TY  - JOUR
AU  - Allen,Steven G.
AU  - Clark,Robert L.
AU  - McDermed,Ann A.
TI  - Post-Retirement Increases in Pensions in the 1980s: Did Plan Finances Matter?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4413
PY  - 1993
Y2  - August 1993
UR  - http://www.nber.org/papers/w4413
L1  - http://www.nber.org/papers/w4413.pdf
N1  - Author contact info:
Steven G. Allen
Jenkins Graduate School of Management
NC State University
2124 Nelson Hall
Raleigh, NC  27695-7229
Tel: 919/515-6941
Fax: 919/515-5073
E-Mail: STEVE_ALLEN@NCSU.EDU
AB  - 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.
ER  -