Retirement Plans: 401(k)s, IRAs and Other Deferred Compensation Approaches 10th Edition by Allen, Joseph Melone, Jerry Rosenbloom, Dennis Mahoney

Exercise 4

An employer asks you to comment on a new concept of providing pension adjustments for retirees. Under this concept, employees are provided with an option to receive benefits in the form of an increasing annuity. Describe the plan design considerations of such an approach and its relative advantages and limitations.