Fundamentals of Private Pensions [Hardcover]

Dan M. McGill (Author), Kyle N. Brown (Author), John J. Haley (Author), Sylvester J. Schieber (Author)

Book Description

ISBN-10: 0199269505 | ISBN-13: 978-0199269501 | Publication Date: February 17, 2005 | Edition: 8

For almost five decades, Fundamentals of Private Pensions has been the most authoritative text and reference book on private pensions in the world. The revised and updated Eighth Edition adds to past knowledge while providing exciting new perspectives on the provision of retirement income. This new edition is organized into six main sections dealing with a variety of separable pension issues. Section I provides an introductory discussion on the historical evolution of the pension movement and how pensions fit into the patchwork of the whole retirement income security system in the United States. It includes a discussion about the economics of the tax incentives that have played a role in stimulating pension offerings and in the structure of the benefits provided. Section 2 lays out the regulatory environment in which private pension plans operate. Section 3 investigates the various forms of retirement plans that are available to workers to determine how they are structured in practical terms. Section 4 focuses on the economics of pensions. Several of the chapters in this section update and refine material from the prior. New chapters in this volume describe the conversion of some traditional pensions to new hybrid forms, including cash balance and pension equity plans, and the growing phenomenon of phased retirement and the issues raised for employer-sponsored pensions. Section 5 explores the funding and accounting environments in which private employer-sponsored retirement plans operate. The concluding section investigates the handling of assets in employer-sponsored plans and their valuation as well as the insurance provision behind the benefit promises implied by the plans. This latest edition of Fundamentals of Private Pensions will prove invaluable reading for both academics and professionals working in the area of pensions and pension management.

Editorial Reviews

Review

"Fundamentals of Private Pensions is one of the few classics in the field, a work that no pension library should be without. Accordingly, it is a pleasure to welcome the 9th edition, published under the auspices of the Pension Research council of the Wharton School, and featuring a dream team of authors."--Journal of Pension Economics and Finance

--This text refers to an alternate Hardcover edition.

About the Author

Dan McGill is Professor Emeritus of Insurance at the University of Pennsylvania's Wharton School, having served on the faculty at the University from 1952 until 1990. During this time he chaired the Department of Insurance, directed the Pension Research Council, and directed the Huebner Foundation. Previously, he held academic positions at the University of Tennessee, North Carolina, and Stanford University. Dr. McGill's research focused on the areas of insurance, pensions, employee benefits, automobile insurance, and social security. He served on several corporate boards including Northwestern Mutual Life Insurance Corporation, Philadelphia Reinsurance Corporation, and several INA group; not-for-profit board membership included the Board of Pensions for the Presbyterian Church (USA), the Boettner Institute of Financial Gerontology, the American Finance Association, the American College, and Independence Blue Cross of Southern Pennsylvania. Kyle N. Brown is an attorney with the Watson Wyatt Worldwide Research and Information Center in Washington, D.C. specializing in employee benefits, where he serves as counsel to Watson Wyatt's Retirement Practice Committee. He is a member of the North Carolina and District of Columbia Bar and is admitted to the United States Supreme Court and Tax Court Bar. Mr. Brown is also an officer of the Employee Benefits Committees of the American Bar Association Section of Taxation. Previously he has taught at the University of Maryland and at George Washington University. He has also served with the Internal Revenue Service in the Employee Plans Technical and Actuarial Division, and at the United States Department of Justice Tax Division. Mr. Brown received the BA from the University of North Carolina at Chapel Hill, a Law degree from the Campbell University School of Law, and the LLM in Taxation from George Washington University. John J. Haley is CEO and Chair of the Board of Directors at Watson Wyatt Worldwide. Mr. Haley has consulted widely on retirement programs for large companies, in the context of which he directed the development of Watson Wyatt Worldwide's Asset/Liability Model. Mr. Haley is a Fellow of the Society of Actuaries; and a member of the American Academy of Actuaries, the International Actuarial Association, and the International Association of Consulting Actuaries. Haley has served on the Pension Committee of the Society of Actuaries and on the Technical Panel of Experts supporting the Advisory Council on Social Security. Mr. Haley received the AB in mathematics from Rutgers College, and he received a Fellowship for two years of study at the Graduate School of Mathematics at Yale University. Sylvester J. Schieber is the Director of Watson Wyatt Worldwide's Research and Information Center in Washington, D.C. During his professional career, he has specialized in the analysis of public and private retirement policy and health policy issues. His best-known work is on national and corporate retirement policy, and his recent work focuses on changing demographics and employee benefits in the 21st century. Prior to joining Watson Wyatt Worldwide, he served as the first Research Director of the Employee Benefit Research Institute, as the Deputy Director of the Office of Policy Analysis at the US Social Security Administration, and as Deputy Research Director at the US Department of Health and Human Services. Dr. Schieber also serves on Watson Wyatt's Board of Directors, and he has served on the Advisory Board of the Pension Research Council at the Wharton School. Dr. Schieber received the Ph.D. in economics from the University of Notre Dame.

