction arises naturally when well-documented effects of language structure are merged with models of intertemporal choice. Empirically, I find that speakers of such languages: save more, retire with more wealth, smoke less, practice safer sex, and are less obese. This holds both across countries and within countries when comparing demographically similar native households. The evidence does not support the most obvious forms of common causation. I discuss implications for theories of intertemporal choice. (JEL D14, D83, E21, I12, J26, Z13)

Full-Text Access | Supplementary Materials

Upcoming event: “Disability Insurance: Inherent problems, practical solutions, and action for reform”

noreply@blogger.com (Andrew G. Biggs) — Wed, 03 Apr 2013 13:42:00 +0000

The first day of a two-day event series:

Disability insurance: Inherent problems, practical solutions, and action for reform (Part 1)

Cosponsored by AEI, the Brookings Institution, and the Secretary's Innovation Group

Description

Disability program expenditures and applications are rising at a rapid pace. The Social Security trustees report predicts that absent change, the Social Security Disability Insurance (SSDI) trust fund will be insolvent by 2016. These realities point to the need for fundamental changes to the way disability is insured and managed.
This first day of a two-day conference will feature three panels. Panel A will discuss the causes of SSDI program growth and its implications for the future solvency of the SSDI trust fund. Panel B will then discuss the extent to which the SSDI program enrolls individuals capable of full- or part-time work. Finally, Panel C will discuss the effects of increased work participation on the health and well-being of disability applicants and beneficiaries. A full-form agenda can be downloaded here.

Details

Friday, April 12, 2013
8:30 AM - 12:30 PM

Rayburn House Office Building
Room B-318
Independence Avenue and South Capitol Street
Washington, DC 20003
[Map]

This event will not be livestreamed.

RSVP to attend the April 12 event.

Participants

Participants include:

Richard Burkhauser, AEI

Kim Burton, Center for Health and Social Care Research, United Kingdom

Jennifer Christian, Webility! Corporation

Michael Donnelly, Kansas Rehabilitation Service

Robert E. Drake, Geisel School of Medicine, Dartmouth College

Mark Duggan, Wharton School of the University of Pennsylvania

Stephen Goss, Social Security Administration

Dorcas Hardy, Social Security Administration

Ron Haskins, Brookings Institution

Henry Olsen, AEI

Bryon Macdonald, World Institute on Disability

Roger Mahan, Office of the Majority Leader, US House of Representatives

Kathy Ruffing, Center on Budget and Policy Priorities

Bob Steggert, Marriott International

[Full Agenda]

The second day of a two-day event series:

Disability insurance: Inherent problems, practical solutions, and action for reform (Part 2)

Cosponsored by AEI, the Brookings Institution, and the Secretary's Innovation Group

Description

Disability program expenditures and applications are rising at a rapid pace. The Social Security Trustees report predicts that absent change, the Social Security Disability Insurance (SSDI) trust fund will be insolvent by 2016. These realities point to the need for fundamental changes to the way disability is insured and managed.
This second day of a two-day conference will feature three panels. The first will discuss the extent to which the current disability determination process is effective in selecting and supporting individuals who are unable to work. A second panel will then discuss the role of the business sector in supporting employment for individuals with disabilities. The final panel will discuss several proposals for fundamental SSDI reform. A full-form event description is available for download here.

Details

Friday, April 19, 2013
8:30 AM - 12:30 PM

Rayburn House Office Building
The Gold Room 2168
Independence Avenue and South Capitol Street
Washington, DC 20003
[Map]

This event will not be livestreamed.

RSVP to attend the April 19 event.

