Understanding Retirement Policies: A Primer

Most of the significant policy issues associated with retirements and pensions in the United States today hinge on the relative responsibilities of Government, employers and employees in providing for the well-being of workers and their families after they retire. These three interconnected sources of retirement income are all governed by Federal legislation and statutes, each of which offers its own issues, opportunities and challenges. I’ll briefly review each of the three and provide an overview of the policy considerations involved with each.

Government Funded Programs: The Federal Government provides social insurance programs under the Social Security Act of 1935, as amended, and as implemented in Title 42, Chapter 7, of the U.S. Code. These programs originated in the Great Depression, when over 50% of elderly, retired people in the United States lived in poverty.

Title 42, Chapter 7 governs a variety of social insurance programs (including Medicare, Medicaid, TANF, etc.) , though when we use the term “Social Security” we are generally referring only to the Old Age, Survivors and Disability Insurance (OASDI) program. OASDI provides monthly benefits to retirees, dependants, widows, spouses, divorced spouses and disabled workers. In the United States today, workers contribute via mandatory payroll deductions under the Federal Insurance Contributions Act (FICA), which are then matched by their employers.

These funds are held in, and dispersed from, the Social Security Trust Fund. OASDI is a “pay as you go” program, meaning that today’s workers pay for today’s retirees, not for their own future retirements. The problem with this approach in the United States today is obviously a demographic one: the ratio of current workers to retirees is decreasing rapidly as the baby boom generation reaches retirement age, and people are living longer as birth rates decline. By most forecasts, if nothing changes, the Social Security Trust Fund will run dry sometime between 2030 and 2040.

None of the policy options available to remedy this situation are likely be popular among voters (e.g. suspend the program, allow private employee-directed investments, reduce benefits, increase minimum retirement age, raise Social Security taxes, borrow to pay OASDI benefits, make riskier investments with the trust fund in the hopes of increasing investment gains, etc.), hence the decisions tend to just keep getting deferred. This is one of the most profound socioeconomic issues facing our country today, especially as other entitlement programs grow and expand.

Employer Funded Programs: The traditional employer funded pension was a defined-benefit plan, in which employees, in exchange for set periods of employment, were granted certain payments and benefits for the remainder of their lives after they left the work force.

Defined-benefit plans are rapidly dying out everywhere except for in Government and larger, older, more unionized companies and corporations. They are being replaced with defined-contribution plans, like 401(k)s, where employers, employees or both make contributions that go into individuals’ retirement accounts.

The most important piece of legislation governing employer or employee funded programs is the Employee Retirement Income Security Act of 1974 (ERISA), as amended. ERISA was designed to protect the interests of pension plan participants by requiring disclosure of information concerning plans and by establishing standards of conduct for plan administrators.

ERISA also established the Pension Benefit Guaranty Corporation (PBGC), an independent Government agency designed to provide uninterrupted pension benefits in cases where employers can no longer meet their obligations to their retired employees. The Pension Protection Act of 2006 sought to strengthen the PBGC and ERISA in general by eliminating loopholes and penalizing companies that under-fund their pension programs.

Defined-benefit plans are also typically “pay as you go” type arrangements, and they have run against the same sorts of demographic pressures that assail Social Security. From a government policy standpoint, lawmakers must balance provisions that protect employees with realistic assessments of what businesses can bear; if the government mandates pension provisions that bankrupt businesses and cause all of their employees to lose their jobs before they get a chance to retire, has the net utility to society been increased?

Employee Funded Programs: Given the resource pressures noted above, the Government and businesses have a vested interest in encouraging employees to help fund their own retirements.

In addition to ERISA, the Internal Revenue Codes of 1954 and 1986, as amended, are the primary laws influencing employee funded programs, as they provide tax incentives for employees to set aside funding for their retirement; “401(k),” for example, refers to a chapter in the tax code.

Employees may contribute to defined-benefit plans such as 401(k)s that are sponsored by employers, or they may contribute to individual retirement accounts (IRAs); there are several different types of IRAs (Roth, Traditional, SEP, Simple, etc.) that have different tax provisions associated with them.

As originally constituted, IRAs were essentially cash vehicles, but the Economic Growth and Tax Relief Reconciliation Act of 2001 made it easier to use other types of assets to fund retirement accounts.

From a policy-making standpoint, lawmakers must balance a desire to have employees fund their own retirements with a realization that the tax incentives being offered to encourage such investment also results in reduced tax revenues to the federal government; it would be simple to write tax law that would encourage employees to dramatically increase their contributions, but that would dramatically increase the budget deficit by lowering revenues.

