Post-Retirement Adjustments in Defined Benefit Pensions
AbstractFew private defined benefit pension plans commit to indexing benefits after a worker begins receiving them. Previous (now dated) research found that most plans did, nonetheless, make "voluntary" adjustments, which compensated for roughly 40 percent of the price increases experienced since retirement. In analyzing changes in pension benefits reported by HRS respondents between 1994 and 2008, I find annual increases that are about one third of the increase in the CPI. The increases are concentrated among respondents who report that their benefits are adjusted for inflation. They are larger for workers in public administration than in other industries; perhaps surprisingly, they are not larger in jobs covered by union contracts than those in the non-union sector. The HRS data also show that benefits paid out of defined contribution plans increased, again by roughly one third of the increase in consumer prices.
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Bibliographic InfoPaper provided by University of Michigan, Michigan Retirement Research Center in its series Working Papers with number wp242.
Length: 22 pages
Date of creation: Dec 2010
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This paper has been announced in the following NEP Reports:
- NEP-AGE-2011-02-05 (Economics of Ageing)
- NEP-ALL-2011-02-05 (All new papers)
- NEP-LAB-2011-02-05 (Labour Economics)
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- Steven G. Allen & Robert L. Clark & Daniel A. Sumner, 1984. "Post-Retirement Adjustments of Pension Benefits," NBER Working Papers 1364, National Bureau of Economic Research, Inc.
- Olivia S. Mitchell, 2000.
"New Trends in Pension Benefit and Retirement Provisions,"
Center for Financial Institutions Working Papers
00-06, Wharton School Center for Financial Institutions, University of Pennsylvania.
- Olivia S. Mitchell, . "New Trends in Pension Benefit and Retirement Provisions," Pension Research Council Working Papers 2000-1, Wharton School Pension Research Council, University of Pennsylvania.
- Olivia Mitchell, 1999. "New Trends in Pension Benefit and Retirement Provisions," NBER Working Papers 7381, National Bureau of Economic Research, Inc.
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