...Unit 6 CASH BENEFITS 6.1. Efficiency and equity in retirement pensions 6.2. Efficiency and equity in unemployment benefits 6.3. Efficiency and equity in poverty relief INTRODUCTION New unit → 1st Economic fundamentals of the Welfare State 2nd Welfare State programs cash benefits in-kind benefits - There is a complex set of cash programs - Quantitative and qualitative differences Some of the most important goals of the WS are channeled through cash benefits - income and consumption smoothing - insurance - poverty reduction - redistribution - social solidarity Main questions - What justifies public pensions? - What are the main schemes? - Is capitalization (funded pensions) a viable alternative? 1. INSURANCE, EFFICIENCY AND EQUITY IN PUBLIC PENSIONS a) Efficiency - Any individual should achieve an efficient level of retirement income → rational insurance ⇒ a risk averse individual will buy future pensions if the net price of insurance is lower than the value given to certainty Public o private pensions? Private markets are efficient if there is perfect competition, perfect information and no other market failures. Conditions (a follow-up): 1.- independent probabilities 2.- known probabilities (less than one) 3.- no adverse selection 4.- no moral hazard Inflation → private markets cannot supply insurance against unanticipated inflation (to guarantee the real value of pensions) : 1.- the probability of future levels of inflation is unknown 2.- inflation is...
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...Social Security and Retirement in the United Stated Com156 Date Social Security and Retirement in the United States It is important to plan for retirement because Social Security alone will not cover all of our needs by itself. I will also explain the need for another source of income other than Social Security. Social Security alone will not be enough to cover one’s needs when he or she retires simply because there is no one that can survive off less than $2000.00 a month. The way the government is borrowing from Social Security and the way it has been projected, some believe there will be no more Social Security in years to come. This is why every adult in the United States should start planning when they are younger for their retirement. Social Security is a program that was developed to ensure that people of retirement age will have money to live off of when they do decide to retire. This program was created in 1935, and was called “the system of old age benefits.” In 2007, the Social Security Administration had a net worth of about 785 billion. The expenses that year were about 594 billion dollars. The year of 2007 had 49 million people that received benefits. It is said that by the year 2018, negative effects on the federal budget are going to be experienced. The government has borrowed millions of dollars from Social Security, $159 billion in 2004 to be exact, and that is not the only time it has happened. According to the Social security...
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...Evaluate the existing compensation plan to determine if it is the most appropriate for your company. Explain your rationale. Comcast currently uses a market based compensation plan to determine an employee’s salary. Employees have the opportunity to earn above the market pay through the company’s merit pay program. The compensation plan Comcast currently has in place is appropriate for several reasons. First, this strategy helps the company to control its compensation cost. For example, the biggest raises can go to the top performers. The company is also able to link pay to performance for everyone (including executives). Second, this strategy effectively balances the financial objective of the company with the needs of the employees. According to Bamberger and Meshoulam “ with a market-based compensation system the employee theoretically exchanges job security and control over the labor process in exchange for a salary that is comparable to the amount they could receive in other organizations performing similar tasks. (Bambeger & Meshoulam, 2000) Third, the current plan allows the company to increase employee morale and productivity through incentives programs and rewards. Comcast strives to implement incentive programs to reward employees for their hard work. Some of these are employee referral bonuses, on the spot awards, promotions, and corporate vacations. Comcast is committed to creating a work environment that allows their people to grow personally as well as...
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...What is the Basic State Pension? The State Pension is a regular form of income provided by the government on or after the retirement age of an individual. There is a limited contribution by individuals towards this state pension, from their national insurance contributions. The working population pay NI contributions from their pay package, but those who do not work also pay NI contributions through their state benefits. Individuals who claim JSA, IS, ESA, the government pays the NI contribution on behalf of these individuals. There is also a second state pension available to top-up the state pension for those who qualify. Any individual who has reached their state pension age can claim this. For men the state pension age in 2013 was 65 and for women, state pension age is now varying from 60 in 2010 to 65 in November 2018. In order to qualify for the basic state pension one must have contributed 30 qualifying years of NI contributions. The new State pension… The new state pension will be put in place to replace the old basic state pension and additional pensions and will affect people from April 2016. In accordance with the new rules for the pension the full single tier pension will be only given to people with at least 35 years national insurance contributions or credits. Individuals reaching state pension age from 6th April 2016 onwards would be affected with the new single tier, flat rate state pension changes being put in place. During mid 2014, parliament agreed the...
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...Is Social Security Enough to Rely on for Retirement Will Social Security be around when you retire? Should you rely on Social Security to cover 100% of your needs? Relying on Social Security 100% for your retirement needs could put your retirement years in financial hardship. Retirement could have different meanings for different people. Some people define retirement as no longer working; spending their golden years traveling and spending time with their spouse and/or family. To some, retirement means leaving their job they have worked at for many years and going to work part time at a job. If you plan on relying 100% on Social Security for your retirement, you may find that the part time job is no longer an option but a necessity. Social Security is a much like health insurance, it is not meant to pay all of your expenses. For example, your health insurance has a deductible you have to meet each year before the health insurance company pays 100% of your medical bills. Health insurance is intended to share the cost of medical bills, just like Social Security is intended to share the cost of the retirement needs and help prevent financial hardship. Think of the expenses you currently have, and while some expenses might go away as your become older or retire, the cost of living is constantly going up. The average person will only collect approximately 40% of what they were earning before retirement. If you currently make $70,000 per year and are accustomed...
