The Role and Importance of Individual Retirement Accounts

What are now called “traditional IRAs” (Individual Retirement Accounts) were created by the Employee Retirement Income Security Act of 1974. Roth IRAs were added in 1997. Employer-sponsored Simplified Employee Pensions–IRAs were added in 1978 and Savings Investment Match Plans for Employees–IRAs (and 401(k)s) in 1996. Together IRAs hold $8.8 trillion in assets, one third of the total $27.1 trillion in all retirement plans. This article examines the role and importance of IRAs in the U.S. retirement system and the development of the different types of IRAs and their interaction with each other.

Fiduciary Principles in Employment Law

Employees are agents of their employers, and in some cases, are in a position to undermine the interests of their employers in ways that the employers cannot fully anticipate or contractually protect themselves against. While most jurisdictions historically treated all employees as fiduciaries of their employers, by now only a minority of jurisdictions regards all employees as fiduciaries. Most states treat only high-level employees of “trust and confidence” as fiduciaries, while other employees owe a lesser duty of loyalty. Some scholars have made arguments in support of recognizing employers as fiduciaries to employees, but as yet, employers owe neither fiduciary duties nor any lesser duty of loyalty to employees. Only employer-related entities such as pension funds and employee stock option programs owe fiduciary duties to employees under the Employee Retirement Income Security Act (ERISA). The doctrinal status and conceptual basis for the fiduciary duties of employees are discussed in Section I. Section II addresses fiduciary duties under ERISA. Section III touches on potential fiduciary duties of employers.

Navigating complex financial decisions at retirement: evidence from annuity choices in public sector pensions

Choices regarding the disposition of wealth at retirement can have substantial implications for retirement income security. We analyze the factors determining annuity payout option choices within the context of a public sector defined pension plan with no default annuity option. Using combined administrative records and survey data, we explore the role of individual and household characteristics as well as risk preferences, time preferences, and financial literacy. We also document retiree well-being and satisfaction with retirement decision making. The evidence is consistent with predictions over which households might benefit most from each annuity option. Comparing retirees who chose different types of annuities, we find that these groups of retirees report very different levels of well-being in retirement. All retirees report lower levels of retirement income security over time, with strong differences among those who chose different types of annuities.

Do Unpaid Caregivers Save Less for Retirement?

Unpaid caregiving has always been widespread in the U.S. and is a growing phenomenon, especially in response to an aging population. Unpaid caregivers can experience adverse labor market outcomes such as less pay, fewer hours at work, and greater job instability. These negative labor market outcomes could translate into lower retirement savings. Our analysis of the Federal Reserve’s Survey of Consumer Finances indicates that unpaid caregivers have lower retirement savings because they are less likely to participate in retirement plans at work and have lower contributions relative to pay. Single women, in particular, see declines in retirement security associated with unpaid caregiving. That is, caregiving further exacerbates an already existing retirement income security gap by gender. The data thus lend support to efforts to increase access to retirement savings plans for people with less job stability and fewer hours and to give more people paid sick leave at their job.

Challenges and Opportunities of Living and Working Longer

This chapter describes the challenges and opportunities that older Americans face, with a focus on retirement income security and the role of continued work later in life. We first overview the new world of retirement income security including a discussion of how a low return environment (e.g. low interest rates) exacerbates existing retirement income security challenges. We then document how older people have responded to the evolving retirement income landscape, especially when and how they exit the labor force, and we explore how continued work later in life can help mitigate some of the anticipated retirement security challenges. We then pose some important outstanding questions. The implications of societal aging depend in large part on how we harness or squander the labor resources of older individuals.

Coverage mandates and market dynamics: employer, insurer and patient responses to parity laws

Parity in coverage for mental health services has been a longstanding policy aim at the state and federal levels and is a regulatory feature of the Affordable Care Act. Despite the importance and legislative effort involved in these policies, evaluations of their effects on patients yield mixed results. I leverage the Employee Retirement Income Security Act and unique claims-level data that includes information on employers’ self-insurance status to shed new light in this area after the implementation of two state parity laws in 2007 and federal parity a few years later. My empirics reveal evidence of strategic avoidance on behalf of insurers in both states prior to the passage of state parity, as well as positive increases in mental health care utilization after parity laws are implemented – but context matters. Policy heterogeneity across states and strategic behaviors by employers and commercial insurers substantively shape the benefits that ultimately flow to patients. Insights from this research have broad relevance to ongoing health policy debates, particularly as states retain great discretion over many health coverage decisions and as federal policy continues to evolve.