Public Policy & Aging E-Newsletter

Volume 2, Number 1, January 2008

This bimonthly e-newsletter highlights key developments and viewpoints in the field of aging policy from a wide variety of sources, including articles and reports circulating in the media, academy, think tanks, private sector, government and nonprofit organizations.

The goal of this email publication is to reach teachers, students, and citizens interested in aging-related issues, especially those who may not have sufficient access to policy information disseminated both in Washington and around the country.

A. CMS Publishes National List of Poor-Performing Nursing Homes, Key Tool For Families Seeking Quality Care: The Centers for Medicare & Medicaid Services (CMS) has released the first ranking of the nation’s poor-performing nursing homes, granting powerful new information for those individuals seeking long-term health care services. Click here to read about the 52 poor-ranking facitilites.

B. Kohl: Hidden 401(k) Fees Threaten Retirement Security of Older Americans: U.S. Senate Special Committee on Aging Chairman Herb Kohl (D-WI) recently held a hearing on the devastating effect hidden 401(k) fees can have on retirement savings and the need for simple and clear disclosure. Click here to view.

C. Modernizing Older Americans Act Programs: This report from the U.S. Administration on Aging (AoA) chronicles the partnerships between AoA and the National Aging Services Network (the Network) to respond to the increasingly diverse needs of today’s aging population.

II. WHAT’S HAPPENING AROUND THE COUNTRY?

A. Valuing the Invaluable-A New Look at State Estimates of the Economic Value of Family Caregiving: This AARP Public Policy Institute Data Digest takes a fresh look at estimating the economic value of family caregiving at the state level. Click here to view.

B. Employment-Based Retirement Plan Participation-Geographic Differences and Trends, 2006: This issue brief from EBRI closely examines the level of participation by workers in public- and private-sector employment-based pension or retirement plans, based on the U.S. Census Bureau’s March 2007 Current Population Survey (CPS).

C.Pensions and Retirement Plan Enactments in 2007 State Legislatures: From the National Conference of State Legislatures (NCSL), this report summarizes selected pensions and retirement legislation that state legislatures have enacted in recent years.

III. THIS ISSUE'S MAJOR POLICY STORY: PENSIONS

Because the future of Social Security financing grabs headlines, we often lose track of what is happening to other retirement vehicles. In this issue we focus on recent developments in state, local, and private pensions. The news is mixed. Once defined-benefit plans—that promised specific future pension benefits based on employees’ earnings or length of service, or both—dominated the pension field. Employers were responsible for setting aside sufficient funds to cover their obligations. The number of defined-benefit plans, and the percentage of workers (even high wage earners) so covered historically have declined over time. Bankruptcy and corporate take-overs account for some of the decline. Despite the protection offered in 1974 with the enactment of Employee Retirement Income Security Act (ERISA), employers have taken advantage of loopholes. Meanwhile, corporations have replaced or adopted instead defined-contribution plans, which puts the burden of investments on employees. The shift has been justified as a boon to young workers, who prefer portability.

Nonetheless, as the articles in this section underscore, the problem of coverage increases. Whereas virtually every American employee is covered under Social Security, the percentage of workers eligible for private pensions has declined since the passage of ERISA. There are disparities by race, ethnicity, and gender, which reflect differences in meeting eligibility criteria, length of services, and income differentials.

The architects of Social Security envisioned retirement to be financially analogous to a three-legged stool. It consisted of Social Security contributions, supplementary pension benefits earned in the work place, and individual savings. If we are truly concerned about the financial well-being of those who follow the Baby Boom generation, it behooves us to pay attention to all three income sources, not just Social Security.

- Andy Achenbaum

A. State and Local Pensions are Different from Private Plans: The Center for Retirement Research at Boston College is undertaking a multi-year in-depth study of state and local pension plans. This brief identifies the key differences between employer-sponsored plans in the private and public sectors.

