Recent articles have reported a large and growing financial crisis associated with retiree health plans offered by state and local governments, and have expressed alarm over their impact on the financial status of these governmental units (Goldman Sachs 2007; David Zion and Amit Varshney 2007). The concern about the unfunded liabilities of retiree health plans follows from a change in the public accounting rules issued by the Governmental Accounting Standards Board (GASB). GASB Statement No. 45 requires state and local governments to report unfunded accrued liabilities and annual required contributions needed to fully fund the retiree health promises. The GASB 45 statements produced by state governments indicate that unfunded liabilities for state employees and retirees total approximately $500 billion. This does not include additional liabilities associated with retiree health plans for local governments and public school teachers with plans that are not managed at the state level. The explicit acknowledgement of these liabilities and their absolute and relative size has created considerable concern and debate among economists, policymakers, and voters. This article presents data from state actuarial reports on the size of retiree health liabilities, examines the key assumptions used to determine the unfunded liabilities, and then assesses the potential future of retiree health plans in the public sector.

Reforming Social Security to restore its financial balance is one of the most important public policy issues of the 21st century. Reform is essential whether one favors maintaining the basic structure of the current system or transforming this retirement program to include individual accounts. The needed national debate on Social Security must be based on the best, unbiased measures of the financial status of the program and on appropriate economic research. Unfortunately, projections, data, and research are often misused in reform debates. Even some “experts” are often uninformed about various aspects of the current and future financial status of Social Security. This paper highlights misconceptions and focuses on the facts of Social Security financing.

Pension compensation is shown to rise with age and tenure until the worker becomes eligible to receive benefits. At this point, pension compensation drops sharply. If workers are paid their marginal product in each period, earnings grow at a lower rate prior to eligibility but must increase when the worker reaches the age of eligibility. This hypothesis is tested using data from the Retirement History Study, and earnings are found to rise significantly after eligibility. This finding supports the concept of spot market compensation and is in direct conflict with the predictions of Lazear-type lifetime contracts.

The relationship between job tenure and annual earnings in Japan has received considerable attention from social scientists examining employment contracts and the Japanese compensation system. In their widely cited article, Masanori Hashimoto and John Raisian (1985), using data for 1980, showed that Japanese men have greater job tenure than comparable workers in the United States and that the earnings of Japanese men rise more rapidly with increased tenure. They found that an additional year of tenure increases earnings in both small and large firms in Japan more than does an additional year of general market experience. Their results for the United States indicate that general market experience increases earnings more than an additional year of job tenure. The 1970's and 1980's were a period of substantial change in Japanese labor markets, due to the rapid aging of the population and the restructuring of the economy following the oil crisis. The present analysis extends the work of Hashimoto and Raisian by estimating earnings equations for Japanese men for the years 1971, 1976, 1981, and 1986. Specifically, we wish to investigate whether Hashimoto and Raisian's findings have been stable over time or whether changes in the labor market have altered the importance of tenure relative to total labor-market experience in the Japanese labor market. I. Changes in the Labor Market

The continuation of low rates of fertility and reductions in mortality rates of the elderly have revived the interest of economists in the examination of the economic impacts of aging populations. These concerns combined with the analysis of the income status of the elderly and their activities from the broad framework of the economics of aging. The rapid growth of support programs for the aged also has been the focus of considerable economic analysis. This review highlights the most important areas of research in the literature on aging. The first section discusses the determinants of population age structure changes and their impact on the size and composition of the dependent groups. The following section provides a review of the economic status of the elderly and the sources of income in old age. Section III incorporates the economic characteristics of the elderly into a life-cycle context while Section IV examines the empirical evidence concerning labor supply decisions of the aged. Social Security and private pensions and their influence on the economy are analyzed in Section V. The final section of this article reviews evidence on the interaction between aging and macroeconomic variables. (excerpt)

Workers plan and save for retirement throughout their careers. Individuals must navigate complex financial instruments and understand public and employer-provided retirement plan characteristics. Beginning when a worker is first hired, most employers provide the option to contribute to retirement saving plans. As workers near retirement, they face many choices that have considerable consequences for their retirement income security. At these two important periods, employers can provide timely information assisting workers in making choices that optimize lifetime wellbeing. Our research, conducted in cooperation with several large employers, illustrates the importance of employer-provided education in increasing worker understanding of several retirement-related issues.