Participants

Participants include:

Eloise Anderson, State of Wisconsin

Jo Anne Barnhart, Social Security Administration

Doug Besharov, University of Maryland

Richard Burkhauser, AEI

Ron Haskins, Brookings Institution

Kim Jinnett, Integrated Benefits Institute

Harold Krent, IIT Chicago-Kent College of Law

Henry Olsen, AEI

Richard J. Pierce, Cato Institute

Jack Smalligan, Office of Management and Budget

David Stapleton, Center for Studying Disability Policies

Allyn C. Tatum, Tyson Foods

Jason Turner, Secretary's Innovation Group

Richard Victor, Workers Compensation Research Institute

[Full Agenda]

Contacts

For more information, please contact Michelle Hays at disabilityeventapril2013@gmail.com or Brad Wassink at brad.wassink@aei.org.
For media inquiries, please contact MediaServices@aei.org (202.862.5829).

Five ways to reform Social Security Disability Insurance

noreply@blogger.com (Andrew G. Biggs) — Wed, 03 Apr 2013 13:39:00 +0000

…From the Washington Posts’s Dylan Matthews. And they’re all practical and non-ideological, meaning they might have a shot at actually getting passed. Hey Congress, take a look!

New paper: “Do Income Projections Affect Retirement Saving?”

noreply@blogger.com (Andrew G. Biggs) — Tue, 02 Apr 2013 16:57:00 +0000

The Center for Retirement Research at Boston College has released a new Issue in Brief:

“Do Income Projections Affect Retirement Saving?”

by Gopi Shah Goda, Colleen Flaherty Manchester, and Aaron Sojourner

The brief’s key findings are:

One barrier to saving may be ignorance about how it translates into retirement income.

A recent study conducted a field experiment to see whether providing workers with retirement income projections affected the amount they saved.

The results show that such projections, accompanied by information on retirement planning, could modestly increase saving.
- The experiment’s positive effect on saving works, in part, by boosting individuals’ knowledge and confidence.
- But its effect on saving is limited among those with who have difficulty paying bills, prefer to “live for today,” or tend to procrastinate.

The brief is available here.

Job openings at the CRS

noreply@blogger.com (Andrew G. Biggs) — Mon, 01 Apr 2013 16:16:00 +0000

Congressional Research Service (CRS) Domestic Social Policy Division

The Congressional Research Service (CRS) Domestic Social Policy Division is seeking several analysts who will provide congressional committees, Members of Congress and their staff with the vital analytical support they need to address complex public policy issues related to one of the following areas: Social Security (e.g. financing issues, impact on beneficiaries, and program design and operations), Health Care Financing and Insurance (e.g. private health insurance and/or Medicaid, Medicare, CHIP and health care reform) and Education (e.g. students with disabilities, English language learners, student assessment and academic achievement, and school finance).

JOB DESCRIPTION: Analyst duties include preparing objective, non-partisan analytical studies and descriptive background reports on issues of national significance; providing personal consultation and assistance to congressional committees, Members, and staff on public policy issues throughout the legislative process; and participating in or leading team research projects and seminars.

APPLICATION PROCEDURE: Applicants MUST apply online. For more information, please visit: http://www.loc.gov/crsinfo

Brannon: How Republicans Really View Social Security

noreply@blogger.com (Andrew G. Biggs) — Tue, 19 Mar 2013 16:31:00 +0000

Writing for Salon.com, Ike Brannon of the R Street Institute talks about what really would be needed to come to a deal on social security reform.

The answer: more than you might think. It’s well worth checking out.

New paper: "Mortality Differentials by Lifetime Earnings Decile: Implications for Evaluations of Proposed Social Security Law Changes"

noreply@blogger.com (Andrew G. Biggs) — Sun, 17 Mar 2013 16:05:00 +0000

"Mortality Differentials by Lifetime Earnings Decile: Implications for Evaluations of Proposed Social Security Law Changes"
Social Security Bulletin 73(1): 1-37, 2013

HILARY WALDRON, U.S. Social Security Administration
Email: hilary.waldron@ssa.gov

To evaluate the distributional effects of some proposed Social Security law changes, such as an increase in Social Security's early entitlement age, retirement policy analysts typically tabulate the number of workers who fall below a predetermined threshold of hardship. Analysts using this technique often implicitly assume that the insured population falls neatly into a low-earnings poor health group and a remaining good health group. If the hardship threshold assumption is correct, there should be no difference in mortality risk between lifetime earnings deciles above a hardship threshold. This study finds that the hardship threshold model is overwhelmingly rejected in US Social Security data, a result consistent with similar studies conducted in Canada, Germany, and England. The bottom 80-95 percent of the male lifetime earnings distribution exhibits an inverse correlation with regard to mortality risk (the higher the earnings, the lower the mortality risk) at ages 63-71.