Recommended Further Reading:

  • The Coming Generational Storm: What You Need to Know about America’s Economic Future, by Laurence J. Kotlikoff and Scott Burns, MIT Press, 2005.
  • Coming Up Short: The Challenge of 401(K) Plans, by Annika Sunden and Alicia Haydock Munnell, Brookings Institution Press, 2004.
  • Fundamentals of Private Pensions (Eighth Edition), by Dan McGill, et al., Oxford University Press, 2005.
  • The Economics of an Aging Society, by Robert L. Clark, et al., Wiley-Blackwell, 2004.

A Model for Municipal Management

I wrote this article in 2008 as part of an urban and regional planning seminar. It attempts to provide a modeled framework within which municipal managers may maximize the civic impact of their planning and financial decisions. Click on the link below to open the PDF version of the article.


A Memorial for Haiti (One Year Later)

I was humbled and honored one year ago today to be asked by the Haitian Students Association (HSA) at the University at Albany to speak at their Memorial Service tonight for victims of the January 12th earthquake. The organization that I head (University Auxiliary Services at Albany) supported HSA and the entire UAlbany community’s response to this humanitarian crisis by matching gifts to the UAlbany Haiti Relief Fund up to $40,000. On the one-year anniversary of this moving event, I provide the text of my remarks below:

I want to speak with you briefly tonight about giving and about stories.

I’ve spent many years in the nonprofit sector, and know that fundraising is an art, a science, and a business. It’s hard work. The people who do it well know how to identify a need, craft a compelling story about that need, broadcast that story widely, find those potential donors whose personal interests resonate with that story, and then convince them to act on that resonance by making a donation to help meet the need.

It takes a lot of planning. It can take a long time. And the success rate can be very low, as people are bombarded from all sides with competing, worthy stories that often cancel each other out.

Sometimes, though, stories about need are so compelling that they tell themselves. The Haitian Earthquake of January 2010 is such a story.

I imagine most of us here sat riveted by televisions or computers as the earliest words and pictures began to leak out of a shattered nation in the hours after the earthquake. The sights and sounds we were exposed to, even from 1700 miles away, didn’t require anybody to craft a story and tell it to us.  We got it. We understood.

I know for some here, the most tragic sound they heard in the days after the Earthquake was silence, as they waited for calls or e-mails confirming the health and safety of loved ones in Haiti. I also know for some here, those calls still haven’t come, and they never will.

President Woodrow Wilson said nearly a century ago that “There is no cause half so sacred as the cause of a people, and there is no idea so uplifting as the idea of the service of humanity.”

What was most remarkable to me in the days after the earthquake was watching the UAlbany community, including many of you in the room tonight, take up the cause of the Haitian people, rallying together around this idea of service of humanity.

Even as you grieved for lives lost, you began working to help the survivors look to the future.

Even as you wept at Haiti’s despair, you began working to provide hope.

Even as buildings tumbled and rubble was hauled away, you began working to help Haiti rebuild.

I’m very proud to be a UAlbany alumnus, and honored to work for you at UAS, but never have I been prouder of this University’s students, faculty, administration, alumni and staff as I have been while watching the response to the Haitian crisis over the past two weeks.

You, the University, are UAS’s only customer, and our sole mission is to improve the quality of life that you experience here. And I believe strongly that by supporting the UAlbany Haiti Relief Fund, UAS does improve the quality of life of each and every person associated with this campus. We are all better people for giving our time, treasures, and talents, whatever they may be, to provide such service to humanity.

If the world is truly to be within our reach, then we must willingly assume an obligation of responsibility and a duty of care for that world and its people. So the story I want to craft, and that I want everyone to hear, is the story of how the University at Albany accepted that responsibility and duty without pause or compromise.

The world is a better place in your hands tonight, Albany.

Implementing Idealism: HIV Testing and Confidentiality in New York State

Acquired Immunodeficiency Syndrome (AIDS) is a disease of the immune system caused by the human immunodeficiency virus (HIV), which renders people vulnerable to life-threatening infections and cancers. In the early 1980s, during the nascent days of the AIDS epidemic, there was significant social stigma and fear associated with AIDS infection, as the disease first manifested itself through outbreaks of rare cancers among young gay men in California and New York. HIV was discovered and identified as the AIDS-causing virus in 1984, and prevention education efforts thereafter have focused on HIV testing as a key tool for enabling individuals to best protect themselves and others from infection or transmission. Given the ongoing social stigma associated with AIDS, however, privacy and confidentiality provisions associated with HIV testing remained paramount, and had to be addressed before testing could become widely useful among populations who were fearful that they could be harmed, persecuted, institutionalized or otherwise discriminated against as a result of a positive HIV test.

