I study the history and performance of commercial real estate (CRE) in the pension fund portfolio, showing how many plan sponsors fundamentally changed their approach to CRE investment once underfunding gaps began to emerge in the early and middle 2000s. Several new empirical facts are presented, including pension fund share ownership estimates of private equity real estate (PERE) in excess of 50%, reconfirmation of underperformance of Value-add and Opportunity PERE funds, and the apparent existence of an illiquidity price premium paid by pension funds for the “volatility veil” that PERE fund investment provides. Three types of concentration risks are identified, including high geographical ownership concentrations. The risks that pension funds and their investment in PERE funds pose to economic and financial stability have been exacerbated by the negative aftershocks of the COVID-19 pandemic.
{"title":"Pension Funds and Private Equity Real Estate: History, Performance, Pathologies, Risks","authors":"Timothy J. Riddiough","doi":"10.2139/ssrn.3682113","DOIUrl":"https://doi.org/10.2139/ssrn.3682113","url":null,"abstract":"I study the history and performance of commercial real estate (CRE) in the pension fund portfolio, showing how many plan sponsors fundamentally changed their approach to CRE investment once underfunding gaps began to emerge in the early and middle 2000s. Several new empirical facts are presented, including pension fund share ownership estimates of private equity real estate (PERE) in excess of 50%, reconfirmation of underperformance of Value-add and Opportunity PERE funds, and the apparent existence of an illiquidity price premium paid by pension funds for the “volatility veil” that PERE fund investment provides. Three types of concentration risks are identified, including high geographical ownership concentrations. The risks that pension funds and their investment in PERE funds pose to economic and financial stability have been exacerbated by the negative aftershocks of the COVID-19 pandemic.","PeriodicalId":147403,"journal":{"name":"ERN: Employee Benefits (Topic)","volume":"260 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-08-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123329991","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Meghaan R. Lurtz, Derek T. Tharp, Katherine S. Mielitz, Michael E. Kitces, D. Ammerman
Using a unique data set with detailed information on the backgrounds and practices of 654 financial planners, this study examines the associations between the use of technologies by financial planners and self-reported time spent within various stages of the six-step financial planning process. Surprisingly, in many cases, use of technology is associated with an increase rather than a decrease in time spent within various stages of the financial planning process. These results suggest that although technologies may provide efficiencies in completing certain tasks, these efficiencies do not necessarily result in net reductions in time spent within the financial planning process.
{"title":"Exploring Relationships Between Technology Use and Time Spent in the Financial Planning Process","authors":"Meghaan R. Lurtz, Derek T. Tharp, Katherine S. Mielitz, Michael E. Kitces, D. Ammerman","doi":"10.2139/ssrn.3309914","DOIUrl":"https://doi.org/10.2139/ssrn.3309914","url":null,"abstract":"Using a unique data set with detailed information on the backgrounds and practices of 654 financial planners, this study examines the associations between the use of technologies by financial planners and self-reported time spent within various stages of the six-step financial planning process. Surprisingly, in many cases, use of technology is associated with an increase rather than a decrease in time spent within various stages of the financial planning process. These results suggest that although technologies may provide efficiencies in completing certain tasks, these efficiencies do not necessarily result in net reductions in time spent within the financial planning process.","PeriodicalId":147403,"journal":{"name":"ERN: Employee Benefits (Topic)","volume":"49 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-03-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128013815","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article examines the taxation of benefits received under New York’s new Paid Family Leave Act. The article argues that New York’s Paid Family Leave Act is unique when compared to similar provisions enacted in other states to date and that benefits paid under the tax are excluded from federal gross income by operation of Internal Revenue Code Sections 104 and 105. Additionally, the article contends that New York’s Department of Taxation and Finance’s Notice N-17-12 errs in concluding that amounts paid under the Act are includible in federal gross income. The article contends that insurance policies issued in compliance with the Act are “health insurance” and that income replacement benefits paid under the Act are paid for “sickness” as described in Code Sections 104 and 105.
