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2nd
Quarter 2003
Executive
Summaries
Health and Retirement
 Dependent
Care Spending Accounts-Do They Make Sense in 2003?
by Joe Lineberry and Dennis T. Blair
The perception that EGTRRA changes lessened the benefits of dependent
care spending accounts (DCSAs) for employees, particularly the lower
paid, is a myth. In fact, because EGTRRA allows salary reductions
to dependent care spending accounts to increase employees' earned
income tax credits, more employees will now benefit from DCSAs.
In demonstrating how this is so, the authors provide general illustrations
that employers will find useful for communicating the new tax credit-DCSA
tradeoffs to employees.
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The
Consumer-Driven Approach: Can It Pick Up Where Managed Care Left
Off?
by Steve Halterman, Chris Camero and Pete Maillet
Managed care has failed and health care costs are once again out
of control. Given the current political, social and economic environment,
there are now two options: a single-payer socialized health care
system, or an aggressive and global employer health benefits redesign
that strongly encourages consumer-driven behavior. This article
discusses the failure of managed care and ways that employers can
promote consumer-driven behavior now using available tools and plan
provisions.
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Living
to 100 and Beyond-Implications of Longer Life Spans
by Anna M. Rappaport and Alan Parikh
The challenge of longer life spans will center on the problem of
allocating individual, family and social resources most effectively.
To create a context for understanding the significance of measuring
and forecasting mortality trends, this article addresses concerns
about the implications of increasing longevity to very high ages
for families, businesses and society as a whole.
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The
Significance of Integrated Plans
by Pamela Perun
The extent of Social Security integration in the private pension
system has long been a question, but the debate over Social Security
reform heightens its importance. Using multiple measures and a previously
unexplored dataset (Form 5500), this article examines the prevalence
of plan integration and then uses statistical procedures that predict
which type of plans are most likely to be integrated.
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Employer
Stock in Retirement Plans: Investment Risk and Retirement Security
by Patrick J. Purcell
This paper describes a statistical analysis of the relationship
between the characteristics of defined contribution plans and the
proportion of plan assets held as employer securities. It then discusses
the provisions of the Employee Retirement Income Security Act (ERISA)
that apply to employer securities in retirement plans. It concludes
with a summary of bills introduced in the 107th Congress that would
amend these provisions of ERISA.
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Are
Cash Balance Plans Defined Benefit or Defined Contribution Plans?
by John A. Turner
Cash balance plans are hybrid pension plans that U.S. pension law
treats as defined benefit plans despite their defined contribution
plan features. After reviewing the features of cash balance plans
from worker and employer perspectives, the author demonstrates how
treating cash balance plans exclusively as defined benefit plans
creates problems. He argues that the remedy is hybrid regulation-regulating
some aspects of cash balance plans as defined benefit plans (e.g.,
employer behavior) and other aspects as defined contribution plans
(e.g., benefit accruals).
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Investment
Choice in Defined Contribution Plans: The Effects of Retirement
Education on Asset Allocation
by Leslie A. Muller
Recently, both pension plan sponsors and policy makers alike have
become concerned as to whether participants have the financial knowledge
to choose how their pension assets are invested. This article provides
evidence of the effect of retirement classes on asset allocation
in self-directed DC plans. I find that those with a relatively high
degree of risk aversion invest a larger percentage of their assets
in equities after attending a class, with individuals who are farther
from retirement making the largest re-allocations to equity.
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
$100 (or $75 for CEBS registrants).
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