B. Preparation for Retirement-The Haves and Have-Nots: This survey from AARP gages the level of retirement preparedness of those households that participate in an employer-sponsored defined contribution plan (the "Haves") versus those that do not have access to a plan (the "Have-nots").

C. Women Face Challenges in Ensuring Financial Security in Retirement: Despite increases in women's workforce behavior in the past 65 years, elderly women have persistently high rates of poverty. Thus, it is important to understand the differences between men's and women's retirement income, and how women may fare given future reforms to Social Security and pensions. Click here to view this report from GAO.

D.Promises With a Price-Public Sector Retirement Benefits: This groundbreaking report from The Pew Chariable Trusts provides first-of-its-kind data about the long-term costs of public sector benefits. It highlights which states are prepared to pay the significant bill coming due, which are not, and why it matters to state lawmakers and citizens alike.

E. Do Financial Literacy and Mistrust Affect 401(k) Participation?:This brief from the Center for Retirement Research at Boston College extends the issues of financial literacy and mistrust to the domain of 401(k) participation during a period of rapid change in the nature of the participation decision.

IV. WORTH NOTING

A. 2007 Health Confidence Survey (HCS)-Rising Health Care Costs are Changing the Ways Americans Use the Health Care System: The 2007 HCS represents the 10th wave of an annual survey to assess the attitudes of the American public regarding the U.S. health care system. Click here to view this survey from EBRI.

B. Aging Baby Boomers: Reprinted with permission from the Congressional Quarterly Researcher, this report provides an in-depth look at the aging boomers. More information about the CQ Researcher can be found on their website.

C. Gender Disparities in Health and Mortality: This report from the Population Reference Bureau discusses specific factors, like gender, that determine how long a person can expect to live.

A. Towards Lifetime Neighbourhoods-Designing Sustainable Communities for All: This paper from the ILC-UK discusses the concept of "lifetime neighbourhoods": communities that offer everyone the best possible chance of health, wellbeing, and social, economic and civic engagement regardless of age.

B. Tackling Insecurity in Old Age-The Challenge of Universal Pensions: The United Nations Department of Economic and Social Affairs brings us this report on a universal pension plan proposal that would lend a hand to the nearly 80 percent of older persons living in developing countries who lack adequate income security.

C. World's 300 largest Pension Funds: Click here to view Watson Wyatt's analysis of the largest pension funds in the world.

VI. PERSPECTIVES ON POLICY: ROB HUDSON, EDITOR, PP&AR

The Spring 2007 issue of PP&AR addresses some of the pension issues that Andy Achenbaum has raised above. The organizing theme was about “risk-shifting” or the contemporary policy trend to move responsibility for social well-being from government, employers, and the formal sector onto individual citizens, employees, and the informal sector of family, friends, and neighbors. In particular, Teresa Ghilarducci of Notre Dame, documents the pressures that are building on both today’s retirees and older workers, noting that working longer may not be the “win-win” solution that “productive aging” advocates suggest. And, Alicia Munnell, Director of Boston College’s Center on Retirement Research, uses the Center’s “National Retirement Risk Index” to document trends in public and private pension policy and practice that portend serious economic difficulty for older workers and retirees of the future. And, Craig Copeland of the Employee Benefit Research Institute, documents alarming increases in debt levels among older people, calling particular attention to older adults putting their principal asset—their home—at risk through various refinancing devices.

Please click here to purchase a copy of the Spring 2007 issue, to purchase the current issue, or to subscribe to the Public Policy & Aging Report.

The Public Policy & Aging E-Newsletter is a free bimonthly email publication. If you would like to subscribe, please click here and type “Subscribe” in the subject line. If you would like to unsubscribe to this newsletter, please click here and type “Unsubscribe” in the subject line.

Newsletter Editors: Ellyn Emsley and Greg O'Neill, National Academy on an Aging Society; Andy Achenbaum, University of Houston.

The Public Policy and Aging E-Newsletter is supported in part by a grant from the AARP Office of Academic Affairs.