Edwin Pawlowski > wrote:

>"Steve Pope" > wrote in message

>> These things are highly scenario-dependent. In some job situations
>> with a traditional defined-benefit pension scheme, it can indeed make
>> a huge difference to work just one additional year.

>> I think it's a good thing that most types of work have shifted
>> away from such a scenario, because it really does distort
>> decision-making for both employees and employers.

> Yes, easy decision because with the new scenario, most people will
> have to work into their 80's.

Some will. Perhaps I will, depending on my spending patterns
and the investment results of my retirement savings.

However, the part of the system that should go away, and largely
has gone away except in the public sector, is the steep,
age-dependent compensation curve of the older defined benefit plans.
Older workers were subsidized by younger workers due to the
multiplicative effect of pension benefits being determined both
by final salary and years of service. It runs counter to economics,
since mathematically income and savings created early in your career
should have a much greater impact on your retirement position
(due to growth and compounding); instead such plans give artificial
weight to earnings late in your career.

An excellent reform would be to get rid of defined benefit plans
entirely. (By that I mean, eliminate any tax preference for
them.) At the same time, a social safety net for people who
cannot work is necessary in any civilized country.

Steve