401(k) Plans and Retirement Savings: Issues for Congress

[Excerpt] Over the past 25 years, defined contribution (DC) plans—including 401(k) plans—have become the most prevalent form of employer-sponsored retirement plan in the United States. The majority of assets held in these plans are invested in stocks and stock mutual funds, and the decline in the major stock market indices in 2008 greatly reduced the value of many families’ retirement savings. The effect of stock market volatility on families’ retirement savings is just one issue of concern to Congress with respect to defined contribution retirement plans. This report describes seven major policy issues with respect to defined contribution plans: 1. Access to employer-sponsored retirement plans. In 2007, only 61% of employees in the private sector were offered a retirement plan of any kind at work. Fifty-five percent were offered a DC plan. Only 45% of workers at establishments with fewer than 100 employees were offered a retirement plan of any kind in 2007. Forty-two percent were offered a defined contribution plan. 2. Participation in employer-sponsored plans. Between 20% and 25% of workers whose employer offers a DC plan do not participate. Workers under age 35 are less likely than older workers to participate. 3. Contribution rates. On average, participants in DC plans contributed 6% of pay to the plan in 2007. The median contribution by household heads who participated in a DC plan in 2007 was $3,360. This was just 22$15,500 in that year. 4. Investment choices. At year-end 2007, 78% of all DC plan assets were invested in stocks and stock mutual funds. This ratio varied little by age, indicating that many workers nearing retirement were heavily invested in stocks and risked substantial losses in a market downturn like that in 2008. Investment education and target date funds could help workers make better investment decisions. 5. Fee disclosure. Retirement plans contract with service providers to provide investment management, record-keeping, and other services. There can be many service providers, each charging a fee that is ultimately paid by participants in 401(k) plans. The arrangements through which service providers are compensated can be very complicated and fees are often not clearly disclosed. 6. Leakage from retirement savings. Pre-retirement withdrawals from retirement accounts are sometimes called “leakages.” Current law represents a compromise between limiting leakages from retirement accounts and allowing people to have access to their retirement funds in times of great need. In general, borrowing from a 401(k) plan poses less risk to retirement security than a withdrawal. Pre-retirement withdrawals can have adverse long-term effects on retirement income. 7. Converting retirement savings into income. Retirees face many financial risks, including living longer than they expected, investment losses, inflation, and possible large expenses for medical care and long-term care. Annuities can protect retirees from some of these risks, but few retirees purchase them. Developing polices that motivate retirees to convert assets into a reliable source of income will be a continuing challenge for Congress and other policymakers

401(k) Plans and Retirement Savings: Issues for Congress

[Excerpt] Over the past 25 years, defined contribution (DC) plans—including 401(k) plans—have become the most prevalent form of employer-sponsored retirement plan in the United States. The majority of assets held in these plans are invested in stocks and stock mutual funds, and the decline in the major stock market indices in 2008 greatly reduced the value of many families\u27 retirement savings. The effect of stock market volatility on families\u27 retirement savings is just one issue of concern to Congress with respect to defined contribution retirement plans. This report describes seven major policy issues with respect to defined contribution plans: 1. Access to employer-sponsored retirement plans. In 2007, only 61% of employees in the private sector were offered a retirement plan of any kind at work. Fifty-five percent were offered a DC plan. Only 45% of workers at establishments with fewer than 100 employees were offered a retirement plan of any kind in 2007. Forty-two percent were offered a defined contribution plan. 2. Participation in employer-sponsored plans. Between 20% and 25% of workers whose employer offers a DC plan do not participate. Workers under age 35 are less likely than older workers to participate. 3. Contribution rates. On average, participants in DC plans contributed 6% of pay to the plan in 2007. The median contribution by household heads who participated in a DC plan in 2007 was $3,360. This was just 22$15,500 in that year. 4. Investment choices. At year-end 2007, 78% of all DC plan assets were invested in stocks and stock mutual funds. This ratio varied little by age, indicating that many workers nearing retirement were heavily invested in stocks and risked substantial losses in a market downturn like that in 2008. Investment education and target date funds could help workers make better investment decisions. 5. Fee disclosure. Retirement plans contract with service providers to provide investment management, record-keeping, and other services. There can be many service providers, each charging a fee that is ultimately paid by participants in 401(k) plans. The arrangements through which service providers are compensated can be very complicated and fees are often not clearly disclosed. 6. Leakage from retirement savings. Pre-retirement withdrawals from retirement accounts are sometimes called leakages. Current law represents a compromise between limiting leakages from retirement accounts and allowing people to have access to their retirement funds in times of great need. In general, borrowing from a 401 (k) plan poses less risk to retirement security than a withdrawal. Pre-retirement withdrawals can have adverse long-term effects on retirement income. 7. Converting retirement savings into income. Retirees face many financial risks, including living longer than they expected, investment losses, inflation, and possible large expenses for medical care and long-term care. Annuities can protect retirees from some of these risks, but few retirees purchase them. Developing polices that motivate retirees to convert assets into a reliable source of income will be a continuing challenge for Congress and other policymakers

