Introduction
In the United States, public sector pensions are offered by federal, state and local levels of government and are available to most public sector employees. The promise of a pension on retirement is a significant part of government compensation. Public pensions have long been advertised as offering generous, guaranteed benefits for public employees while collecting low and stable contributions from taxpayers (Biggs 2013). The employer contributions to these plans may vest either immediately or after a certain number of years of service and can then be withdrawn or rolled over to another retirement plan if the employee leaves the company. These retirement plans may be defined-benefit (DB) or defined-contribution (DC) pension plans; although defined-benefit plans have been most widely used by public agencies in the U.S. throughout the late twentieth century. Studies show that public sectors find that defined-benefit pension plans are strongly preferred over defined-contribution plans primarily because defined-benefit plans are more cost efficient than defined-contribution plans due to higher investment returns and longevity risk pooling (Pension Rights Center 2011).
According to Mikesell (2011), providing pensions can be expensive, particularly in light of the fact that people are living longer and returns that can be earned on funds invested to finance retirement income have recently been dismal. Public pension funding has become a pressing policy issue in the wake of the financial crisis and given the pending retirement of a large number of baby boomers entering retirement age. The pension crisis has posed financial difficulty in paying for federal, state, and local pensions in the U.S. for several reasons; the pri...
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... face and the downfall companies may continue to experience.
Conclusion
The importance of properly financing state and local government retirement systems has never been greater in the wake of so many pension plan funding catastrophes. It is mandatory that employers balance the responsibility of providing sufficient retirement income in conjunction with controlling the cost to maintain and fund retirement plans. To counter the current pension concerns, over the past 20 years there has been a significant shift in retirement plan structures, from the outdated DB plan to the more modern DB plan. As a result of this change, the primary responsibility for preparing for retirement has been removed from the employer and placed upon employees. This option will help with pension planning going forward, but still does not solve the outstanding pension plan crisis of today.
Patrick, C 2004, The Guardian: Australia may hold key to pensions, 12 October 2004, retrieved 21 July 2006
San Diego has an unfunded pension liability of $2.1 billion. There was the choice of either cutting public goods and services or raises taxes in order to pay for them. There are three events that played a significant role in the pension crisis. The first of these being Proposition 98.
In America’s early days before the kickoff of industry, there was little need for retirement savings for a few key reasons. First of all, people were dying at a much earlier age; most people didn’t live past 38, whereas in 1900, 60 years of age was common for about 40 percent of the population and 15 percent experienced 80 years of life. Another reason for the irrelevance of social security in the 19th century and earlier was that people were usually living rurally on farms with extended families to take care of them. Furthermore, the Civil War also didn’t allow the government much economic room to consider providing a service such as social security. However, after the Civil War, pensions were a form of social security for civil war veterans that carried into their retirement. Unfortunately these pensions provided support for only a very small portion of the population; not even one percent of Americans received these pensions. Despite a much lower need for social security in the 18th ...
The current pension plan which BTH provides to its employees are defined benefits pension plan. Defined benefits pension plan is an employer-sponsored retirement plan where employee benefits are sorted out based on a formula using factors such as salary history or duration of employment. The employer bears investment risk and controls portfolio management. The employer will need to dip into the company’s earnings when the returns from the investments devoted to funding the employee’s retirement result in a shortfall.
In my position as a pension benefit specialist with Towers Watson, I have gained invaluable experience working with plan administrators to process participant request, address inquiries, and resolve disputes. Through this experience I have learned a great deal about pension law, pension plan design, processes, and policies. This experience has allowed me to exercise my skills in time management in adhering to client service level agreements to ensure participant’s request are handled in a timely fashion. In addition have had the chance to hone my research and analytical skills in reviewing and relaying retirement plan information to participants.
To illustrate these tendencies, several macro-level trends and events in Illinois’ recent history warrant brief discussion. First, Thomas Walstrum, a business economist from the Federal Reserve Bank of Chicago, published a striking analysis in 2016 concerning Illinois’ fiscal situation that succinctly illustrated how the state’s current fiscal trajectory essentially began in the late 1980s. In his article, “The Illinois Budget Crisis in Context: A History of Poor Fiscal Performance,” he posits that the state could have been categorized as a low-expenditure, low-revenue state prior to the 1990s (Walstrum). Starting in the mid-1990s, however, his analysis shows that the state began consistently spending more than it took in in revenues, significantly outpacing the national average (see figs. 1-3). From the years 1994 to 2010, Illinois’s spending averaged 115.9% of its revenues compared with 105.7% for the typical U.S. state (see fig. 4). The main source of this increased spending was pension-related and since revenues continued to remain low, the state began accruing debt to cover these liabilities (Walstrum). This imbalance between revenues and expenditures indicates that Illinois’ budget has not really been balanced since this period in the 90s. In his analysis, Walstrum also treats the yearly change in pension liabilities as an expenditure, treating future payments as if they were being made right now. In doing so, he demonstrates that Illinois was actually a much higher expenditure state than commonly believed since it was merely deferring those expenditures in the form of pension fund payments well into the future
Today, the future of Social Security is in the news again. The reason Social Security is of such concern is that the extremely large group of citizens born in the post-World War II period—the much-discussed baby-boom generation—is retiring. The generation that will take its place in the workforce is far smaller in proportion to the number of retirees, raising fears about the sustainability of Social Security. In the past, proposed solutions to the various problems facing Social Security aroused great debate. Each time, however, the arguments were stilled, repairs were made, and the system continued to fulfill its mandate. That uncertainty about the future has resulted in suggestions for change that range from minor adjustments to complete privatization of the ...
