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

Author

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  • Charles Sutcliffe

    (ICMA Centre, 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.

Suggested Citation

  • Charles Sutcliffe, 2007. "Should Defined Benefit Pension Schemes be Career Average or Final Salary?," ICMA Centre Discussion Papers in Finance icma-dp2007-06, Henley Business School, University of Reading.
  • Handle: RePEc:rdg:icmadp:icma-dp2007-06
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    File URL: http://www.icmacentre.ac.uk/files/pdf/dps/dp2007_06.pdf
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    Cited by:

    1. Geoffrey Young, 2012. "Winners and Losers: The Inequities within Government-Sector, Defined-Benefit Pension Plans," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 347, April.

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