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Published online by Cambridge University Press: 21 December 2004
The last decade has seen tremendous interest in hybrid pension plans in the United States. These plans combine risk sharing between employers and employees with increased incentives for employees to remain in the labour force. Hybrid plans avert many of the key issues with defined contribution plans, such as participant exposure to financial risk, the consequent need for extensive financial education and high administrative costs. Hybrids also help rectify some of the main drawbacks of traditional final salary plans: lack of portability, high incentives to retire early and redistribution towards those whose wage growth is above average.