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...Social Security as a Form of Retirement It has been argued that there is no need for a separate retirement plan because when we reach the retirement age Social Security will cover our needs. The truth is American’s don’t know that the Social Security System is failing. To meet your own personal needs when their needs when they retire, all American’s are in need of a retirement plan. Millions of the country’s citizens depend on Social Security, yet the program is unsustainable. . “But Social Security was never meant to be the only source of income for people when they retire. Social Security replaces about 40 percent of an average wage earners income after retiring and most financial advisors say retirees will need 70 percent or more of pre-retirement earnings to live comfortably” (Social Security Online, 2011 para. 4). Continual changes in the Social Security System make it almost impossible to count on Social Security as a sole source as a retirement plan Social Security is a fixed income that increases marginally. Retirement is something that should be planned for carefully. The Social Security Program was created to provide benefits to retirees, the disabled, survivors of workers who have died, and dependents of beneficiaries. ”A one-time payment of $255 is payable to the surviving spouse if he or she was living with the beneficiary at the time of death, OR if living apart, was eligible for Social Security benefits on the beneficiary's earnings record for the month of...
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...Changes in Workforce Demographics and the Future of Work and Retirement Dr. Jost Lottes Institute on Aging Portland State University No single trend will play a larger role in shaping the social, economic, and geopolitical order throughout the developed and developing world than global aging A historic transformation approaches— the “inversion” of the age pyramid. •!Populations throughout history have all shown a steep pyramid-shaped age distribution—with more young than old people. •!In the near future, starting with developed countries, the distribution will transform into an inverted pyramid— with more old than young people. Pyramid inversion in the developed world—1950 to 2050. year 1950 median age 28.6 Pyramid inversion in the developed world—1950 to 2050. year 1960 median age 29.6 Pyramid inversion in the developed world—1950 to 2050. year 1970 median age 30.6 Pyramid inversion in the developed world—1950 to 2050. year 1980 median age 31.9 Pyramid inversion in the developed world—1950 to 2050. year 1990 median age 34.4 Pyramid inversion in the developed world—1950 to 2050. year 2000 median age 37.6 Pyramid inversion in the developed world—1950 to 2050. year 2005 median age 39.3 WHERE WE ARE TODAY Pyramid inversion in the developed world—1950 to 2050. year 2010 median age 40.8 Pyramid inversion in the developed world—1950 to 2050. year 2020 ...
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...comprehensive benefits packages I have ever seen. Body Sentara offers a Flexible Benefit Plan (FBP) that allows employees to choose from numerous grouped plan options, or employees can pick and choose individual benefits. Employees have the option of choosing health coverage including medical insurance, dental insurance, or vision insurance. For other health insurance, qualifying employees may choose to continue health care coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). Other benefits available to employees include: Pension plan, accidental death and dismemberment, health care flexible spending account, health savings account, life insurance, long-term disability, short-term disability, 403(b) retirement plan, a...
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...employer's 401(k) or set up an individual retirement account (IRA). Depending on your personal situation, one of these two options may be the best choice for you. 10 Reasons Why You Should Do a 401(k) Rollover to IRA 1. You Can Take Advantage of a Roth IRA While there are Roth 401(k)s, this option is not always available...
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...“Aging Europe and the looming pension crisis.” 1. Why have governments tended to avoid the problem of pension reform? Why is it harder to avoid the problem in the 21st century? How the demographic changes have created problems for pensions? Governments are worried about the sustainability of current pension schemes as changes in demographics are indicating that these schemes will not be able to sustain themselves in a few years time. Fertility rates heavily increased in the post World War II period (1960 a representative year) and decreased subsequently, creating the “baby boom”, which has been an important factor in the 21st century population aging. Current fertility rates are experiencing historic lows; at an European Union (EU ) average 1.58 live births per woman, it is significantly below the level needed to replace the population (2.1) . Such changes have significantly increased the average percentage of EU population aged 65 and over, from 9.6% in 1960 to 16% in 2010, which is expected to increase to 22.6% by 2030 . This statistic shows that increasingly more people will have to be supported by government pensions. In the EU the average life expectancy at birth has risen by 10 years over the last 50 years , which means that pension schemes have to support each member increasingly longer than before. The average old age dependency ratio (OADR) in the EU, which measures the amount of elderly people for every 100 people of working age, has increased from 15% in 1960...
