APPENDIX

CURRENT AND RECENTLY COMPLETED

RESEARCH

The research projects in this appendix were identified by staff of The Urban Institute in the summer of 1979 as the current and most recent studies related to major policy issues of income and employment of older Americans.

The projects chosen for this compilation have been organized according to the issue structure used in section I of this report. The main emphases on the selection of projects were on their currency and their relatedness to policy issues. The specific criteria used in the selection are as follows:

(1) Projects selected are either ongoing or have been completed since December 31, 1977.

(2) Projects chosen involve both analysis and either collection of new data or generation of new information from existing data (thus, literature reviews, policy option papers and the like were excluded).

(3) Selected projects involve research concerning issues of income and/or employment of older Americans; and

(4) The research relates to furthering knowledge about major policy issues rather than issues of benefit administration.

In compiling information on the selected projects, Urban Institute staff found several previous research summaries extremely helpful. These summaries were prepared by: Thomas Gustafson of the Office of the Assistant Secretary for Planning and Evaluation, Department of Health, Education, and Welfare; staff of the National Commission. on Social Security; and staff of the National Planning Association. Another valuable source for this material was a draft report of the Employee Benefit Research Institute ("An Annotated Bibliography of Selected Recent Research on Retirement Income Programs,' review draft, June 1979).

In an effort to obtain as complete a listing of current research as possible, Urban Institute staff consulted 10 experts in the research areas of interest. Their cooperation and advice are gratefully acknowledged. The 10 experts who lent their assistance in reviewing a draft of this report are:

John Brittain, Brookings Institution.

Richard Burkhauser, Vanderbilt University.
John Carroll, Social Security Administration.
Robert Clark, North Carolina State University.
Dan McGill, University of Pennsylvania.

Marilyn Moon, University of Wisconsin (Milwaukee).
Alicia Munnell, Federal Reserve Bank of Boston.

Jim Schulz, Brandeis University.

William Serow, University of Virginia.

Tom Woodruff, President's Commission on Pension Policy.

EXPLANATION OF ENTRIES

Each research project summary is listed within the major policy issue to which it is most relevant, although some projects address more than one issue area. The issue category titles are identified by Roman numerals and capital letters, with the project summaries listed numerically, alphabetized by the institution where the research is being (or has been) done.

The summaries presented are displayed in the following format: Project title.

Institution; principal investigator.

Sponsoring organization; starting date-completion date (if known). Abstract.

Frequently cited abbreviations are as follows: ADEA: Age Discrimination in Employment Act.

CBO: Congressional Budget Office.

CPS: Current population survey (periodic census surveys).

DOL/BLS: Department of Labor; Bureau of Labor Statistics. DOL/ESA: Department of Labor; Employment Standards Administration.

DOL/ETA: Department of Labor; Employment and Training Administration.

DOL/PWBP: Department of Labor; Office of Pension and Welfare Benefit Programs.

DYNASIM: Dynamic simulation of income model.

ERISA: Employee Retirement Income Security Act (1974).
GAO: General Accounting Office.

HEW/AOA: Department of Health, Education, and Welfare; Administration on Aging.

HEW/ASPE: Department of Health, Education, and Welfare; Office of the Assistant Secretary for Planning and Evaluation.

HEW/NIA: Department of Health, Education, and Welfare; National
Institute on Aging.

HEW/SSA/ORS: Department of Health, Education, and Welfare;
Social Security Administration; Office of Research and Statistics.
HUD: Department of Housing and Urban Development.
IRS: Internal Revenue Service.

NLS: National longitudinal survey.

OASDI: Old age, survivors and disability insurance (the cash benefits program of social security).

OPM: Office of Personnel Management.

MPSID: Michigan Panel Study of Income Dynamics.

RHS: Retirement history survey.

SIE: Survey of income and education.

SSI: Supplemental security income (welfare program for the aged, blind, and disabled).

