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Defined Benefit vs Defined Contribution  

Some call it a profession. I think of it more as a calling. Destiny makes some of us painters, ball players or police officers. Me? I am an actuary. The excitement, the intrigue, the mathematical accuracy. You won't find a combination like this anywhere else. "Ask an Actuary", that's my motto.

It had been 4 weeks since her last call, and I was closing out the files when the phone rang. I was thinking about rolling it into voicemail, but it was a slow day and I had already been through the latest trends in mortality. I wiped the graphite from my hand and lifted the receiver. The clock read 1:03 P.M.. "Ask an actuary," I intoned. If you have a motto, you might as well get some use from it. She started talking immediately. "The Board is meeting next week. The agenda is being mailed tonight. I need to know which is better, a defined benefit plan or a defined contribution plan, and why." I told her that I was on the case and would be there before 2. Another government agency with a retirement problem. Some guys get all the breaks. I tossed an extra set of calculator batteries into my briefcase as I walked out the door. This could be a tough assignment.

My gray Volvo moved at the limit over the bridge, as I thought back to our last discussion. She had been told to switch her agency's retirement program from its current form, a standard final-pay defined benefit plan, to a defined contribution plan. The reason -- cost savings. After a quick investigation, we knew she was looking at the wrong reason to make the switch. They wouldn't get more retirement benefits for less money. In the last few weeks, she had been promoted. This time, she was told to look at the big picture. We had less than 4 hours to put an agenda item together. You've got to love this job. At 1:55 P.M. I walked into her office.