Pension spiking, sometimes referred to as "salary spiking",[1] is the process whereby public sector employees are granted large raises, bonuses, incentives or otherwise artificially inflate their compensation in the time immediately preceding retirement in order to receive larger pensions than they otherwise would be entitled to receive.
Upon retirement any employee transitions from receiving a paycheck from the employer to a pension check drawn on the assets of the retirement fund; this amount is typically determined as a percentage of the employee's regular salary by state law or statute.
This practice is considered a significant contributor to the high cost of public sector pensions.
Several states including Illinois have passed laws making it more difficult for employees to spike their pensions.
The agent, or bureaucrat in this instance, has superior information and is able to maximize their benefit at the cost of the principal.