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.