Sharad C. Asthana
Temple University
Roland Lipka
Temple University
David Ryan
Temple University
Abstract: The paper examines tax-related determinants of firmsÂ’ choices of pension and non-pension postretirement benefits. We find that firms with higher effective tax rates and capital availability are likely to prefer defined-benefit pension plans to retiree health plans. These results are consistent with the managersÂ’ motivations to maximize tax benefits of pension funding. This research provides insights into the impact of tax benefits of pension funding on corporate pension and retiree health care policies. The results should be useful for policy makers contemplating future grants of similar tax breaks for funding retiree health plans.
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