Federal News Radio: During an interview this morning, I was asked a question about federal retirement plans and whether I thought the government should move away from the defined benefit portion of the Federal Employees Retirement System. We have all heard proposals for retirement reform that range from increasing employee contributions to doing away with the pension plan and having employees rely entirely on the Thrift Savings Plan and Social Security for their retirement.
Arguments in favor of killing the pension plan are usually based on the fact that defined benefit retirement programs are a dying breed. More and more companies have discontinued pension pans and shifted to defined contribution plans. From the perspective of a company’s bottom line, it appears to be a good move. Costs are lower and far more predictable.