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...ages as they deal with Social Security, health care, housing, employment and other national issues that are important to an aging population. The number of Americans living over the age of 65 has dramatically increased in the past years. People are beginning to live well past retirement and later stages of their lives because they have remained healthy and productive. Given the fact that America is aging, it is important to have resources available for American’s who will soon dip into retirement funds and Medicare. A good question to ask as America becomes populated by more and more elderly is, “How can the unique needs and desires of each person be appropriately assessed and addressed in a rapidly changing health care environment?” In 2011 “baby boomers” began to turn 65 which accounted for 14 percent of the U.S. population, that percentage will increase to 20 by the year 2030 (APA). The average life expectancy for men is now 73 years and for women it is 80 years. These baby boomers will have a significant impact on American society and will challenge the health care delivery and financing systems. As the life expectancy increases, the elderly will spend more than half of their adult life in retirement (Helsler, 2000), many will re-enter the workforce as a way to socialize and maintain active. Employers will also discover that mature adults hold more years on experience (Helsler, 2000). Medical expenses will also rise...
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...Inevitable Future Retirement and Social Security issues have become local, national, and international concerns that will also affect each of us on a personal level. Social Security benefits began in 1935 when the depression hit and put many elderly people out of work (http://ssa-custhelp.ssa.gov). Social Security has been around for over 70 years providing a dependable monthly income with automatic increases as the cost of living increased. The Social Security Administration reports that workers need 70-80 percent of pre-retirement income once retired and Social Security only provides about 40 percent (www.ssa.gov). The depletion of funds is becoming a great concern and is also getting worse with each generation. Social security reaches almost every family and will have an impact on the lives of many Americans. Today, about 54 million people receive these types of benefits (http://en.wikipedia.org/wiki/Social_security). It has been said that if changes aren’t made, in 2037 there will not be enough funds to pay the same benefits people are earning today (www.msnbc.msn.com). Some changes include; payroll tax increase, benefits of young workers being cut, and general revenues may have to be used. Some causes of this financial trouble is that people are living longer, birth rates are low, and baby boomers are close to retirement. Baby boomers have been at blame since reproduction has decreased, affecting money paid into Social Security which is what pays the retired workers...
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...defined in the law and are generally related to facts that can be objectively determined. 3. Do you think workers should be permitted to invest all or part of their social security taxes into a personal retirement account? I do think that workers should be permitted to invest into a PRA because it would let the\m save and invest for their retirement and provide workers with a property right to the funds contributed into their accounts and reduce dependency on the government. 4. How does social security affect the economic well-being of blacks relative to whites and Hispanics? According to statistics blacks have a shorter life expectancy than whites and Hispanics, blacks are more likely to pay a lifetime into social security and see little of it. Hispanics have an above average life expectancy and therefore derive a higher return rate than both whites and blacks. Blacks also have a lower return rate due to their shorter life expectancy. 5. Does the current social security system promote income equality? I do not feel that the social security system promotes equality because anyone with income of more than $400 per month has to pay SS tax and if self-employed like a nanny or gardener, has to pay the employers share as well. so even the poorest people pay a 15% tax on income,...
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...Week 2 Knowledge Check Study Guide Concepts Mastery Score: 21 / 21 Questions Components and Objectives of Organizational Reward 100% 1 2 3 100% 4 5 6 100% 7 8 9 100% 10 Systems Determinants of Pay Structure and Level Policy Issues in Pay Planning and Administration Organization-wide Incentives Strategic Considerations 11 12 in the Design of Benefit 100% 13 14 15 100% 16 17 18 100% 19 20 21 Programs Components of the Benefits Package Cost-Containment Strategies for Benefits Concept: Components and Objectives of Organizational Reward Systems Mastery 100% Questions 1 2 3 1. At a comprehensive point of view, a(n) _____ includes anything an employee values and desires that an employer is able and willing to offer in exchange for employee contributions. A. competency-based pay system B. employee stock ownership plan C. organizational reward system D. merit-pay method Correct: The Correct Answer is: C. Organizational reward systems include both financial and nonfinancial rewards for employee contributions. 2. ___________ bridge the gap between organizational objectives and individual expectations and aspirations. A. Financial systems B. Corporate compensation systems C. Employment practices D. Rewards Correct: The Correct Answer is: D. Organizational reward systems and compensation...
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...to raid the account and give OUR money to a bunch of zero losers in return for votes, thus bankrupting the system and turning Social Security into a Ponzi scheme that would make Bernie Madoff proud. 4. Recently, just like Lucy & Charlie Brown, you and "your ilk" pulled the proverbial football away from millions of American seniors nearing retirement and moved the goalposts for full retirement from age 65 to age, 67. NOW, you and your "shill commission" are proposing to move the goalposts YET AGAIN. 5. I, and millions of other Americans, have been paying into Medicare from Day One, and now "you morons" propose to change the rules of the game. Why? Because "you idiots" mismanaged other parts of the economy to such an extent that you need to steal our money from Medicare to pay the bills. 6. I, and millions of other Americans, have been paying income taxes our entire lives, and now you propose to increase our taxes yet again. Why? Because you "incompetent bastards" spent our money so profligately that you just kept on spending even after you ran out of money. Now, you come to the American taxpayers and say you need more to pay off YOUR debt....
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