انتخاب به پول نقد بیرون از حقوق های بازنشستگی در تغییر کار یا بازنشستگی

Most pension plans allow a lump sum distribution upon job separation, enabling a subsequent cash-out. In the 1992–2000 HRS, 13% of entitlements were cashed-out, representing 5.3% of entitlement dollars. Among plans with a lump sum option, 20% were cashed out. Cash-outs can be rational and we broadly confirm hypotheses for cash-out determinants, but not that individuals with short expected longevity should wish to disproportionately cash out. Fears of adverse selection into the pool of pensioners with annuity income thus appear unfounded. While we find only limited leakage, it is concentrated among individuals vulnerable to poverty in old age.

When workers change jobs or retire, they often have several options for the disposition of their pension rights. Many can settle the entitlement with a lump sum cash payment. Such cash-outs are likely to reduce consumption in retirement and may increase poverty among the elderly. This leakage undermines an important public policy that, at considerable expense, allows workers to defer taxes on income that is earmarked for consumption in retirement. This paper analyzes cash-outs and other dispositions of pension entitlements among mature workers who left their jobs between 1992 and 2000. We pay special attention to the choices that are available to individual workers, in particular whether they may take a lump sum distribution (LSD). Limited by available data, prior literature has typically analyzed cash-outs among only those pension entitlements that were settled with an LSD. Instead, we measure leakage from all pension entitlements, and analyze cash-outs among all workers with the option of cashing out. The purpose of this paper is to better understand how workers make choices concerning the use of their pensions and retirement accounts. The remainder is organized as follows. Section 2 provides background, reviews prior research, and discusses the legal environment. Section 3 outlines our theoretical perspective and describes the Health and Retirement Study (HRS) data, and Section 4 presents and discusses the results. We conclude in Section 5 with implications for public policy and the potential problems posed by adverse selection behavior.

Prior work on pension cash-outs has typically centered on the universe of pension entitlements that were settled with an LSD. A key insight of this paper is that cash-out rates are more meaningful when based on a much larger universe. To assess leakage of retirement resources as a consequence of pension cash-outs, the appropriate universe consists of all pension entitlements. However, not all pension plans offer the option of lump sum settlement. For analyses of economic decisionmaking—and an assessment of potential retirement resource leakage should plan sponsors be required to offer an LSD option—, the appropriate universe consists of all pension entitlements with the option of an LSD. Either way, we find cash-out rates that are far below those reported in previous research. Most pension plans result in a current or future benefit flow or are left to accumulate with the previous employer; only 31% of plans (16% of dollars) were settled with an LSD. Less than half of these, 13% of all plans (5.3% of all dollars), were cashed out. Among plans with an LSD option, 20% were cashed out, representing 9.3% of their value. Most of the cash went into investments and savings; only 5.6% of plans (1.8% of dollars) ended up being spent on current consumption or used to pay off debt. A potential concern with cash-outs is that cash-out rates may be higher among individuals who will live shorter than others of their age. This could lead to adverse selection among remaining annuitants and thus increase pension liabilities. We believe this concern may be put to rest. In other words, we do not find evidence of adverse selection: those who remain in the pool of (future) annuitants expect to enjoy average lifespans. We conclude that, among workers that are within roughly 10 years of retirement, only a small fraction of pension plan dollars is consumed immediately after job separation and that the vast majority is preserved for retirement income security. For this cohort, public policy appears to be quite effective, and our study provides little or no scientific basis for proposals to outlaw cash-outs. A concern remains for individuals with relatively low incomes. We find that cash-out rates were highest for plans with small values and for individuals with low wealth holdings, i.e., cash-outs may erode the retirement income for low-income households. The very low wealth holdings of this group may be the result of the Social Security program, which may force them to save more than they consider optimal. Their cash-out behavior is consistent with this argument, but it raises a moral hazard issue. If it results in greater public safety net outlays later in life, such as on Supplemental Security Income, then policy makers may want to consider curbs on the ability to cash out pensions. A study into the long-term consequences of cash-outs for low income workers and their surviving spouses can shed light on this potential risk. It is not clear whether the overwhelming majority of pension dollars is also preserved for younger cohorts. We found a higher cash-out rate among DC plans, which are more likely to be held by younger cohorts. Perhaps more importantly, DB plans offer no protection against inflation after job separation, so that younger cohorts, who are farther from retirement, may be more likely to take an LSD. This may well result in higher cash-out rates than those that we found for the HRS cohorts. We therefore recommend that future research focus on long-term consequences of cash-out for low-income workers and on younger cohorts.