Benefits January 17, 2008

Women over 50 Can Lag in Annuity, Pensions

January 17, 2008 (PLANSPONSOR.com) - Because of a difference in their length of time in the workforce, women who were older than 50 in 2006 were much less likely to have an annuity and/or an employment-based pension than men, according to a new study.
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The Employee Benefit Research Institute (EBRI) reported that if female workers over 50 in 2006 received an annuity or employer pension, they were likely to end up with a smaller amount. However, EBRI was quick to add, women currently in the workforce are in better shape than their older counterparts since they are more likely to spend more time in the workforce.

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The EBRI study evaluated the impact of gender, age, education, marital status, and other demographics in the likelihood of a worker receiving annuity and/or pension income in retirement.

According to the EBRI data, in 2006, 44.6% of men age 65 and older received annuity and/or pension income, with a mean amount of $17,200 per year while only 28.4% of women age 65 and older received annuity and/or pension income in 2006, with a mean amount of $11,142 annually.

A woman age 65 or older in 2006 was only about two-thirds (63.7%) as likely to receive an annuity and/or pension payment as her male counterpart, and her mean benefit was likely to be about 65% of that received by a man of he same age.

EBRI pointed out that the women who were born in 1956 at the latest are part of a group who, on average, spent fewer years in the labor force than their younger counterparts. However, on average, today’s younger women tend to spend more time in the workforce than did women who were 50 and older in 2006, so the number of younger women who will receive annuity and/or pension income and the amounts they will receive are likely to increase over time.

Other study findings included:

  • The likelihood of receiving annuity and/or pension income increases with age, until the oldest age group (80 and older), for whom the data shows a lower percentage receiving such income. However, the percentage of those 80 and older receiving annuity and/or pension income increased from 17.7% in 1975 to 39.7% in 2006.
  • In 2006, some 27.5% of men age 50 and older with a graduate-level education received annuity and/or pension income, compared with 21.7% of men without a high school diploma.
  • Men age 50 and older in 2006 who were married or widowed were more likely to receive annuity and/or pension income than men of the same age who were never married. Women age 50 and older in 2006 who were never married were more likely to receive annuity and/or pension income than married women, but widowed women were much more likely to receive annuity/pension income than either married women or women who were never married.
  • While fewer individuals age 50 and older received pension income from a public-sector plan (7.5%) than from a private-sector plan (12.6%) in 2006, the median amount an individual received from a public-sector plan ($17,974) was considerably larger than that received from a private-sector program ($8,146).

The research is at http://www.ebri.org/pdf/notespdf/EBRI_Noptes_01-2008.pdf .

Administration January 16, 2008

CT Close to Teachers' Pension Fund Bond Sale

January 16, 2008 (PLANSPONSOR.com) - A $2 billion pension bond sale by the state of Connecticut, intended to help close the $6.9 billion funding shortfall in the state's teachers' pension program, is close to being a realty, Governor M. Jodi Rell announced.
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In  a Web announcement , Rell said final approval by the state Bond Commission is expected at the panel’s January 25 meeting. Rell contended that the teachers’ pension shortfall was largely caused by decisions under prior state chief executives to not fully fund the retirement program.

The fund currently contains $10.2 billion in assets, which represents 59.5% of its future obligations. According to Rell, the investment of $2 billion at the fund’s actuarial investment rate of 8.5% is expected to “significantly” reduce the funding shortfall.

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A new law authorized the bond sale to reduce the liability. The legislation also requires the state to fund the Teachers’ Retirement Fund at 100% of the actuarially recommended contribution each year over the life of the bonds.

“We demand much from teachers – and rightfully so, since they are the ones we trust to educate our most precious resource,” Rell said in the announcement. “Teachers, in turn, trust state government to make good on its commitments to them, now and in the future. We must keep our promises, not only to current teachers but to those we hope to encourage to enter the profession in the future.”

The budget signed in 2006 by Governor Rell authorized $245.6 million to fully finance the Teachers’ Retirement Fund for fiscal years 2006 and 2007. The new state budget also provides for full payments in fiscal years 2008 and 2009.

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