Post-Retirement Increases in Pensions in the 1980s: Did Plan Finances Matter? / Steven G. Allen, Robert L. Clark, Ann A. McDermed.

Format:

Book

Author/Creator:

Allen, Steven G.

Contributor:

National Bureau of Economic Research.

Clark, Robert L.

McDermed, Ann A.

Series:

Working Paper Series (National Bureau of Economic Research) no. w4413.

NBER working paper series no. w4413

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Post-Retirement Increases in Pensions in the 1980s

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1993.

Summary:

Many firms give post-retirement increases in pension benefits to retirees even though the pension contract does not require such increases. A leading explanation of this behavior is that benefit increases are part of an implicit contract where retirees accept lower initial benefits in return for the option of receiving a share of the plan's financial returns above the risk-free rate. The paper reports mixed evidence on the linkage between the financial performance of pension plans and post-retirement increases. Between 1980 and 1985, benefit increases were larger in plans with high funding ratios and lofty rates of return. However, the practice of giving post-retirement increases became much less widespread in the 1980s, despite dramatically improved financial performances across all pension plans.

Notes:

Print version record

August 1993.