Maximizing Ferries in New York City's Emergency Management Planning

In addition to providing fast, efficient, and enjoyable public transportation under normal circumstances, ferries have consistently proven to be the most resilient mode of transit during and after emergencies. Lacking reliance on either a fixed route or the electrical grid, ferries have historically been deployed for speedy evacuations from no-notice emergency situations. Moreover, ferries are typically the first mode of transportation to resume service during prolonged transit outages, relieving New Yorkers -- particularly in communities lacking bus and subway access -- from an extended transit paralysis.In spite of ferries' utility in emergency management, they are presently underutilized in New York's waterways. This paper is a call to action to policymakers and city officials to redefine ferries as critical emergency management assets. In doing so, the City will not only be equipped for a robust, interconnected ferry transit network, but it will also be prepared to facilitate effective waterborne evacuation and transit recovery. This paper makes eight key recommendations for maximizing the role of ferries in citywide emergency preparedness:1. Increase capacity for waterborne evacuation by expanding inter-borough ferry service.2. Provide ferry crews with emergency personnel identification.3. Prioritize reimbursements to ferry operators when allocating federal and state emergency relief funds.4. Fully integrate ferries with mass transit to facilitate seamless regional mobility.5. Coordinate all regional ferry infrastructures -- including all boats and landings -- as one unified system of emergency management.6. Develop coastal design standards to equip New York's shoreline for emergency response.7. Establish a Department of the Waterfront -- a new city agency -- and house a Waterfront Emergency Management division within it to coordinate long-term planning and preparedness efforts.8. Considering ferries as essential emergency management assets, apply for government emergency preparedness and recovery grants for coastal retrofitting and additional tie-up sites

Evaluation of privacy assurance methods and guideline development: Implications for dr’s higher education institutions

This project evaluates the actual mechanism of privacy assurance in the Dominican Republic\u27s Higher Education institutions towards a standardization process. International regulations and type codes such as U.S Family Education Rights and Privacy Act (FERPA), and Spain Castilla\u27s University de La-Mancha conduct code for personal data protection have been examined in order to obtain a ground for comparing and evaluating Dominican Republic\u27s higher education privacy assurance methods. The evaluation of the Dominican Republic\u27s actual higher education was developed through investigation of the different processes and procedures that people who are responsible of the students personal data, follow to achieve their tasks. Interviews to those involved in the process have also been made. After the evaluation process several flaws were identified and a guideline developed to assist universities and higher education institutions in managing and enhancing their privacy safe methods. The creation of a good practices code for privacy assurance of student\u27s personal data has been recommended as a Universities\u27 self-regulated approach, which should precede a centrally regulated code or law

Proposal for a Non-Subsidized, Non-Retirement-Plan, Employee-Owned Investment Vehicle to Replace the ESOP

The authors have previously been critical of the existing American legal exemption and subsidy regime for employee stock ownership plans (“ESOPs”). By definition such plans create dangerously undiversified investment programs tying employees’ retirement security to the financial health of a single company – which, to compound the problem, is the employees’ employer, thereby correlating participants’ retirement security risk with the risk of losing their jobs. No demonstrated compensating policy benefit justifies this extraordinary large-scale departure from basic principles of financial prudence. One context, however, where a plausible case might be made for employee ownership is that which arises when a small-company founder retires and doesn’t wish to sell to an (or there is no available) outside buyer. An argument could be made that it should be permissible in that context for the company’s employees to form some collective finance vehicle to purchase all the shares; and perhaps the government might find a way to facilitate or at least allow that. But it shouldn’t be through the retirement system. A conceivable alternative would be to abolish ESOPs but amend the securities laws to allow establishment of an all-employee-owned trust, somewhat analogous to a mutual fund company, to borrow money and buy a company’s shares. Such a thing is currently effectively impractical under federal law except in limited situations amenable to the use of “employee cooperatives.” The new type of proposed entity would not be characterized or treated as a retirement plan, and it would not be tax-subsidized. (And we would need to retain and even strengthen regulatory protections involving such things as stock valuation. That, however, could be modeled after and subject to enforcement mechanisms similar to those that apply to mutual funds, which are subject not to ERISA but instead to securities regulation under the Investment Company Act of 1940.) This approach might be more politically feasible than simple abolishment of ESOPs without any replacement