International Review of Accounting, Banking and Finance Vol 11, No. 1/2/3, Spring/Summer/Fall, 2019, Pages 1-11 IRABF ○ C 2019 Examining the Prevalence of Salary Spiking in Missouri’s Defined Benefit Public School Retirement System James V. Shuls 1 and Joseph Lux 2 1. Department of Educator Preparation and Leadership, College of Education, University of Missouri-St. Louis 2. Graduate Student, Department of Economics, University of Missouri-St. Louis *Accepted September 2019 A B S T R A C T Salary spiking is the practice of boosting one’s wages in the period just before retirement in order to reap larger retirement benefits. This may happen in Defined Benefit pension plans because they often do not base benefits on contributions, but on a formula, which takes into account a short window of time. Using two sources of data, school district salary schedules and actual teacher salaries for Missouri teachers, we estimate the prevalence of salary spiking. We do this by using seven years of actual salary data to forecast a worker’s final three years then compare this forecast to the individual’s actual wages. While we find evidence of salary spiking in all our samples and models, our estimates of spiking vary considerably across years. This suggests that some macro factors in the economy, possibly the lingering impacts of the great recession, may affect estimates of salary spiking. ○ C2019 IRABF All rights reserved. Keywords: Defined Benefit Plans, Public Pensions, Retirement Policies, Public Employees, Salary Spiking, Teachers JEL classification: H55, J26, J33 1