{"title":"Exploring the Taxation of New York's New Paid Family Medical Leave Benefit","authors":"Richard Barnes","doi":"10.2139/ssrn.3276664","DOIUrl":"https://doi.org/10.2139/ssrn.3276664","url":null,"abstract":"This article examines the taxation of benefits received under New York’s new Paid Family Leave Act. The article argues that New York’s Paid Family Leave Act is unique when compared to similar provisions enacted in other states to date and that benefits paid under the tax are excluded from federal gross income by operation of Internal Revenue Code Sections 104 and 105. Additionally, the article contends that New York’s Department of Taxation and Finance’s Notice N-17-12 errs in concluding that amounts paid under the Act are includible in federal gross income. The article contends that insurance policies issued in compliance with the Act are “health insurance” and that income replacement benefits paid under the Act are paid for “sickness” as described in Code Sections 104 and 105.","PeriodicalId":147403,"journal":{"name":"ERN: Employee Benefits (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-10-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130855236","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The central claim of the present article is that some form of government intervention is necessary to make telework arrangements sufficiently binding in the long-run for employees living in, or near, city centers to feel comfortable incurring the costs of relocating to more remote, lower-priced areas, and to ensure the long-run financial self-sufficiency of private telework centers, which provide important benefits, not just to employers and employees, but to society generally. The public benefit considered here is the capacity for telework, and telework centers specifically, to provide lower-priced housing alternatives for middle- and high-income earners who choose to live in, or near, the city center to reduce the time spent commuting, but who would otherwise choose to live in more remote, lower-priced areas if commuting costs were lower. As explained, a minimal amount of government intervention is necessary, however, to overcome several key economic challenges that preclude employees from relocating to remote, lower-priced exurban or rural communities, as well as the formation of a new and exciting private-sector enterprise: the privately-operated telework center.
{"title":"Unlocking the Housing-Related Benefits of Telework: A Case for Government Intervention","authors":"W. Bunting","doi":"10.2139/SSRN.2994779","DOIUrl":"https://doi.org/10.2139/SSRN.2994779","url":null,"abstract":"The central claim of the present article is that some form of government intervention is necessary to make telework arrangements sufficiently binding in the long-run for employees living in, or near, city centers to feel comfortable incurring the costs of relocating to more remote, lower-priced areas, and to ensure the long-run financial self-sufficiency of private telework centers, which provide important benefits, not just to employers and employees, but to society generally. The public benefit considered here is the capacity for telework, and telework centers specifically, to provide lower-priced housing alternatives for middle- and high-income earners who choose to live in, or near, the city center to reduce the time spent commuting, but who would otherwise choose to live in more remote, lower-priced areas if commuting costs were lower. As explained, a minimal amount of government intervention is necessary, however, to overcome several key economic challenges that preclude employees from relocating to remote, lower-priced exurban or rural communities, as well as the formation of a new and exciting private-sector enterprise: the privately-operated telework center.","PeriodicalId":147403,"journal":{"name":"ERN: Employee Benefits (Topic)","volume":"2015 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-08-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130736326","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We examine whether the recent expansions in Medicaid from the Affordable Car Act reduced "employment lock" among childless adults who were previously ineligible for public coverage. We compare employment in states that chose to expand Medicaid versus those that chose not to expand, before and after implementation. We find that although the expansion increased Medicaid coverage by 3.0 percentage points among childless adults, there was no significant impact on the employment.
我们研究了最近《平价汽车法案》(Affordable Car Act)对医疗补助计划(Medicaid)的扩大是否减少了以前没有资格享受公共保险的无子女成年人的“就业锁定”。我们比较了那些选择扩大医疗补助计划的州和那些选择不扩大医疗补助计划的州在实施前后的就业情况。我们发现，尽管医疗补助计划的扩大使无子女成年人的医疗补助覆盖率提高了3.0个百分点，但对就业没有显著影响。
{"title":"Employment Effects of the ACA Medicaid Expansions","authors":"Pauline Leung, Alexandre Mas","doi":"10.3386/W22540","DOIUrl":"https://doi.org/10.3386/W22540","url":null,"abstract":"We examine whether the recent expansions in Medicaid from the Affordable Car Act reduced \"employment lock\" among childless adults who were previously ineligible for public coverage. We compare employment in states that chose to expand Medicaid versus those that chose not to expand, before and after implementation. We find that although the expansion increased Medicaid coverage by 3.0 percentage points among childless adults, there was no significant impact on the employment.","PeriodicalId":147403,"journal":{"name":"ERN: Employee Benefits (Topic)","volume":"14 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116012980","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
D. Lehrer, Charles A. Jeszeck, M. Hartnett, Sharon Hermes, Kun-Fang Lee