RESEARCH PROJECT SUMMARIES

I. ISSUES OF BENEFIT ADEQUACY AND FAIRNESS

A. ADEQUACY OF RETIREMENT INCOME AND BENEFITS FOR THE AGED

(1) Levels of Private Pension Benefits. Arthur Young and Co. (Washington, D.C.); Mike Hooban; DOL/PWBP and HEW/SSA;

Data will be obtained from a sample of pension plans and crosschecked against social security records to create a multipurpose computer file able to support a wide range of retirement income studies. Major areas analyzed will include plan benefit formulas (including integration provisions), total replacement rates, and changes in retirement income over time. A sample size of 1,500 plans (with an expected response rate of 80 percent) will be surveyed to collect benefit amounts paid to beneficiaries.

(2) Economic Impact of Private Pensions. Brandeis University (Waltham, Mass.); James Schulz; National Science Foundation; May 1976-January 1979.

Basic analytical work was undertaken to investigate the major characteristics of private pension plans. Coverage and benefit formulas are included. In addition, work was carried out to investigate the distribution of tenure in the United States and the incidence of job change, both using multiple regression techniques. Based on this initial work, a preliminary private pension model was constructed to be added to The Urban Institute's DYNASIM model.

(3) Private Pensions Fall Far Short of Preretirement Income Levels. Brandeis University (Waltham, Mass.); James Schulz, Thomas Leavitt, Leslie Kelly; February 1979.

The authors base their findings on a 1974 BLS study of 989 retirement plans, covering 100 workers or more, which had sufficiently definable contributions and benefits. Benefits were simulated for a median income male and female earner at 20 and 30 years of service, and the replacement rates of post- to preretirement income were calculated. Replacement rates varied widely, tended not to exceed 28 percent on average, were higher for women (although their earnings and benefit levels were lower), varied by industry, and were lower in multiemployer plans. Replacement rates for single and married workers were calculated with social security added in, and very few nonmarried workers achieved the 70-percent standard.

(4) Private Pension Policy Simulation. Brandeis University (Waltham, Mass); James Schulz; DOL/PWBP; June 1977-September

1979.

This project is adding a private pension module to The Urban Institute's DYNASIM model. The module is fully specified and is now in the validation stages. It will be used to investigate the following issues: (1) Economic status of the social security-only population; (2) level and distribution of private pension benefits; (3) adequacy of pension benefits; (4) special problems of women; (5) impact of alternative vesting provisions. This is a followup for "Economic Impact of Private Pensions" by the same investigator.

(5) Private Pensions and the Economic Status of the Aged. Brookings Institution (Washington, D.C.); John A. Brittain; DOL; completed 1979.

The objective of this study was to evaluate empirically the importance of private pension benefits as a source of the income of aged couples and individuals. The role of private pensions is compared to that of social security benefits and other income sources in generating the incomes of aged persons. The degree of dependence of the elderly on both types of pensions is also assessed in terms of the contribution of these pensions to their absolute and relative economic status. Variations by age, and the effects of taxes and income in kind are considered as qualifications of the income analysis. Finally, the role

of pensions in financing consumption and maintaining preretirement living standards is evaluated.

(6) The Economics of Private Pension Programs. Brookings Institution (Washington, D.C.); John A. Brittain, Alicia H. Munnell. Issues covered in this monograph include funding of pensions and investment policy; financial effects on companies; demand for pensions and the incidence of pension costs; income maintenance and the effects on personal income and wealth distribution; tax treatment of pension programs; the effects of inflation and indexing; effects on saving and investment; relationship with other retirement prograr.s (especially social security); and the increasing tendency for social security to substitute for private pensions.

(7) Development of a Pension Plan/Social Security Model. CRS (in-house); Ray Schmitt; completion spring 1980.

This project involves the development of a pension and social security model to examine income replacement rates, pre- and posttaxes. The model has been designed to calculate social security benefits according to old, new, and transitionary formulas, and pension benefits under any type of benefit or contribution formula. Similarly, “replacement rates" may be defined in numerous ways so that replacement can be based on final year's earnings, or some other definition. The model will accept real or synthetic wage data.

(8) Pension Plan Protection Survey. HEW/SSA/ORS and DOL/ PWBP (in-house); in progress.

