Should Defined Benefit Pension Schemes be Career Average or Final Salary?

Charles Sutcliffe

ICMA Centre Discussion Papers in Finance from Henley Business School, University of Reading

Abstract: There is widespread dissatisfaction amongst employers with defined benefit pension schemes, and many are switching to defined contribution schemes. Career average is a form of defined benefit scheme that has some important advantages over final salary schemes. The comparison of career average and final salary schemes is a neglected area, and this paper offers one of the first in-depth analyses of this topic. It considers the advantages and disadvantages of a cost neutral switch to a career average re-valued earnings (CARE) scheme.

Keywords: career average re-valued earnings (CARE) Pension schemes; final salary pension schemes; defined benefit pension schemes; redistribution (search for similar items in EconPapers)
Pages: 32 pages
Date: 2007-06
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