CBO Testifies on Social Security Disability

noreply@blogger.com (Andrew G. Biggs) — Fri, 15 Mar 2013 15:49:00 +0000

Download it here.

Upcoming NASI event: “What Do Americans Want for Social Security?”

noreply@blogger.com (Andrew G. Biggs) — Tue, 05 Mar 2013 15:12:00 +0000

Beyond the Sequester: What Do Americans Want for Social Security?

Register Now – Space is Limited

Tuesday, March 12, 2013 ~ 2:00-3:15pm

Capitol Visitors Center, Room SVC 212-10
(East Capitol Street & First Street, NE, Washington DC)

With lawmakers considering changes to Social Security such as adopting the chained CPI, it’s important to know what their constituents want — across political parties, generations, and income levels. Join us for a discussion of the findings from an innovative new national survey.

Social Security faces a long-term funding challenge. How do Americans want to deal with it? This survey used trade-off analysis, a technique widely used in market research, to explore how Americans would prefer to modify and pay for Social Security for the long run. If voters could choose their own policy package, what would it look like?

Survey participants chose among policy options that would cut benefits, increase benefits, or raise revenues to put the program on solid footing for future generations. Speakers will present findings from NASI’s new report — Strengthening Social Security: What Do Americans Want? — and will discuss the implications for policymakers.

Featured speakers:

Lisa Mensah, The Aspen Institute
James Roosevelt, Jr., Tufts Health Plan
Jasmine V. Tucker, National Academy of Social Insurance
Mathew Greenwald, Mathew Greenwald & Associates
Virginia Reno, National Academy of Social Insurance

This forum builds on “People vs. Pundits: A Disconnect in Public Opinion on Social Security,” a roundtable event held on February 1, 2013, at NASI’s annual conference.

Resister Now.

Alter: Democrats Need to Get Smart on Entitlements

noreply@blogger.com (Andrew G. Biggs) — Tue, 05 Mar 2013 14:38:00 +0000

Bloomberg columnist Jonathan Alter argues that his fellow Democrats need to think more seriously about entitlement reform. Alter disagrees with the Republican approach to fixing entitlements, but chides his own side for not thinking about reform at all.

“Anyone reaching retirement age in the next 20 years (including me) will take more than three times as much out of Medicare as he or she contributed in taxes. By 2030, the U.S. will have twice as many retirees as in 1995, and Social Security and Medicare alone will consume half of the federal budget, with the other half going almost entirely to defense and interest on the national debt. It’s unsustainable.”

“If Democrats don’t want to talk about these programs, they can say goodbye to every other pet program. We can preserve Medicare in amber only at the expense of investments in prekindergarten programs or cancer research.”

While I’ve got some factual quibbles with Alter’s piece, it’s nevertheless a good read.

New paper from the NBER

noreply@blogger.com (Andrew G. Biggs) — Mon, 04 Mar 2013 15:01:00 +0000

Aging and Pension Reform: Extending the Retirement Age and Human Capital Formation

by Edgar Vogel, Alexander Ludwig, Axel Boersch-Supan -

Abstract:

Projected demographic changes in industrialized and developing countries vary in extent and timing but will reduce the share of the population in working age everywhere. Conventional wisdom suggests that this will increase capital intensity with falling rates of return to capital and increasing wages. This decreases welfare for middle aged agents with assets accumulated for retirement.

This paper addresses three important adjustments channels to dampen these detrimental effects of ageing: investing abroad, endogenous human capital formation and increasing the retirement age. Although non of these suggestions is new in itself, we examine their effects jointly in one coherent model.

