Woerheide, W. (1995).
The impact of salary growth, inflation, employee age, and career length on the
relative desirability of pension fund type. Financial Counseling and
Planning, 6, 53-58.
The Impact of Salary Growth,
Inflation, Employee Age, and Career Length on the Relative Desirability of
Pension Fund Type
Walt Woerheide (1)
The purpose of this paper is to
examine how the variables of salary growth rate, inflation, employee age, and
career length affect the relative desirability of defined contribution (DC)
plans compared to defined benefit (DB) plans. High salary growth rate and
employee age favor DB pensions. A longer career favors DC pensions. The impact
of inflation is theoretically ambiguous although an example indicates that high
rates of inflation favor DC plans. This study is of interest to people with
multiple job offers that include both DC and DB pensions.
Key Words: pensions, personal
finance, retirement planning
1. Walt Woerheide, Professor of
Finance, Rochester Institute of Technology, College of Business, COB-RIT, 108
Lomb Memorial Dr., Rochester, NY. 14623. Phone: (716) 475-5268 Fax: (716)
475-7450. E-mail: email@example.com.