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Sample text
Schmitt 1993, p. ) Lazear (1990) also concluded that benefit managers primarily understand pensions as retirement savings vehicles, suggesting that they frequently fail even to understand the implications of pension incentives on work force outcomes, let alone see them as having strategic value. Economics is about incentives, so it is not surprising that economists are more likely to think about why pension tenure and retirement incentives might be useful to firms and workers. Even the economics literature, however, often has characterized pension quit penalties as impediments to efficient job mobility.
Defined-benefit plans promise workers a retirement annuity based upon years of service and, usually, the worker's highest earnings. Internal Revenue Service rules generally prohibit pre-tax employee contributions to a pension fund, and most defined-benefit plans do not require employee contributions. Since the employee's pension wealth is in the form of a promised benefit, defined-benefit plans have rules which specify participation, vesting, and benefit eligibility. , begin earning service credit.
Internal Revenue Service rules generally prohibit pre-tax employee contributions to a pension fund, and most defined-benefit plans do not require employee contributions. Since the employee's pension wealth is in the form of a promised benefit, defined-benefit plans have rules which specify participation, vesting, and benefit eligibility. , begin earning service credit. Pension vesting rules define the portion of a worker's accrued benefit that he or she owns upon leaving the firm. , workers who left before retirement lost all pension benefits (Kolodrubetz and Landay 1973).