premise: final salary and commission distributionFinal Salary Scheme: -They provide benefits according to a fixed formula. The benefits are based on salary on the date of retirement (Guarantee payment of a fraction of the final salary)-Employer assumed all risk -Both the employer and the employee will make contributions into this type of pension scheme -Benefits not depend on investment returns or annuity rateFinal salary exists before world war two, final salary system requires more pension funds that the company has to pay for employees, and distribution salary reduces cost. Companies adopt distribution salary have fewer employees register scheme.
hypothesis: Company wants more to use the distribution salary than final salary.