Our quantitative finding is that openness has a relatively mild effect. In contrast, endogenous human capital formation in combination with an increase in the retirement age has strong effects. Under these adjustments maximum welfare losses of demographic change for households alive in 2010 are reduced by about 3 percentage points.

http://papers.nber.org/papers/W18856?utm_campaign=ntw&utm_medium=email&utm_source=ntw

Social Security Q&A with Larry Kotlikoff

noreply@blogger.com (Andrew G. Biggs) — Tue, 26 Feb 2013 15:25:00 +0000

PBS’s website hosts a question and answer with Boston college professor Larry Kotkoliff regarding Social Security and financial planning. Check it out here.

Gokhale: “AARP Misleads Elderly About Social Security's Fiscal Health”

noreply@blogger.com (Andrew G. Biggs) — Tue, 26 Feb 2013 15:19:00 +0000

Over at Investors Business Daily, Jagadeesh Gokhale of the Cato Institute takes AARP to task for their statements on Social Security reform.

“The American Association of Retired Persons (AARP) is perhaps the most powerful lobbying organization in the U.S. Its Policy Council promotes national fiscal policies that protect its members' interests.”

“But the Council cites half-truths, uses ambiguous language, and omits key details about the programs and policies it discusses — especially on Social Security — in its communications with those members.”

Read Jagadeesh’s take here.

NPR interview with former SSA Commissioner Mike Astrue

noreply@blogger.com (Andrew G. Biggs) — Fri, 22 Feb 2013 16:27:00 +0000

NPR has a nice interview with my old boss, SSA Commissioner Mike Astrue, who recently stepped down after the end of his 6-year term. He’s obviously feeling more liberated to talk about the program and the way that Congress and the White House have failed to maintain it. Worth a read.

Notes on Social Security Reform

New papers from the Social Science Research Network

New articles from the Social Security Bulletin

Social Security Bulletin, Vol. 73 No. 2 (released May 2013)

Matt Miller: Expand Social Security

Munnell: Don’t Scrap the Cap

Chained CPI: A sucker’s deal for Republicans?

Andrew Biggs: Cut payroll taxes for workers 65 and older

CBO testimony on the chained CPI

Expanding Social Security is a bad idea

My take on the Chained CPI: A bad deal all around

Are you entitled to your entitlement benefits?

New papers from the Social Science Research Network

Not saving enough? Blame it on your grammar…

Upcoming event: “Disability Insurance: Inherent problems, practical solutions, and action for reform”

The first day of a two-day event series:

Cosponsored by AEI, the Brookings Institution, and the Secretary's Innovation Group

Description

Details

Friday, April 12, 2013 8:30 AM - 12:30 PM

Participants

The second day of a two-day event series:

Cosponsored by AEI, the Brookings Institution, and the Secretary's Innovation Group

Description

Details

Friday, April 19, 2013 8:30 AM - 12:30 PM

Participants

Contacts

Five ways to reform Social Security Disability Insurance

New paper: “Do Income Projections Affect Retirement Saving?”

Job openings at the CRS

Brannon: How Republicans Really View Social Security

New paper: "Mortality Differentials by Lifetime Earnings Decile: Implications for Evaluations of Proposed Social Security Law Changes"

CBO Testifies on Social Security Disability

Upcoming NASI event: “What Do Americans Want for Social Security?”

Beyond the Sequester: What Do Americans Want for Social Security?

Register Now – Space is Limited

Tuesday, March 12, 2013 ~ 2:00-3:15pm

Alter: Democrats Need to Get Smart on Entitlements

New paper from the NBER

Social Security Q&A with Larry Kotlikoff

Gokhale: “AARP Misleads Elderly About Social Security's Fiscal Health”

NPR interview with former SSA Commissioner Mike Astrue

Friday, April 12, 2013
8:30 AM - 12:30 PM

Friday, April 19, 2013
8:30 AM - 12:30 PM