Postretirement Adjustments of Pension Benefits
AbstractDuring the 1970s, defined benefit pension plans increased their liabilities by giving benefit increases to persons no longer working even though almost none of the plans were required to do so by any legally enforceable contract. Our model of these adjustments has workers and firms agreeing to implicit contracts under which postretirement increases in benefits are purchased by workers through lower wages or initial benefits. The major empirical findings are that compensating differentials exist in final salary and initial pension benefits, that large pension plans and collectively bargained plans provide larger post-retirement benefit increases, and that benefit increases are larger in percentage terms for those who have been retired the longest and for those with the most years of service.
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Bibliographic InfoArticle provided by University of Wisconsin Press in its journal Journal of Human Resources.
Volume (Year): 21 (1986)
Issue (Month): 1 ()
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Web page: http://jhr.uwpress.org/
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- Michael D. Hurd, 1993. "The Effect of Labor Market Rigidities on the Labor Force Behavior of Older Workers," NBER Working Papers 4462, National Bureau of Economic Research, Inc.
- Steven G. Allen & Robert L. Clark, 1987. "Pensions and Firm Performance," NBER Working Papers 2266, National Bureau of Economic Research, Inc.
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