Tag: DB pension plan
The brief’s key findings are: Defined benefit plans based on final pay: “backload” benefits, so younger shorter-service employees get virtually nothing; favor those with high earnings growth, who tend to be higher paid; and invite sudden late-career “spikes” in earnings. Moving to career-average earnings would: provide reasonable benefits for younger shorter-service employees; treat high- and…
Abstract This paper examines the effect of incorporating individual-level heterogeneity into default rules for retirement plan selection. We use data from a large employer that transitioned from a defined benefit (DB) plan to a defined contribution (DC) plan, offering existing employees a choice of plans. Employees who did not make a choice were defaulted to…
