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by SZJX 92 days ago
Sounds like a weird incentivization for sure. Why not base the pension on the average over all the years worked as in many other countries? When you offer such incentives, people will naturally work in such a way.
3 comments

Because you'll loose half a career's worth of inflationary salary rises that way. Also, women might work part time after having children which would skew the average annual salary down. Over a 40 year career, just from inflation alone, you'd be getting about half your final salary that way, even ignoring any increases later on from being better qualified or taking on more responsibility.

Mind you, in the UK, defined benefits pension schemes are very rare nowadays, but where they exist they are defined as a percentage of the final year salary with that company, so the highest 2 year thing seems a bit weird to me but for a different reason.

Highest 2 year is an attempt to address the edge cases around 1 year (especially final year).
You can adjust for inflation and only exclude year where you don't work full time.
In the US, social security is based on the 35 highest paying years. If that system is good enough for social security, I don't see why we don't do the same for government pensions.
Much more obvious solution is to not include overtime pay in the pension calculation.