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1st Quarter 2008 Executive
Summaries
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The long-term transition from defined benefit (DB) to defined contribution (DC) occupational pensions has been the subject of academic and industry research. Even so, there remains considerable debate about the causes and consequences of this transformation. This article explores these contentious issues through a unique survey of over 1,260 U.S. experts in the field of pension financing and provision. The results suggest that apparent disagreements among experts over the current predicament and future of DB pensions in the private sector represent disagreement about the very nature of the pension promise. Those who hold to a strong version of the pension promise hold to, in fact, a quite specific relational model of modern capitalism.
Would It Have Mattered? The Consequences of Favoring Short-Term Budget Goals Over Long-Term Retirement Policy
by Stuart A. Sirkin and Sonja J. Coffin, Ernst & Young
Government policies toward defined benefit plans over the last 20 years often focused on short-term federal budget accounting rather than long-term retirement needs. In reviewing the history of U.S. pension policy, the authors argue that government policy focused on the retirement needs of workers and the concerns of defined benefit plan sponsors would have made a difference in the retirement benefits of today's middle-class workers. Although the decline in the defined benefit system was inevitable due to larger forces like globalization, those workers' defined benefit plans might not have been frozen or terminated in recent years.
Tax-Sheltered Annuities Under Code Section 403(B) New Regulations And New Obligations
by Allen T. Steinberg, Allen T. Steinberg, P.C.
Sponsors of 403(b) plans will have to become more active and hands-on in managing their 403(b) programs and providers for two reasons. First, the new 403(b) regulations published in July 2007 will impact plan sponsors' oversight of plan administration and legal compliance. Second, some of the “environmental” factors that have given rise to recent 401(k) trends apply to 403(b) sponsors and should be considered when assessing employers' relationship with their 403(b) program. In fact, for many sponsors, these trends will represent a shift in emphasis and resources far beyond the legal effort needed to comply with the new regulations.
Living With GASB 45: How To Manage Liabilities Associated With Retiree Medical Benefits
by Frank Thoen and Daniel Wade, Milliman, Inc.
The Governmental Accounting Standards Board Statement 45 (GASB 45) obliges public employers to disclose liabilities related to postretirement medical benefits. Most state and local government entities are beginning to analyze and quantify how GASB 45 liabilities will affect their balance sheets and credit ratings. This article describes the many ways to reduce those liabilities without eliminating retiree medical plan benefits altogether. Now is the time for employees and employers to work together and make difficult choices for keeping retiree medical costs and GASB 45 liabilities manageable.
More Preventive Care, and Fewer Emergency Room Visits And Prescription Drugs— Health Care Utilization In A Consumer-Driven Health Plan
by Amy R. Wilson, Eric P. Bargman, Derek Pederson, Annikka Wilson, Nancy A. Garrett, David W. Plocher and Philip L. Ailiff Jr., Blue Cross Blue Shield of Minnesota
Although consumer-driven health plans (CDHPs) have grown dramatically, the question of whether CDHPs have reduced health care costs has not been answered definitively. This article presents what the authors believe to be the first study to analyze a large sample of claims data and to look in detail at different types of utilization among enrollees in a CDHP and those in a traditional comprehensive major medical (CMM) plan. After adjusting for the finding that CDHP enrollees are both younger and healthier than those in CMM plans, the authors found that CDHP enrollees show no consistent or significant utilization differences for measures over which consumers have little control (e.g., inpatient stays); lower utilization for measures over which consumers have greater control (e.g., emergency room visits); and higher utilization of preventive services.
Full text copies of these articles are available through the INFOSOURCE™ Document Delivery Service. Article reprints are also available in quantities of 100 or more. For information, call the Publications Department at (888) 33-IFEBP. You can order your subscription (reprints and back issues) online. Four issues for $125 (or $95 for CEBS registrants).