Research Grant Summaries: Pension Responses To Changes In S

In 1983, Congress instituted a set of reforms of the Social Security system aimed at rectifying the system's impending financial shortfall, the most important reform being the raising of the normal retirement age from age 65 to age 67. A sample of 14 pension plans over a period from the 1960s to the 1980s was examined, and research was expanded in its 2nd year to 100 collectively bargained pension plans. Through empirical analysis, 2 sets of pension outcomes were explored - pension structure or provision variables and pension value variables. An examination of the pension plans in the sample found that these plans vary over time in ways that encourage early retirement. Specifically, pension plan provisions are not sensitive to changes in the Social Security system, though pension plan financial incentives are. The research demonstrates that employer-sponsored pensions are not static, shows that a strong relationship exists between pension plan provisions and financial incentives to Social Security policy, and establishes merit for the hypothesis that companies are using early retirement incentives to shed more expensive older workers.