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Publications by Barbara Butrica for Retirement Policy


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Assessing Pension Benefits Paid under Pennsylvania's State Employees' Retirement System (Research Report)
Richard W. Johnson, Barbara Butrica, Owen Haaga, Benjamin G. Southgate

Pennsylvania’s pension plan for state employees receives a failing grade in the Urban Institute’s state and local pension plan report card, and ranks as the third-worst plan in the nation covering newly hired general state employees. The plan scores poorly because it is inadequately funded, it penalizes work at older ages by reducing lifetime benefits for older employees, and it provides few retirement benefits to short-term employees. Age-25 hires must work 32 years before they accumulate rights to future pension benefits worth more than their required plan contributions. Various pension reforms could distribute benefits more equitably across the workforce.

Posted: September 04, 2014Availability: HTML | PDF

Flattening Tax Incentives for Retirement Saving (Research Report)
Barbara Butrica, Pamela Perun, C. Eugene Steuerle

Under current law, a large share of tax benefits for retirement saving accrues to high-income employees. We simulate the short- and long-term effect of three policy options for flattening tax incentives and increasing retirement savings for low- and middle-income workers. Our results show that reducing 401(k) contribution limits increases taxes for high-income taxpayers; expanding the saver's credit raises saving incentives and lower taxes for low- and middle-income taxpayers; and replacing the exclusion for retirement saving contributions with a 25 percent refundable credit benefits primarily low- and middle-income taxpayers, and raises taxes and reduces retirement assets for high-income taxpayers.

Posted: June 30, 2014Availability: HTML | PDF

Policy Brief: How Will Teachers Fare in Rhode Island's New Hybrid Pension Plan? (Summary)
Richard W. Johnson, Barbara Butrica, Owen Haaga, Benjamin G. Southgate

Hybrid retirement plans that combine defined benefit pensions with 401(k) type, defined contribution accounts can play important roles in the reform of public-sector pensions. Summarizing results from our longer report, this brief shows that most public school teachers in Rhode Island will earn more retirement income from the state’s new hybrid plan than they would have earned in the former stand-alone defined benefit plan. However, teachers with at least 25 years of completed service, who account for only one-quarter of the total employed by the state, will fare worse in the hybrid plan.

Posted: May 30, 2014Availability: HTML | PDF

How Will Rhode Island's New Hybrid Pension Plan Affect Teachers? (Research Report)
Richard W. Johnson, Barbara Butrica, Owen Haaga, Benjamin G. Southgate

In 2011 Rhode Island replaced the stand-alone defined benefit pension plan it provided to state employees with a hybrid plan that reduced the defined benefit component and added a 401(k)-type, defined contribution component. Although controversial, the new hybrid plan will boost retirement incomes for most of the state’s public school teachers. Our simulations show that two-thirds of newly hired teachers will earn more retirement benefits under the hybrid plan they would have earned under the old plan. Defined contribution plans—the dominant employer-sponsored retirement plan in the private sector—can play an important role in the reform of public-sector pensions.

Posted: May 30, 2014Availability: HTML | PDF

When Do State and Local Pension Plans Encourage Workers to Retire? (Research Brief)
Richard W. Johnson, Barbara Butrica, Owen Haaga, Benjamin G. Southgate

Traditional defined benefit pension plans that cover nearly all state and local government employees generally penalize work at older ages. In more than three-fifths of state-administered plans, employees hired at age 25 will receive lower lifetime pension benefits if they continue working after age 57 because retirement-eligible workers cannot receive benefit checks while they remain on the job. This reduction in benefits can create strong retirement incentives, which are hard to justify as the population ages and health gains and declines in physical work enable more older people to work. Well-designed public pension reforms could eliminate these work disincentives.

Posted: April 30, 2014Availability: HTML | PDF

How Long Must State and Local Employees Work to Accumulate Pension Benefits? (Research Brief)
Richard W. Johnson, Barbara Butrica, Owen Haaga, Benjamin G. Southgate

Traditional defined benefit pension plans that cover nearly all state and local government employees generally provide generous retirement benefits to long-tenured public servants but little retirement security to those with shorter tenures. Virtually every plan requires employee contributions. In half of those plans, employees must work at least 20 years before their future benefits are worth more than those contributions. Employees who separate earlier get nothing from their plan. Alternative designs like cash balance plans distribute benefits more equally across the workforce and allow employees who spend less than a full career in public service to accumulate retirement benefits.

Posted: April 30, 2014Availability: HTML | PDF

Do State and Local Pensions Lock In Mid-Career Employees? (Research Brief)
Richard W. Johnson, Barbara Butrica, Owen Haaga, Benjamin G. Southgate

State and local pension plans often allow employees who have completed 25 or 30 years of service to collect benefits regardless of their age, instead of waiting until they reach their plan’s normal retirement age. The lifetime value of their pension surges when they qualify for early benefits. Our analysis shows that on average, half the benefits employees have accumulated by their early 50s or late 40s are earned from a single year of work. These patterns create strong incentives for mid-career workers to remain on the payroll until they realize these windfalls, including those ill-suited for their jobs.

Posted: April 30, 2014Availability: HTML | PDF

The Changing Causes and Consequences of Not Working before Age 62 (Series/The Retirement Project Discussion Papers)
Barbara Butrica, Nadia Karamcheva

This study considers nonworking older adults and their channels of support before qualifying for Social Security benefits. Results show that among adults ages 55 to 61, nonearners are more likely than earners to be poor, to be concerned about not having adequate resources for retirement, and to be dissatisfied with their retirement when they do retire. However, nonearners are a heterogeneous group. A large share is poor, with low incomes and limited wealth. But a sizeable share is income-poor and asset-rich. More than for singles, this phenomenon characterizes nonworking married adults, who are generally better off than their unmarried counterparts.

Posted: April 05, 2013Availability: HTML | PDF

Retirement Plan Assets (Updated 4/13) (Research Brief)
Barbara Butrica

The retirement savings of American households took a big hit when the stock market crashed in 2008. Since then, however, a good portion of these losses has been reversed. This fact sheet reports the value of assets held in retirement accounts and defined benefit plans and how they have changed since 2007-before the stock market crash and the Great Recession. It replaces "Retirement Account Balances"

Posted: April 05, 2013Availability: HTML | PDF

Automatic Enrollment, Employee Compensation, and Retirement Security (Discussion Papers)
Barbara Butrica, Nadia Karamcheva

This study uses restricted microdata from the National Compensation Survey to examine the impact of autoenrollment on employee compensation. By boosting plan participation, automatic enrollment likely increases employer costs as previously unenrolled workers receive matching retirement plan contributions. Our data shows a significant negative correlation between employer match rates and autoenrollment. We find no evidence that total costs differ between firms with and without autoenrollment or that DC costs crowd out other forms of compensation-suggesting that firms might be lowering their match rates enough to completely offset the higher costs of autoenrollment without needing to reduce other compensation costs.

Read the full report here (Leaving the UI web site)

Posted: December 19, 2012Availability: HTML | PDF

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