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The Search for Cheaper Benefits:

Defined Benefit versus Defined Contribution

I am an actuary. Being an actuary is not just a job, it's a way of life.  Substitute facts for appearances and demonstrations for impressions, that's the calling of an actuary. Monday morning at 8:05, my phone rings. I let it ring twice before picking it up.

"Good morning," I try to sound as if I already had my two cups of java.

"Morning," she responds in a high soprano.  A woman with an idea. She works for the government and she's looking for facts. The idea: get rid of the defined benefit plan that her employees are in and replace it with a defined contribution plan. She thinks that it will save her money and give her employees bigger retirement benefits.  "Everyone is doing it," she says, "but I want you to check it out first." 

Retirement programs, an actuary's favorite topic. I finish my game of Minesweeper, check the batteries in my calculator and head out of the office. I snap on the seatbelt in my Volvo and pull onto the freeway. In 24 minutes, I'm in her office.