Occupational Pension Plans, Group Registered Retirement Savings Plans, and Employee Quit Transitions

Abstract

One of the concerns largely ignored by the occupational pension reform movement across Canada is the fact that defined-benefit (DB) pension plans generally—and particularly the most common of such plans, the final-average earnings plans—allow both plan members and employer sponsors to reduce certain risks they face in the employment relationship. Therefore, deferred compensation can be used by the employers as a strategic human resource management tool in the areas of reducing certain unwanted employee behaviors such as shirking and turnover, as well as facilitating desirable retirement decisions and human resource planning (Allen and Clark 1985; Ippolito 1987, 1994; Mitchell 1988; Gunderson and Pesando 1988; Lazear 1990; Gustman, Mitchell, and Steinmeier 1994; and Dorsey 1995). Employees make a long-term commitment and performance guarantee in exchange for a pension linked to their final pay at retirement and an implicit guarantee of employment security until that time.