Risk of Poverty Six Times Greater for Older Americans Lacking Pensions, New Study Finds

`Pension Factor` Drives Public Assistance Savings of $7.3 Billion, 4.7 Million
Fewer Households in Poverty, "Near-Poverty" in 2006 Economic Security Impact of
Pensions Especially Important for Minorities, Women

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WASHINGTON--(Business Wire)--
Defined benefit pension income plays a critical role in reducing the risk of
poverty and hardship among older Americans. According to a study released today,
rates of poverty among older households lacking pension income were about six
times greater than those with such income. The analysis also finds that pensions
reduce - and in some cases eliminate - the greater risk of poverty and public
assistance dependence that women and minority populations otherwise would face.

The findings are contained in a new report, "The Pension Factor: Assessing the
Role of Defined Benefit Plans in Reducing Elder Hardships." The report was
authored by Dr. Frank Porell, Professor of Gerontology at the McCormack Graduate
School of Policy Studies at the University of Massachusetts-Boston, and Beth
Almeida, Executive Director at the National Institute on Retirement Security.

"This analysis reveals that pensions have a unique, independent, and positive
impact on older Americans economic well-being. This `pension factor` is
particularly powerful for improving the economic security of vulnerable older
households - women and members of racial/ethic minority groups, " said Beth
Almeida, executive director of the National Institute on Retirement Security."

"Ensuring older Americans have access to pensions in retirement," she continued,
"can help relieve some of the enormous pressures on Federal, state and local
budgets. We calculated a savings of some $7.3 billion in public assistance
expenditures in 2006, attributable to pensions. That`s about 8.5 percent of
aggregate public assistance dollars received by all American households in 2006
for the same benefit programs. These are sizable dollars."

The Pension Factor finds that pensions have helped substantial numbers of older
Americans avoid material hardships associated with inadequate food, shelter, and
health care, and also avoid reliance on public assistance. More specifically,
key findings indicate that pension receipt among older American households in
2006 was associated with:

* 1.72 million fewer poor households and 2.97 million fewer near-poor households

* 560,000 fewer households experiencing a food hardship
* 380,000 fewer households experiencing a shelter hardship
* 320,000 fewer households experiencing a health care hardship
* 1.35 million fewer households receiving means-tested public assistance
* $7.3 billion in public assistance expenditures savings, representing about 8.5
percent of aggregate public assistance dollars received by all American
households in 2006 for the same benefit programs

"Evidence that pensions contribute to the retirement readiness of older American
households has long been noted by experts and academics," said report lead
author Dr. Frank Porell. "With our analysis, we now have hard numbers on the
people and budget impacts of pensions. The bottom line: pensions help older
Americans escape poverty - especially women and minorities who we know are most
vulnerable," he said.

The analysis in The Pension Factor was conducted using the U.S. Census Bureau`s
Survey of Income Program Participation (SIPP) panels from 1996, 2001, and 2004.
The study sample included SIPP respondents age 60 years or older and all
households with a head age 60 and older, who had records in both the Pension and
Adult Well-Being topical modules of the survey. This totaled 10,259 households.

Additional data and analysis is available in the full research brief available
at www.nirsonline.org.

ABOUT NIRS

The National Institute on Retirement Security (www.nirsonline.org) is a
non-profit organization established to contribute to informed policymaking by
fostering a deep understanding of the value of retirement security to employees,
employers, and the economy through national research and education programs.
Located in Washington, D.C., NIRS has a diverse membership of organizations
interested in retirement including employee benefit plans, state or local
agencies that manage retirement plans, trade associations, financial services
firms, and other retirement service providers. More information is at
http://www.nirsonline.org.

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National Institute on Retirement Security
Kelly Kenneally, 202-457-8190
kkenneally@nirsonline.org

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