New York State enacted a seminal piece of legislation in 1989 as Public Health Law Article 27-F (Pub. Health L. §§ 2780-2787): “HIV Testing and Confidentiality Law.” The initial Article 27-F provisions have been amended since their passage, and were significantly supplemented in 1998 with the passage of New York State Public Health Law Article 21, Title III, (Pub. Health L. §§ 2130-2139): “HIV Reporting and Partner Notification Law,” the provisions of which went into effect in 2000. These laws specifically applied to, and had to be implemented by: physicians and others authorized to order lab tests or make medical diagnoses; persons who receive HIV-related information in the course of providing health or social services; persons who receive HIV-related information pursuant to a release; or health care providers or other medical services plans.

The seemingly simple concepts behind these laws were subject to a great deal of interpretation and ambiguity. While both Article 27-F and Article 21, Title III have been successfully implemented, the machinery required to support their provisions is far more complicated and loophole-ridden than that originally envisioned by the pioneering legal and social activists who first advocated for the confidentiality provisions now embodied in the New York State’s health laws. In the 2007 article connected to the link below, I discuss the challenges, complicating factors, approaches taken in the implementation process, and outcomes associated with applying the noble idealism embodied in Article 27-F in the crucible of the “real world” in which State and nonprofit agencies operate. The article also provided broad lessons learned and strategy recommendations for those tasked with implementing public policy, especially when they will be blazing trails while they do it.

Implementing Idealism: HIV Testing and Confidentiality in New York State

Rulebound Rebellion: An Ethnography of American Hardcore Music

The Penn Anthropology Department defines “ethnography” as: “(1) the fundamental research method of cultural anthropology, and (2) the written text produced to report ethnographic research results.” Penn’s site further notes that: “Ethnography as method seeks to answer central anthropological questions concerning the ways of life of living human beings. Ethnographic questions generally concern the link between culture and behavior and/or how cultural processes develop over time. The data base for ethnographies is usually extensive description of the details of social life or cultural phenomena in a small number of cases. In order to answer their research questions and gather research material, ethnographers (sometimes called fieldworkers) often live among the people they are studying, or at least spend a considerable amount of time with them. While there, ethnographers engage in “participant observation”, which means that they participate as much as possible in local daily life (everything from important ceremonies and rituals to ordinary things like meal preparation and consumption) while also carefully observing everything they can about it.”

This academic pproach seemed to me to be the ideal one to document my observations about American Hardcore Music, around which I’ve spent far more time than I should probably admit since its earliest, formative days in Washington, DC, nearly three decades ago. I conducted some interviews, went to a bunch of shows, dug up years worth of old reviews, interviews and notes, and parsed it all using the ethnographer’s tools to find the common threads between and meanings of the rituals that hardcore culture embraces. I’m pleased that I ended up with a very different understanding of the culture than I had assumed would be the case when I started the analysis. The names of the interviewees cited in the paper have been changed to protect the innocent and guilty alike. So without further ado, I present . . .


If I Only Had My Mind on Something Else

1. I ran out of usable song titles by The Who to caption miscellaneous posts, so having over-used “Spicks and Specks” (a Bee Gees song) almost as much as I once over-used Odds and Sods (a Who album) for such writing, I feel it only fair to forage through the Bee Gees catalog now. “If I Only Had My Mind on Something Else” was the opening track of Cucumber Castle, the odd duck in their early catalog recorded by Barry and Maurice Gibb while brother Robin was off having a star fit. Worth a spin, for sure.

2. In my usual “if it’s worth doing, it’s worth over-doing” mode, having gotten sick for the first time in a long, long time, my body decided that it should just go ahead and get really sick, with some kind of oxygen-eating crud in my chest that caused even simple, pleasurable tasks to bring on paroxysms of hacking and wheezing, which is no good! I think it’s finally passing, but I’m not rushing back to the gym, since I did that last weekend and, I think, gave it a new lease on life for another seven days. I did make a visit to the doctor, finally, and he prescribed something that slightly improved one minor symptom I already had, while giving me six other worse side symptoms, and almost immediately creating withdrawal reactions when I stopped taking it after two days. This is the second time prescribed medication has done to this me in the past several months. It’s “First Do No Harm,” Big Pharmacy, y’know?  Not “First Get Your Patients Addicted.” Sheesh.