Product Details

• Hardcover: 902 pages
• Publisher: Oxford University Press, USA; 8 edition (February 17, 2005)
• Language: English
• ISBN-10: 0199269505
• ISBN-13: 978-0199269501
• Product Dimensions: 9.7 x 7.5 x 2.2 inches
• Shipping Weight: 4 pounds
• Average Customer Review: 4.2 out of 5 stars  See all reviews (4 customer reviews)
• Amazon Best Sellers Rank: #1,644,269 in Books (See Top 100 in Books)

Customer Reviews

Most Helpful Customer Reviews

8 of 9 people found the following review helpful:

3.0 out of 5 stars A good reference, September 13, 2002

By 

"mseckman" (United States) - See all my reviews

This review is from: Fundamentals of Private Pensions, Seventh Edition (Pension Research Council Publications) (Library Binding)

A good reference book for anyone connected with a pension or profit sharing arrangement. It is not a guide to IRAs, Keogh plans, SEPs, rather it focuses on traditional defined contribution and defined benefit plans. While this book seems written for more for budding actuaries, those wishing to study design alternatives or asset management will find this book provides a good background. I find two flaws with the book.

First is the lack of examples. While the book discusses full funding limitations, it does not show you an example calculation. While it tells you how to calculate the minimum liability, it does not show you an example of how to present it in the financial statements. This book is not a text book, but it would be very helpful to see some real examples in practice rather than only discussions about the rationale behind the method.

Second, the single chapter on pension accounting is weak. Issues not mentioned include accounting for minimum liability, disclosures under FAS 132, understanding the relationship between funding and expense, curtailments and other plan amendments, the interrelationships between the conflicting limitations of ERISA/IRC/GAAP, the effect of pension assumptions on the financial statements and the impact of FAS 87 for an over funded plan on the financial statements of the sponsor. The perspective focuses more on the reasons the accounting standards exist, not the strategy or day-to-day issues of how the pension affects the financial statements of the sponsor. If accounting is what you need, buy a current intermediate accounting book.

4 of 6 people found the following review helpful:

4.0 out of 5 stars Very complete yet sometimes boring: serious stuff !, November 7, 2000

By 

"dimikar" (Brussels, Belgium) - See all my reviews

This review is from: Fundamentals of Private Pensions, Seventh Edition (Pension Research Council Publications) (Library Binding)

Very coplete study, covering almost all imaginable subjects, from actuarial maths to investment management to organisation and HR aspects of pension provision. This is not a manual, though. Get a simpler and less in detail book to get a general view of the topic, and then use "Fundamentals..." as reference.