A special supplement to the CPS (May 1979) will be used to gather data on private pension plan coverage and vesting, and on the use of IRA and Keough provisions. These data will provide new benchmark estimates of the level of retirement income protection provided by private plans, as well as information on such changes since ERISA. The data can be used to explore coverage gaps and overlaps.

(9) Private Pension Benefit Trends. HEW/SSA/ORS (in-house); in progress.

A number of illustrative private pension plans will be examined to determine the improvement between 1968 and 1976 in the relationship of benefits to preretirement wages.

(10) Preparatory Studies for Re-Drafting BLS Family Budgets. Institute for Research on Poverty (Madison, Wisc.); Harold Watts; DOL/BLS; completion January 1980.

This study provides a methodology necessary for drawing up new budgets. Present budgets are based on the 1960-61 survey of consumer expenditures, and are drawn up only for an urban family of four and for a retired couple over age 65.

(11) American Attitudes Toward Pensions and Retirement. Louis Harris and Associates (New York, N.Y.); Johnson and Higgins; completed 1979.

1,330 current full-time employees, as well as 397 who had retired from full-time work, and 212 financial executives of the Fortune 1,000 list who deal with pension and retirement problems were surveyed for a nationwide study. The survey provided considerable information concerning public attitudes toward retirement and its financial requirements, characteristics of pension plans, and the ultimate willingness of future generations to pay social security retirement

(12) Inflation and Pension Plans. Math Tech (Princeton, N.J.); Donald Wise; DOL/PWBP; completion fall 1979.

This is part of a larger econometric study, "The Role of Private Pensions in Meeting Economic Security Needs of the Nation." It provides an analysis of the impact of inflation on current retirees. Data source: RHS.

(13) Retirement Income Research Project. Math Tech (Princeton, N.J.); The Hendrickson Corp., ICF; William Morrill; EBRI; begun August 1979.

This research project will examine three major issues: (1) What retirement income goals should be established for individuals during retirement; (2) what mix of public and private retirement income programs should be employed to meet those goals; and (3) what funding methods should be used to finance these benefits. The shortand long-term implications of these policy questions will be examined in terms of the economic and distributional effects on different income and population groups.

(14) Measurement of Intra-family Transfers and Their Effect on Individual Behavior. National Bureau of Economic Research (Stanford, California); Mordecai Kurz, Marcy Arvin; HEW/AoA; October 1, 1978-October 1, 1979.

The objectives of this study include the development and testing of a variety of techniques for the measurement of intrafamily transfers to assess their utility and feasibility. A model will be developed to determine the probable amount, direction and type of transfers. A limited number of studies will be used to test and validate the model.

The model will be based on Samuelson's consumption-loan model with several modified assumptions. The study will address the following questions: (1) What are the mechanics by which data on amounts of intragenerational transfers can be obtained; (2) what are the behavioral characteristics that determine size and direction of transfers; and (3) how do public transfers influence intrafamily transfers.

(15) The Wealth-Age Relation Among the Aged. SUNY Albany (inhouse); Thad Mirer; January 1977-January 1979.

Mirer examined the wealth-holding behavior of the aged, using the life-cycle approach. He found that wealth declines modestly, or perhaps not at all, with age in cross-section regression analysis. This study is now unnder revision. Data source: 1968 Survey of the Demographic and Economic Characteristics of the Aged.

(16) The Wealth Holding Behavior of the Aged. SUNY Albany (inhouse); Thad Mirer; September 1977-December 1978.

This is an examination of the savings behavior of aged retired persons and couples. Mirer finds very slight dissavings, on the order of 1 percent. Dissavings were found to increase with wealth and income. This paper is now under revision. Data sources: 1963-64 Federal Reserve Wealth Surveys.

(17) The Social Security Benefit Structure: Equity Considerations of the Family As Its Basis. University of Texas, Austin; Carol Bennett. The ratio of expected benefits to expected contributions is calculated for workers entering the social security system in 1978, by family type and earnings level. Estimates are provided to show the impact of two