Differential analysis of American pensions

Objective: to study the causes of the differentiation of American pension.

Abstract: American social welfare is not the best in western countries, but its pension system is the largest in the world. This paper mainly draws the following conclusion through the differential analysis of American pension fund: the pension fund increased year by year during 2001-2008, and began to decline after 2008. The highest level was in 2008. There is a wide gap in state pension levels, with California having the highest. State and local employees receive the highest pensions, followed by teachers. The level of pension under multi-employer cost-sharing schemes and multi-employer agency schemes is high, while that under single-employer cost-sharing schemes is low.

Keywords: Datafocus; Pension; Differential analysis

Case background

America’s social welfare is not the best in the west, but its pension system is the biggest in the world. Everyone who works for a certain number of years can receive a pension from the federal government each month after retirement. America’s pension system has three levels. The first level is the social security endowment insurance system, enforced by the government. The second level is self-funded pension schemes by employers, both public and private. The third level is the personal savings pension scheme, which sets up a pension account if the individual is willing and the federal government provides tax benefits.

Case study

Although the pension benefits of the United States as a whole are relatively good, there are still big differences in the pension levels of different states in different years. Based on the pension data of the United States from 2001 to 2016, this paper first studies the overall trend of pension changes in the United States from 2001 to 2016 and the causes of pension changes. Then, based on the data of a certain year, the author studies the reasons for the differentiation of American pension fund from the aspects of payment proportion, cost structure and population orientation.

Case analysis

Import the analyzed “American pension data” CSV file into the Focus system.

(1) pension trend analysis

In order to analyze the pension difference in different years, a line chart is drawn as shown in figure 1. From the chart, it can be seen that the pension amount increased year by year from 2001 to 2008, and began to decline again after 2008, until 2010. The highest level was in 2008. 捕获32

图1 2001-2016年养老金变化趋势

Inflation analysis

By comparing the changes of the inflation rate and the pension in the United States between 2001 and 2016, this paper studies the impact of the inflation rate on the pension level. As can be seen from figure 2, the pension level was gradually increased as the inflation rate decreased before 2008. The relationship between inflation and pension changes after 2008 is less obvious. Because pensions are paid by the government, when there is inflation, the government may increase the cost of pensions in return for offsetting the rise in prices caused by inflation. 捕获38

图2 通货膨胀率与养老金的变化趋势

Government funding ratio analysis

The government capital ratio refers to the ratio of actuarial assets to actuarial liabilities. It is one of the important indexes to measure the government’s solvency. Actuarial assets are usually calculated using the fluctuations in the level of assets resulting from smooth investment gains and losses. Actuarial liabilities are accrued liabilities calculated according to GASB standards. Actuarial liabilities are equal to the present value of future earnings, discounted using the plan’s long-term investment return. As can be seen from figure 3, pensions increased year by year before 2008 as the government funding ratio declined. Both have been in a state of horizontal volatility since 2008. This suggests that when the government is more solvent, pension payouts are lower. 捕获34

图3 政府资金比率与养老金的变化趋势

Pension status in 2008

1. Differentiation analysis of different states

To study differences in state pension levels, the bar chart is shown in figure 4. As can be seen from the bar chart, there is a large gap between the state pension levels, among which California has the highest pension level, followed by New York.

捕获35

图4 2008年不同州的养老金水平

Payment ratio analysis

Contribution rate refers to the rate paid by the employer on the basis of the average salary in the previous year. The minimum wage is 60% of the average monthly wage (the social average wage of the previous year) of the non-private employees in urban and non-private sectors in the whole state, and the maximum is three times the social average wage of the previous year. From the analysis of the proportion of employers’ contributions, it can be seen that the higher the proportion of contributions, the higher the pension level in the regions. 捕获40 图5 2008年不同州的缴费比例与养老金统计

State of California pension status

Since California’s pensions are higher than those of other states, data from the region are screened to study differences in pensions across demographic and cost structures.

1. Crowd oriented

It can be seen from figure 6 that the pensions of national and local employees are the highest, followed by teachers. This suggests that the United States offers better pension benefits to government employees and teachers.

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图6 加利福尼亚州不同人群养老金构成比例

Cost structure analysis

By analyzing the pension under different cost structure, it is found that the pension under multi-employer cost-sharing plan and multi-employer agency plan is higher, while the pension under single-employer cost-sharing plan is low.

捕获37

图7 加利福尼亚州不同成本结构下的养老金水平

Multi-employer cost-sharing of pension plans

The cost structure of the higher pension level, the pension data under the multi-employer cost-sharing scheme, was screened out to study the pension situation of different pension plans under the structure. As can be seen from the area chart (see figure 8), California teachers have the best pension benefits.

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图8 加利福尼亚州多雇主成本分摊下的养老金计划

Data pinboard

Finally, the 6 results were imported into the data pinboard of “differential analysis of American pensions”, and the operation results were as follows: 捕获39

图9 数据看板

 

Conclusion

From 2001 to 2008, the total amount of pension increased year by year. After 2008, it began to decline, and the downward trend continued until 2010. The highest level was in 2008. There is a wide gap in state pension levels, with California having the highest, followed by New York. State and local employees receive the highest pensions, followed by teachers. This suggests that the United States offers better pension benefits to government employees and teachers. The level of pension under multi-employer cost-sharing schemes and multi-employer agency schemes is high, while that under single-employer cost-sharing schemes is low.

Suggestions

Since there are large differences in state pension levels, the government should take some measures to narrow the gap. Through the analysis of the public pension, it is found that the pension benefits for the police and firefighters in the United States are relatively low, and the United States is a country with an aggressive terrorist force. The importance of the police and firefighters is self-evident, so the government should make efforts to improve the pension level of the police and firefighters. The level of pensions under the single-employer cost-sharing scheme is low and therefore can be reduced under this cost structure.

 

 

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