The most severely distressed multiemployer plans have taken significant steps to address their funding problems and, while most plans expected improved financial health, some did not. A survey conducted by a large actuarial and consulting firm serving multiemployer plans suggests that the large majority of the most severely underfunded plans -- those designated as being in critical status -- either have increased or will increase employer contributions or reduce participant benefits. In some cases, these measures will have significant effects on employers and participants. For example, several plan representatives stated that contribution increases had damaged some firms' competitive position in the industry, and, in some cases, threatened the viability of such firms. Similarly, reductions in certain benefits -- such as early retirement subsidies -- may create hardships for some older workers, such as those with physically demanding jobs. Most of the 107 surveyed plans expected to emerge from critical status, but about 25 percent did not and instead seek to delay eventual insolvency.The Pension Benefit Guaranty Corporation's (PBGC) financial assistance to multiemployer plans continues to increase, and plan insolvencies threaten PBGC's multiemployer insurance fund's ability to pay pension guarantees for retirees. Since 2009, PBGC's financial assistance to multiemployer plans has increased significantly, primarily due to a growing number of plan insolvencies. PBGC estimated that the insurance fund would be exhausted in about 2 to 3 years if projected insolvencies of either of two large plans occur in the next 10 to 20 years. More broadly, by 2017, PBGC expects the number of insolvencies to more than double, further stressing the insurance fund. PBGC officials said that financial assistance to plans that are insolvent or are likely to become insolvent in the next 10 years would likely exhaust the insurance fund within the next 10 to 15 years. If the insurance fund is exhausted, many retirees will see their benefits reduced to an extremely small fraction of their original value because only a reduced stream of insurance premium payments will be available to pay benefits.Experts and stakeholders cited two policy options to avoid the insolvencies of severely underfunded plans and the PBGC multiemployer insurance fund, as well as other options for longer term reform. Experts and stakeholders said that, in limited circumstances, trustees should be allowed to reduce accrued benefits for plans headed toward insolvency. Also, some experts noted that, in their view, the large size of these reductions for some severely underfunded plans may warrant federal financial assistance to mitigate the impact on participants. Experts and stakeholders also noted tradeoffs, however. For example, reducing accrued benefits could impose significant hardships on some retirees, and any possible financial assistance must be considered in light of the existing federal debt. Opt
{"title":"Private Pensions: Timely Action Needed to Address Impending Multiemployer Plan Insolvencies","authors":"D. Lehrer, Charles A. Jeszeck, M. Hartnett, Sharon Hermes, Kun-Fang Lee","doi":"10.2139/SSRN.2830670","DOIUrl":"https://doi.org/10.2139/SSRN.2830670","url":null,"abstract":"The most severely distressed multiemployer plans have taken significant steps to address their funding problems and, while most plans expected improved financial health, some did not. A survey conducted by a large actuarial and consulting firm serving multiemployer plans suggests that the large majority of the most severely underfunded plans -- those designated as being in critical status -- either have increased or will increase employer contributions or reduce participant benefits. In some cases, these measures will have significant effects on employers and participants. For example, several plan representatives stated that contribution increases had damaged some firms' competitive position in the industry, and, in some cases, threatened the viability of such firms. Similarly, reductions in certain benefits -- such as early retirement subsidies -- may create hardships for some older workers, such as those with physically demanding jobs. Most of the 107 surveyed plans expected to emerge from critical status, but about 25 percent did not and instead seek to delay eventual insolvency.The Pension Benefit Guaranty Corporation's (PBGC) financial assistance to multiemployer plans continues to increase, and plan insolvencies threaten PBGC's multiemployer insurance fund's ability to pay pension guarantees for retirees. Since 2009, PBGC's financial assistance to multiemployer plans has increased significantly, primarily due to a growing number of plan insolvencies. PBGC estimated that the insurance fund would be exhausted in about 2 to 3 years if projected insolvencies of either of two large plans occur in the next 10 to 20 years. More broadly, by 2017, PBGC expects the number of insolvencies to more than double, further stressing the insurance fund. PBGC officials said that financial assistance to plans that are insolvent or are likely to become insolvent in the next 10 years would likely exhaust the insurance fund within the next 10 to 15 years. If the insurance fund is exhausted, many retirees will see their benefits reduced to an extremely small fraction of their original value because only a reduced stream of insurance premium payments will be available to pay benefits.Experts and stakeholders cited two policy options to avoid the insolvencies of severely underfunded plans and the PBGC multiemployer insurance fund, as well as other options for longer term reform. Experts and stakeholders said that, in limited circumstances, trustees should be allowed to reduce accrued benefits for plans headed toward insolvency. Also, some experts noted that, in their view, the large size of these reductions for some severely underfunded plans may warrant federal financial assistance to mitigate the impact on participants. Experts and stakeholders also noted tradeoffs, however. For example, reducing accrued benefits could impose significant hardships on some retirees, and any possible financial assistance must be considered in light of the existing federal debt. Opt","PeriodicalId":147403,"journal":{"name":"ERN: Employee Benefits (Topic)","volume":"6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-03-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131833229","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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