The Society of Actuaries recently published an essay by our own Jack Lund. The essay discusses some of the subtle effects a widespread but short-lived unemployment event might have on the American retirement system.
Unemployment Insurance Benefits under the CARES Act
In response to the growing unemployment numbers due to business slowdowns across the country, the Coronavirus Aid, Relief, and Economic Security (CARES) Act provides expanded unemployment insurance (UI) benefits to workers impacted by COVID-19. The move is no doubt well intentioned, but serious questions have been raised about the specific benefit design adopted by Congress and the ability of state unemployment agencies—hardly models of efficiency in the best of times—to respond to the deluge of claims now inundating them. In fact, one of the potentially most attractive UI features in the new law—its short-time compensation provisions—seems likely to face serious obstacles to implementation due to lack of administrative resources and the vagaries of state law.
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U.K. Government Announces Self-Employment Income Support Scheme
Following its announcement on Friday 20th March to provide much-needed assistance to UK employers and employees in the short-term through the Coronavirus Job Retention Scheme, and intense pressure to provide similar assistance to self-employed workers, the UK Government has released details of a similar scheme intended to support this group: the Self-Employment Income Support Scheme (the “SEISS”).
The SEISS will support self-employed individuals (including consultants and members of partnerships) whose income has been negatively impacted by COVID-19, but is unlikely to apply to consultants who provide their services through a personal services company, given the criteria set out below. Further, the Chancellor indicated that tax payable by the self-employed would, in future, need to be brought in line with that paid by employees.…
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