to bear the cost of increased contributions in the event of underperformance or longevity increases. One way to restructure contribution rates to ease the burden to employers, the study found, is to implement adjustable contribution rates. If an unfunded liability increases the overall contribution rate, the increase will be split between the employee and the employer.

One consequence of an adjustable employee contribution rate is that it will affect employees’ take-home pay every year. An alternative strategy is to have a fixed employee rate that covers a portion of the long-term expected cost of the plan.

From the report: “This fixed rate includes two components: a set portion of the normal cost, plus an additional rate for potential cost volatility that can lead to an increase in the unfunded accrued liability. … Even if this fixed rate will not change from year to year, it can still be subject to change if the underlying normal cost rate changes in the case of a benefit enhancement.”

Oakley also called attention to pension “spiking,” which is an abnormal, unanticipated increase in pension benefits.

“To the extent it occurs, pension spiking can be harmful to the financial health of the pension plan,” she said, because it creates an unfunded liability. Furthermore, she said, it’s unfair to other plan participants and taxpayers.

One way to counter spiking is the increase the number of years over which salaries are averaged to determine benefits, the study found, and to exclude pay from overtime or unused paid time off.

Another measure enacted by the six plans in the study was to cap the final average salary used to determine benefits.