Issues for Implementing Phased Retirement in Defined Benefit Plans

Abstract

U.S. society is aging. The nature of work has changed from work that requires physical strength to work based on knowledge. As a result, workers are beginning to phase into retirement rather than going directly from full-time work to full retirement. From a retirement income perspective, many final-average-pay defined benefit plans have features that make phased retirement difficult at best and detrimental at worst. U.S. pension law and regulations present barriers to phased retirement if the phased retiree wants to receive a portion of available pension benefits during phased retirement.

This paper examines private sector options to encourage phased retirement and to eliminate the disincentives that currently affect defined benefit plans. It offers alternative calculations of final average pay that do not penalize the part-time worker. It also demonstrates that the plan’s early retirement reduction and late retirement increase can be set to maintain actuarial equity throughout phased retirement. The paper presents benefit calculations with equal actuarial values for various payout patterns.

The paper discusses the coordination between phased retirement and subsidized early retirement. Finally, the paper notes some of the changes in ERISA that will be needed to facilitate phased retirement in defined benefit plans, especially for participants who want to receive pension distributions while working part time.     

BE/ME and E/P work better than ME/BE or P/E in regressions

Researchers often form ratios of variables to measure firm characteristics, but which ratios create the most powerful tests? For example, if we use ratios of book value of equity (BE) and market value of equity (ME), or earnings (E) and price (P), does it matter which variable appears in the denominator? Any variable in the denominator, when close to zero, creates outliers and is less likely to produce effective tests. Our tests, using data from 1972 to 2008, indicate the choice between reciprocals often produces significantly different outcomes. While ME/BE is a more commonly used control variable than BE/ME or LN(BE/ME), we find the latter two produce better results, even if the data are trimmed to mitigate the outlier problem. Similarly, using E/P generally produces better results than P/E, and while ratios with book value of assets (BA) in the numerator work better than those with it in the denominator, the difference is less pronounced than when BE or E is part of the ratio. While the focus of our empirical findings is on growth measures, the principal applies anytime a ratio has a denominator that is frequently near zero.     

Information technology innovation in India: The top 100 IT firms

Patents serve as an indicator of the innovation capability of countries, industries, or firms. Many Indian firms are in a transition to move from labor intensive segments to areas with higher value added which has been reflected in this research. The purpose of this study is to analyze patents issued during the period of 1997–2009 from the European Patent Office database and the United States Patent and Trademark Office database from the top one hundred Indian information technology firms. This study represents a novel empirical look at information technology industry innovations in India. A comprehensive set of statistical patent analyses are presented to provide practitioners with valuable knowledge to assist in business strategic planning.     

A Strategic Perspective on Delivery Systems in UK Retail Banking

The pre-eminence of the bank branch as an effective delivery system arose from the difficulties associated with marketing financial services. The branch provides a highly efficient mechanism for administering, collecting and delivering cash as well as a wide range of lending and ancillary services. Historically, branch networks arose to attract cheap retail deposits through the convenience of the branch location itself, and through branch-based payment systems. Indeed, the relationship between the customer and the branch underpins the whole banking process. However, the branch's exclusive function is tenable only so long as the assumptions and conditions that determined its historical position hold good. These assumptions are that the market will continue to respond to it, that it will remain the basis for patterns of competitive behaviour, and that more effective and economic delivery systems will not emerge. This article presents the view that these assumptions are in fact being undermined, particularly by innovations in technology, which will necessitate a complete rethink of future strategy in retail branch banking.     

Spatial Statistics and Real Estate

Real estate has historically employed statistical tools designed for independent observations while simultaneously noting the violation of these assumptions in the form of clustering of same sign residuals by neighborhood, along roads, and near facilities such as airports. Spatial statistics takes these dependencies into account to provide more realistic inference (OLS has biased standard errors), better prediction, and more efficient parameter estimation. This article provides an overview of the field and directs readers to the relevant literature and software.     

Cone,Fairfax M. The Blue Streak. Chicago: Crain Communication, 1976

Abstract

This survey, conducted among 17 of the 25 largest advertising agencies, highlights the reduction of entry-level employment opportunities, for college graduates, when 1974 is compared to 1973. The survey also gives indication of the relative popularity various schools enjoy as preparers of future advertising executives. The author closes with an appeal to the advertising industry concerning the need to increase the number of entry-level opportunities.