A major reform, Assembly Bill 340, passed by Jerry Brown in 2012 ended in large-scale reforms. The new reform requires all new public employees to pay for at least 50 percent of their pensions. This takes the financial burden off of the taxpayer. Additionally, AB 340 increases the retirement age for new public workers and caps the salary amount that can go toward pensions.
Social security, the federal retirement system, is one of the most popular government programs in United State?s history. Today, Social Security benefits are the backbone of the nation's retirement income system. The long road to the successful development of social security began in 1935. Before 1935, very few workers received job pensions. Those workers that were covered never received benefits because they were not guaranteed.
Social Security has played a major role in supporting the elderly as well as sick and disabled financially for many years. However, we do not know how long this will last their are many problems facing social security and the funding of it with the population continuing to grow more and more people are taking advantage of social security. The main problem is people who do not really need the help and free income of social security abusing it making the government actually spend more than they actually putting into the social security fund. In this paper I will not only discuss the problems surrounding social security but also solutions in which could not only help better social security but also make it available for generations to come.
The push for Congress to pass legislation protecting the rights of employees and their retirement was inevitable. Retirement plans are extremely important for all working individuals. Having funds to keep or exceed ones current standard of living and to enjoy one’s life beyond expectations after retire...
(2010)-(States, Congressional Washington DC): Congress of the United Budget Office, Scholarly article Social Security- United States- Finance: retirement income; online Access: http://purl.access.gpo.gov/GPO/LPS, http://www.cbo.gov/publication/21547
Privatizing of social security has been a subject of debate over the years ever since former president George. W. Bush suggested it back in 2004.Over 96% of the American workers benefit from the social security after paying the social security tax (Aaron 12). This is to say that over 49 million people receive some amount of money from the system which fortunately for them is much higher than the taxes they contribute towards the same. While such payment may not be more than $895, nearly two thirds of the American retired population acquires half of their income from the social security payments. For some it is the only source of income. One importance of this social security is its ability to cover the users from unpredictable economic environment including fluctuations in demand and supply and inflation rates. Additionally the security covers them against possible disability or unexpected demise of loved ones. So with the increasing economic uncertainty both nationally and globally, social security is needed more than ever before and this is why privatizing it is the worst idea ever.
There is much-heated debate on the issues of Social Security today. The Social Security system is the largest government program of income distribution in the United States. People are concerned that they won't see a dime of what they worked so hard to contribute into the Social Security system for so many years. Social Security provides benefits to about forty-three million Americans. Not only to retired workers, but also to their spouses and dependents of the workers who die prematurely. It also provides benefits to disabled workers and their dependents. Social Security appears to most people like a simple retirement saving’s account. After all, you generally contribute through payroll deductions, then get money back after you retire. Nonetheless, Social Security is a complex and intricate communal program. By design, Social Security involves massive subsidies from the next generation of retirees to the present, from single workers to married couples. Now that the gigantic post World War II baby boomers generation approaches retirement age, there is concern about the consequences it will have on Social Security. There are basically three options, we can do nothing and allow Social Security to run it’s course, revise Social Security, or consider privatization of the system.
Michael Jones worked his whole life. At the age of 15 he started as a dishwasher at a restaurant a mile away from his house. He never graduated high school because he had to quit school to help his single mom support a family of six. There were many times in his life where he worked two jobs, but at minimum-wage, if that, 80 hours a week still did not go far. By the age of 20 he was married, and soon began to have a family of his own. Michael is a simple man but a hard workingman. Michael rarely took vacations, worked 60+ hours a week, and raised four daughters of his own. After about 25 years of marriage Michael and his wife divorced. Recently Michael turned 65, and against his desire to keep working, his doctor suggested that he retire, due to suffering from two heart attacks, one when he was 50, the other when he was 62. For 50 years Michael has worked many jobs, unfortunately, due to his limited education, he often worked minimum paying jobs. During the first half of this working life he was supporting his family, and Michael was only able to save for retirement after his children had graduated college. Only his latest employer offered pension plan. Now after working his whole life, Michael is left with $305 a month from his pension, and $742 from Social Security. Social Security has become his major source of sustainment. The Social Security Administration (SSA), has become a lifesaver for Michael and most retirees. This paper will attempt to answer how the Social Security Administration came to be, and what it does for the country and its hard working citizens. It will give a brief overview on the history of the administration; what statutes give the agency its authorities; ...