3. During the middle of all this, I drove out to Geneseo to move Katelin home after successfully completing her first year of college. It’s great to have her home for the summer. This weekend is commencement weekend at the University at Albany, so both she and I were there on campus yesterday working our various events, she in catering, me in management by walking around. We both should be there this morning as well, but, sadly, instead I’m about to drive her down to Westchester County for the funeral of a close friend’s college-aged sibling. It’s a sobering reminder to always be thankful through these transitional times with our young adults, and to remember what a blessing it is to watch them graduate, and to bring them home.

The Kids Are Alright

1. You need to go read one of the coolest posts I’ve read in the Times Union Blogosphere in a long, long time: here. Go ahead! Shoo! I’ll wait here until you get back before prattling on about other stuff. No hurry.

2. Wasn’t that great? I sure thought so. Now, on with the prattling: if you want the data to support my contention that the evil and deplorable BCS makes fair play an impossibility in NCAA Division I men’s sports, check out this list of Division I schools ranked by athletic revenues. There are 66 BCS schools affiliated with the Big Six automatic bid conferences, and they are, pretty much, the top 66 ranked teams in terms of income from their athletic departments; Texas Christian is the highest earner among non-BCS schools, in 58th place. Now, here’s the chart showing men’s basketball expenditures. What a surprise! There are many correlations between these lists! Memphis is the highest placed non-evil-and-cheating team on this list, in 18th place, and some of the other mid-majors begin to creep into the 40s, but for the most part, this list skews heavy toward the BCS schools as well, with Duke as the biggest spender of them all. And their opponent tonight for the national championship? Butler ranks 142nd in terms of its hoops outlays. How great will it be if they pull it off tonight? (Thanks to Russ for tipping me off to this angle, here).

3. I’m thrilled to report that I think I’ve got a nesting pair of Northern Mockingbirds in the back yard. They earn their names by loudly and enthusiastically mimicking other birds, creating the bird version of musical mashups, which they broadcast with vigor. I can hear threads of numerous other bird songs in the male’s call, as well as another element: a very clear, distinct “meow! meow! meow!” I’m thinking he’s been teasing someone’s house cat recently, and listening carefully to the results.

Oh, The Things That Pop Up on Facebook (Part 2) . . .

I was a teenaged cartoon character.


I have a whiteboard in my office. I use a variety of colorful, plastic, whiteboard pens on it, which are labeled “nontoxic,” but produce volatile, organic aromas that can lead to headaches if you work with them long enough. On average, I find that only one of three whiteboard markers I pick up will actually write on the whiteboard in a way that allows readers in my office to read the marks. There appears to be no rhyme or reason as to which ones will work and which ones won’t.

When I need to clean my whiteboard, I use a plastic spray bottle of “Extra Strength Marker Board Cleaner,” which contains trisodium phosphate, may be harmful if swallowed, is an eye irritant, and must be kept out of the reach of children. Once I spray this chemical on, I have to wipe it off with either a rag (which must then be washed, consuming water and electricity), or with paper towels (which go into the trash, and then into a landfill somewhere). The longer the material on the whiteboard stays there, the harder it is to scrub off, and the more rags and paper towels are required, and the greater the likelihood that my work clothes, desk or papers will be stained by the residue I am removing.

Once I clean the board, it takes some time for it to dry, and if I try to write something on it before it does, 100% of the whiteboard markers I pick up will leave no readable marks (as opposed to the normal 66%), but will instead sort of skid over the glossy, wet surface of the board, requiring more paper towels or rags to remedy the situation. This makes real-time use of the board in meeting or teaching situations messy and difficult.

So can someone please tell me why this is a better, cleaner, safer, cheaper, or healthier system than a good old natural green slate chalkboard with a stick of chalk and a felt eraser?

Alkulukuja Paskova Karhu

Tell me: do you have to be a math geek (like me) to find this website endlessly amusing? (Make sure you have your speakers on before visiting).

In other news: I submitted my last paper for the semester last night. 13 credit hours and 131 pages worth of papers done. Too many ahead to count without getting depressed. So we will focus on the successes.

Now, let us party for 30 days! Huttah!

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