Assessing Policies for Retirement Income Needs for Data, Research, and Models (1997) / Chapter Skim
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4 Data Needs
4 Data Needs
Pages 61-131
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From page 61... ...
These deficiencies need to be remedied and the knowledge base further developed before it will be possible to construct reasonably adequate projection models with broad capabilities. Moreover, existing retirement-income-related projection models and the associated databases have many limitations and do not generally provide an adequate platform on which to develop improved models once new data and research knowledge become available (see Chapter 5 and Appendix D; see also Hollenbeck, 1995~.
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From page 62... ...
THE LESSON FROM HEALTH CARE REFORM The experiences and reflections of policy analysts who provided estimates for the 1993-1994 health care reform debate underscore the panel's conclusion about giving priority to investments in data and research. Box 4-1 describes the major players in health care reform estimation and the models and databases they used.1 More lead time and prior investment would have facilitated the development of usable projection models for estimating the likely effects of alternative health care reform plans.
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From page 63... ...
noted that "such studies can credibly illuminate only the effects of marginal changes in the current environment. The effects of large, systemic changes that major health care reform proposals would generate are far outside the boundaries of knowledge that can be gleaned from existing economic research or even from social experiments." Nonetheless, they identified several areas in which better data about the current system would have made it possible to develop more credible estimates of the effects of reform proposals (see Box 42; see also Bandeian and Lewin, 1994~.
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From page 64... ...
. Nonetheless, as with health care reform, filling key gaps in data and research knowledge can go a long way to make it possible to develop credible projections of the likely effects of many retirement-income-related policy alternatives.
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From page 65... ...
The remainder of this chapter addresses: the dimensions of databases that should be considered in designing and evaluating cost-effective retirementincome-related data collection systems, whether new or modified; issues in continuing existing panel surveys of middle-aged and older people in order to provide sufficient longitudinal observations for analysis of consumption, savings, and retirement behavior of individuals; issues in developing new and improved cross-sectional and panel data for employers and their workers in order to understand labor demand and employer decisions about pensions and other benefits; issues in linking administrative and survey data, which can be a cost-effective
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From page 68... ...
For example, the level of uncertainty in survey responses can be reduced by increasing the sample size; however, such a decision will increase costs. Similarly, an expansion of the number and detail of survey questions will make a survey more useful for a wider
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From page 69... ...
There are also trade-offs with regard to the use of administrative records instead of survey data. Administrative records are usually thought to be more accurate than survey responses.
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From page 70... ...
In fact, analytical and projection models often use different types of data. For example, analytical models of individual behavior generally require rich longitudinal data from panel surveys, but models that project individual outcomes rarely use panel surveys as their primary database because of small sample sizes and restricted universes.4 Yet if the projection model database does not contain a similarly rich set of variables as were used to estimate key behavioral relationships in an analytical model, it will not be possible to take advantage of the most advanced behavioral models.
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From page 71... ...
Although cross-sectional surveys can use retrospective questions to collect longitudinal information, such as employment and earnings histories (and in some cases this is done) , the quality of retrospective information is much less, compared with panel surveys, because of recall and other errors, which may be large (see, e.g., Kennickell and Starr-McCluer, 1995~.
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From page 72... ...
also lack the full set of information that researchers would like. Boxes 4-4, 4-5, 4-6, and 4-7 show, respectively, the information in major retirement-income-related panel surveys about expectations, pension coverage, health status and health insurance coverage, and assets and expenditures.
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From page 73... ...
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From page 74... ...
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From page 75... ...
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From page 76... ...
NOTES: AHEAD, Asset and Health Dynamics Among the Oldest Old; HRS, Health and Retirement Survey; NLS-MW, National Longitudinal Survey of Mature Women; NLSOM, National Longitudinal Survey of Older Men; NLS-YM, National Longitudinal Survey of Young Men; NLS-YW, National Longitudinal Survey of Young Women; NLSY, National Longitudinal Survey of Youth (Young Men and Women) ; RHS, Retirement History Survey.
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From page 84... ...
84 ASSESSING POLICIES FOR RETIREMENT INCOME a :::: ::::: hi: :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ; :: ::~:::::~ _ _:::: ::: l -:a:-: : -: :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ~ ~ :A :::~::: J:::: ~it- : -:a: : : ~ .~.
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From page 88... ...
Information about health care plan provisions is obtained directly from the employer; information about pension plan provisions is abstracted from Summary Plan Descriptions provided by the employer (which employers are required to have on file)
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From page 89... ...
, conducted by the Census Bureau, is a repeated, short-term panel survey of individuals that began in 1983. From 1983 to 1993, a new panel was introduced every year that followed members of about 12,000 to 24,000 households for 2-1/2 years, with interviews every 4 months.
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From page 90... ...
, which is sponsored by BLS and has been conducted by the Census Bureau since the 1940s. It collects information on labor force participation each month to use in calculating the monthly unemployment rate; the March income supplement collects information on sources and amounts of income for the preceding calendar year; a supplement conducted every 5 years has provided information on employer-provided pension and health care plan coverage.
