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This article was both amazingly vacuous and self serving ... it implies that pension plans were/are paternalistic gestures rather than wages and equity recognition while at the same time suggesting that employees have the same level of control over their financial destiny in society as the people, corporations, governments and organizations that employ them.

Let's get back to starting first with the 'human' in human resources rather the 'resources'.  And let's restart this trend by recognizing that modern accounting doesn't -- and as a result, perhaps isn't really a 'profession' at all, but rather a rather dysfunctional 'practice' that hasn't yet managed to catch up with behavioral economic theory -- economics being, of course a 'social' rather than 'hard' science ? lest we forget!

Just one other footnote ... while 'pensions' might have been a government idea, it's interesting to note that 'pensions' are the compensation carrot that allows hundreds of communities across the U.S. to have dependable, valuable fire -- and other public safety protections on a supposedly 'volunteer' basis!

Joel J. Grumm

Grand Rapids, Mich.

Carol's reply:

Thank you for your note, Joel.

I agree that we need to apply behavioral economic theory to our human resource practice. Dan Ariely, my favorite behavioral economist, recently wrote in his book, The Upside of Irrationality, that we haven't helped people picture what their lives will be like when they retire and that's why they can choose to ignore saving now. 

The beauty and challenge of being a human being is that we are, unalterably, human. We must recognize that most of us don't always respond to life in a fact-based way. If we did, we'd all be normal-weighted, wouldn't smoke, would exercise and eat nine fruits and vegetables every day, would have six months of living expenses set aside and would save at least 10 percent of our gross income every year.

It is my hope that more employers will consider maintaining defined benefit plans and support that choice by making more conservative investments. What worries me about DC plans is that Mike Archer told me you need to have twice as much money as a DB plan since you're not pooling your risk. At minimum, I hope that once the regulatory and legal uncertainties are clarified, employers will consider hybrid plans.

Jul 9, 2010
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