5.0 out of 5 stars Review from the Journal of Pension Economics and Finance, vol. 10, issue 1, March 21, 2011

By 

Pension Research Council (Philadelphia, PA USA) - See all my reviews

This review is from: Fundamentals of Private Pensions (Hardcover)

Pension mavens have long recognized that Fundamentals of Private Pensions is one of the few
classics in the field, a work that no pension library should be without. Accordingly, it is a
pleasure to welcome the 9th edition, published under the auspices of the Pension Research
Council of the Wharton School, and featuring a dream team of authors: Dan M. McGill, Kyle
N. Brown, John J. Haley, Sylvester J. Schieber, and Mark J. Warshawsky.
As always, the book's coverage is comprehensive and includes an array of empirical
and statistical data in addition to thorough coverage of the laws and policies that shape
the American retirement system. The book provides good coverage of recent developments,
including the Pension Protection Act of 2006, the growth of hybrid plans and the (slow)
emergence of phased retirement. The book also includes a good chapter on the most problematic
issue arising from the trend towards defined contribution plans, namely the risk that
individuals will outlive their resources in retirement.
Although the pension laws have been amended frequently since the enactment of the
Employee Retirement Income Security Act of 1974 (ERISA), these changes have mainly
tinkered with the rules, not always for the better. For at least the last 15 years, pension scholars
have been advocating systemic changes. ERISA responded to problems and workplace conditions
of the 1960s: today's problems and conditions are very different.
The need for change has become more urgent as a result of the recent financial crises.
However, the Obama Administration faces major problems that must take priority over changing
the private pension rules including: two wars; reinvigorating the economy; the credit crisis ;
the health care system in general and Medicare and Medicaid in particular; and putting Social
Security on a firmer financial footing. Pension reform is controversial: will this Administration
or Congress have the time or the political will to address fundamental, long-term reform?
Despite all efforts by Congress, private sector pension coverage has hovered around 50%for
several decades, and the percentage with adequate coverage is far less than 50%. Recent
legislative initiatives have focused on encouraging individuals to save more for retirement: but
in the present environment that approach is unrealistic, particularly for the lower income
workers who are most at risk. Adequate retirement income requires mandates. There is a strong
argument for severing completely the link between health care coverage and employment, and
perhaps the same approach would, in the long run, improve our retirement system.
One of the great virtues of the book is that it collects and analyzes information from many
sources and many disciplines, and I am not aware of any other single-volume work with such
broad coverage. Nevertheless, I have a short wish list, probably idiosyncratic, of features that
I would like to see covered or covered in more detail, in future editions. The final chapter of the
present work discusses the future of pensions, and I suggest that this chapter could be expanded
significantly by delving into several unanswered questions.
First, despite some recent cutbacks by major employers, problems of pension coverage and
adequacy disproportionately affect part-time employees and employees of small employers.
Why is this the case and how can this problem be addressed? Second, it is clear that the rate
of contributions must be increased. The current tax incentives are both very expensive and
ineffective. What combination of carrots and sticks is best designed to achieve this goal?
Third, it is not enough to get money into the system: we must try to keep it in the system by
increasing portability and reducing pre-retirement leakage. Social Security is a good model: but
an enhancement of retirement security by increasing Social Security benefits does not appear at
all likely to happen. Fourth, the runaway cost of health care and the amount of waste in the
health care system directly reduce the level of retirement security, by reducing the amounts
available for contribution and by increasing the amount required in retirement.
Book reviews 151
Fifth, the amount held in individual retirement accounts (primarily rollover IRAs) is now
greater than the amount held in private sector defined benefit plans or private sector defined
contribution plans, yet the rules governing IRAs have not evolved to reflect this. Sixth, we need
to develop a better framework for regulating investments by all types of retirement plans.
Finally, we need to develop better distribution alternatives for individuals with account-based
retirement savings. We should not expect every retiree to invest successfully and take appropriate
distributions over a period of up to 40 years, a period in which mental acuity is likely to
diminish.
The authors may legitimately claim that these topics are not part of the book they set out to
write. However, their inclusion would make an excellent book even better.
DAVID PRATT
Professor of Law, Albany Law School