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From page 91... ...
Our recommendations pertain to long-term panel surveys that are critical for retirement-income-related behavioral research and whose benefits may be less apparent than the benefits of these other surveys. We discuss below the advantages of coordinating aspects of the questionnaire design and content of long-term panel surveys with the SCF and SIPP, both of which provide (or have provided)
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From page 92... ...
We support the implementation of this plan, which will likely require a modest increase in future funding until the system reaches a steady state and then continuation of funding levels in real terms. Other Long-Term Panel Surveys HAS/AHEAD is not the only useful panel survey of individuals.
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From page 93... ...
The PSID obtains information about 1lThe SCF is taken as the standard for asset valuation in household surveys. Its wealth aggregates compare very favorably with aggregate figures on household balance sheets from the Federal Reserve flow of funds accounts, when proper adjustments are made to achieve conceptual compatibility (Antoniewicz, 1994)
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From page 94... ...
to finance their retirement. Also useful would be questions on respondents' awareness of and participation in employer financial education programs, in order to analyze the effectiveness of such programs in increasing employee pension contributions and personal savings.
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From page 95... ...
Finally, when one panel survey pioneers techniques that demonstrably improve data quality such as the bracketing or unfolding technique in HRS/ AHEAD, which is used for medical and total expenditures as well as assets it seems highly desirable for other surveys to adopt them. Such techniques should also be adopted in other household surveys, such as SIPP, that are a resource for tracking assets and other retirement-relevant variables in the general population.~3 Mechanisms to provide for regular cross-cutting reviews could include joint meetings of major panel surveys' advisory groups and principal investigators and commissioning papers on specific areas of possible interchange and congruence in questions and data collection techniques.
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From page 96... ...
3. Panel surveys of younger people, such as the National Longitudinal Survey of Youth (NLSY)
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From page 97... ...
The focus of the survey design and published tabulations is on benefits available to workers in several broad occupational categories for example, professional, technical and related; clerical and sales. From surveys of large private employers in one year and smaller private employers and state and local governments in alternating years, the EBS obtains extensive information on features of pensions, health insurance, and other benefit plans.
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From page 98... ...
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From page 100... ...
More detailed information is filed for large pension or welfare plans (those with 100 or more participants) than for smaller plans; more detailed information is also filed for defined benefit plans than for other pension plans.
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From page 101... ...
· Summary Plan Descriptions that provide additional information about features of both pension and welfare benefit plans are available as paper copies only and are often out of date: the filing requirement is once every 5 years or every 10 years if there has been no change. (For defined benefit pension plans, there is an added requirement to file annually a brief description of features that are used in calculating funding requirements.)
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From page 102... ...
to redesign and integrate the department's health surveys, the NEHIS will become an annual survey, beginning in 1997, with a sample size of about 25,000 employers and a design that permits state estimates.l6 The survey covers the universe of employers and has extensive information on health care benefit plan provisions and costs, but it lacks detailed employee characteristics or any information on pension plans and other nonmedical benefits. A longitudinal component, as yet unspecified, will likely be built into the NEHIS sample design.
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From page 103... ...
. On the whole, however, private sources tend to be even more limited in focus than federal sources of employer data: many cover only defined benefit pension plans, or health care plans, or large employers.
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From page 106... ...
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From page 107... ...
There are also issues of the appropriate reporting unit and how to minimize respondent burden. For example, information about benefit plans may be maintained at the establishment level, or it may be maintained at headquarters for all establishments, even when the benefit plans differ among establishments for such reasons as state regulation (see discussion in Chapman, Moriarity, and Sommers, 1996~.
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From page 108... ...
Obtaining Information It can be difficult to obtain comparable information across employers: for example, definitions of fiscal year differ, as do definitions for other characteristics. More important, it is often difficult to obtain any response to surveys (or administrative records systems)
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From page 109... ...
With intensive efforts, the BLS Employee Benefits Survey obtains quite high response rates for medium and large private establishments (85% in 1989) and for governments (94% in 1990)
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From page 110... ...
We suggest that BLS and PWBA jointly lead the task force: PWBA has responsibility for oversight of pension and other benefit plans and hence has the most policy interest in improving employer data; BLS brings extensive statistical experience and expertise. The task force should also involve other agencies with relevant analytical interests and expertise, such as the Pension Benefit Guaranty Corporation, relevant HHS agencies, and the Census Bureau.
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From page 111... ...
In addition, data collected by the Public Pension Coordinating Council, if coverage were improved, could serve as an important resource with which to augment federal agency sources on state and local government employer benefits at little or no added cost. Although the federal government does not regulate state and local government benefit plans, retirement-income-related research and policy analysis needs to consider the full range of employers.
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From page 112... ...
Such an integrated system could potentially bring together information on benefit plan provisions, employee participation in benefit plans, and employer costs. The task force should review these and other suggestions and goals for the EBS in the context of developing an overall plan for comprehensive employer benefit information.
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From page 113... ...
