Social Security and the private pension systemThe significance of integrated plans

Social Security and the private pension system

The significance of integrated plans

Perun

Pamela

Perun, Pamela

Author

text

working paper

Chestnut Hill, Mass. Center for Retirement Research at Boston College20022002monographic

Chestnut Hill, Mass.

Center for Retirement Research at Boston College

2002

monographic

Englisheng

English

eng

electronicapplication/pdfborn digital

electronic

application/pdf

born digital

Since the enactment of Social Security, the concept of integration with Social Security has been a feature of the private pension system. Integration permits employers to take their contributions to Social Security into account and reduce the benefits of low-paid workers in their tax-qualified retirement plans. Prior studies suggest that (1) integration is declining among defined benefit plans and (2) integration among defined contribution plans is rare.

This study contradicts those findings. Using Form 5500 data obtained from about 1,000,000 plans from 1993 to 1997, this research finds that integration is a persistent and stable feature of the private pension system. One out of every four plans is integrated, and their numbers increased by 7% between 1993 and 1997. The number of participants covered by integrated plans grew by 11% to about 24,000,000 by 1997.

Slightly less than one out of every three defined benefit plans is integrated. As measured by the number of participants, integration in such plans does not appear to be decreasing. Integrated defined benefit plans tend to be large and represent almost half of all plans with 2,000 or more participants. Their assets grew to $774 billion by 1997, equivalent to about 42% of the assets in non-integrated defined benefit plans. Annual employer contributions fell from $11 billion in 1993 to $9 billion in 1997, about half the amount contributed to non-integrated defined benefit plans in that year...

Pamela Perun.

CRR WP2002-2

CRR WP

2002-2

http://crr.bc.edu/images/stories/Working_Papers/wp_2002-02.pdf

MChBEnglisheng

MChB

Englisheng

English

eng