New CRR issue brief: "Problems with State-Local Final Pay Plans and Options for Reform"

The Center for Retirement Research at Boston College has a released a new issue in brief, "Problems with State-Local Final Pay Plans and Options for Reform" by Peter A. Diamond, Alicia H. Munnell, Gregory Leiserson, and Jean-Pierre Aubry.

The brief's key findings are: 

• Defined benefit plans based on final pay: 
  
  • "backload" benefits, so younger shorter-service employees get virtually nothing;
    
  • favor those with high earnings growth, who tend to be higher paid; and
    
  • invite sudden late-career "spikes" in earnings.  
    
• Moving to career-average earnings would:
  
  • provide reasonable benefits for younger shorter-service employees;
    
  • treat high- and low-paid employees more equitably; and
    
  • avoid late-career "spikes" in earnings.
    

The brief is available here