Finally, the design should consider the degree of integration that is feasible with the sample design for the Employee Benefits Survey; without some degree of integration, it will not be possible to relate the data from the two systems. National Employer Health Insurance Survey The U.S.
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From page 114... ...
Labor Demand: Case Studies Another important but difficult area for the task force to consider is how to obtain data for analyzing and projecting employer demand for older workers. For this purpose, detailed information is needed for employers with which to relate work force composition by age with compensation, benefit costs, and worker productivity by age.
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From page 115... ...
The survey should include data on the financial and other characteristics of employers and skills, earnings, benefit plan participation, and demographic and family characteristics of employees. Similarly to HAS/AHEAD for individuals, the survey ideally should also include data on attitudes and perceptions of corporate officers, supervisors, and workers, although confidentiality concerns may make it difficult to obtain such information.
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From page 116... ...
The Census Bureau recently matched 1990 census data on workers with employer data from its Longitudinal Research Database. Future matches may be possible if plans are approved for a very large continuing household survey with census-type content (the American Community Survey)
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From page 117... ...
In addition to using the employer benefit plan descriptions for such purposes as estimating future benefit entitlements, the information can be compared to self-reports in HAS/AHEAD. One important question such data would address is whether employees' knowledge of benefit plan features and the implications for how best to prepare for retirement is improving over time.
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From page 119... ...
6. The employer data collection plan should include short-term and long-term goals for obtaining improved information on the distribution across employers of all benefit plan offerings (including pensions, health insurance, disability insurance, retiree health insurance, life insurance)
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From page 120... ...
; · linking records over time to provide panel data; · merging the Form 5500 benefit plan information with the kind of employer financial characteristics found in the Compustat database; · working to standardize the reporting for health care and disability plans, so that they can be added to the Form 5500 database; and · finding ways to add information about benefit plan features to the database, perhaps by abstracting analytically useful information from the narrative plan descriptions that are filed with the Form 5500.
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From page 121... ...
Exact-match files of SSA records with the March 1973 and 1978 CPS, developed by the Census Bureau, were made publicly available (the 1973 file included an exact match with IRS records) , as were exactmatch files of SSA records with the Retirement History Survey.
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From page 122... ...
Earnings histories, including earnings above the payroll tax ceiling (available in SSA records beginning in 1979) , are also helpful in calculating expected benefits from the types of employer pension plans that calculate benefits on the basis of several years of highest earnings with the employer or that specify employer contributions as a percentage of earnings.
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From page 123... ...
Records on Employers Administrative records for employers, such as financial statements that are abstracted in Compustat and the Form 5500 data series, provide useful information for analytic purposes. These particular data sets, unlike SSA records, are derived from public documents, but problems can arise when they are merged with other data for which confidentiality protection is promised (e.g., BLS or Census Bureau surveys)
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From page 124... ...
Matched files of panel survey responses and key administrative records should be regularly produced for retirement-income-related policy analysis and projection purposes. Examples include exact matches of survey records with Social Security earnings histories and benefit records, Medicare and Medicaid records, and the National Death Index.
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From page 125... ...
For example, household surveys of the general population almost always have low coverage rates of such groups as young minority men.22 Surveys and administrative records systems use several methods to try to compensate for nonsampling errors, such as adjustment of survey weights for population undercoverage and attrition, imputation for item nonresponse, and editing for misclassification or inconsistency in reporting. However, these procedures are not likely to maintain all of the underlying relationships and may themselves be a source of bias.
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From page 127... ...
Aggregate Comparisons of Two or More Surveys Comparing aggregate estimates from one survey with aggregate estimates from another survey that is believed to be superior can provide an overall measure of data quality.
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From page 128... ...
Also, they need to be carefully made to ensure that definitions of the reporting universe and data items are comparable between the surveys being compared. Aggregate Comparisons of Surveys with Administrative Records Data Survey and administrative records comparisons are often viewed as a preferred method of measuring overall data quality, on the assumption that the administrative records estimates represent "truth." For example, validation studies of the quality of income data in such surveys as the March CPS and SIPP have used estimates from IRS tax records, food stamps and other program records, and the National Income and Product Accounts (NIPA)
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From page 129... ...
A similar analysis should be performed for all three surveys for the HRS age cohort. Comparing Household Survey Reports of Pension Participation with Estimates from Employer Administrative Records Aggregate comparisons, such as the study by Belier and Lawrence (1990)
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From page 130... ...
This level of employer response is typical of the experience of other surveys that have requested the descriptions, such as the 1989 SCF and 1989 NLS-Mature Women (see Juster and Suzman, 1995:44-45~. Comparing Household Survey Data on Income and Assets Across Surveys and with Administrative Records Comparisons should be regularly performed of household survey reports with other surveys (e.g., comparing wealth estimates from HAS/AHEAD or SIPP with the SCF)
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From page 131... ...
Evaluation methods include reinterviewing subsamples of respondents to measure consistency of reporting; experimentation with alternative question wording to identify possible reporting problems; and comparing survey estimates with administrative records to determine the completeness and accuracy of survey reporting, taking care to adjust for differences in definitions and other aspects of the two sources.
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