A: I've tried to be a really loud, outspoken person when it comes to defined benefit plans. And my point is to an employer, they're an employee benefit, literally just like dental, vision, health care — they're an employee benefit. If you want employees with longevity with institutional memory, then reward them with a defined benefit plan. If you want and you don't mind employee turnover and employee mobility, then offer them a defined contribution plan.
I think we really need to focus in on it like that.
Obviously, I run a teachers fund and I'm passionate that with teachers, absolutely longevity matters and experience matters in that field.
You want to reward that long career and you want to reward it with a defined benefit plan. And I think we're going to look at corporate America and realize there's some jobs at a corporation, you want to reward longevity and you're better off having a defined benefit plan.
We're going to have a giant defined contribution crisis in America as people retire. No. 1, not having to put enough money away for retirement. No. 2, probably not taking enough risk in their portfolio, and No. 3, bearing a higher fee cost each year to manage that retirement account.
Then they're going to end up where they retire with a lump sum and if they don't put it in an annuity, they have a real big risk of outliving their money. That's a huge social crisis that America's going to have to face.
I don't view this as a political discussion.
I really view this as an employee benefit discussion and it's a financial decision. Defined benefit plans blend the longevity risk. They are a lower-cost structure. They blend the investment risk and put it in the hands of institutional experts instead of retail investors. And so to me, it's a superior way to save and to go for retirement.
Is it going to be under attack? Yes, because right now most defined benefit plans are only for public employees and obviously public employees are not popular with the average citizen.
And since most people are going to be in a defined contribution plan, they're going to realize they have less in retirement and a bigger retirement risk.
I wish we would get away from that kind of a fight and just have more of an honest discussion about what's the right way for society to save for the future; look at our Social Security plan and compare it to Canada or other social security plans, where they've started to put money away and invest into the future. We're still going to be pay as you go and we're going to be broke in no time.I think the power of compounding, the power of investing and thinking long term is good for our country. It's good for the employees and it's good for the employer.