Should Defined Benefit Pension Schemes be Career Average or Final Salary

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.