Double Vesting

A happy event in the life of any public administrator still fortunate enough to be covered under a defined benefit retirement plan will soon enter the HR Doctor’s house. Within a few months, the amazing HR Daughter Elyse will become vested in the Florida Retirement System.

Likewise, her father will also get to wear another vest in a management pension plan in another public agency. We each plan to wear a colorful vest to work when these events occur. Unfortunately, fewer and fewer colleagues over time will come to appreciate the significance of this kind of anniversary clothing.

Through the mid 1980s most public agencies offered defined benefits retirement systems. That number is now considerably smaller throughout the United States, in government and in the private sector.

In the private sector, for example, the Pension Benefit Guaranty Corporation reports that there were 114,000 defined-benefit plans operating in 1985. By the end of September 2005, that number had shrunk to 30,330. This represents a rerun of “Honey, I Shrunk the Retirement System.” The same is true of offering lifetime paid health insurance benefits after retirement.

The current, popular effort at dealing with America’s growing health care and retirement savings crises is not working for the society as a whole and will not work in the future.

A sad reality is that for many reasons, many people are not preparing for their retirement, are not saving what they should and could, and do not take steps to improve their own health.

Any doubts? Talk to one of the 18 percent of the population that still smokes. Talk to the perhaps 40 percent of the population that is obese. Talk to the growing millions of diabetes patients. Until we get our act together and create a national vision that will treat the population’s health problems and the problems of aging — including retirement — it is important that we appreciate all we have in the case of a defined-benefit retirement plan.

It is also important that we celebrate events, such as having enough vested service credits to guarantee some form of pension.

For a competent, young and articulate HR Daughter like Elyse whose very bright public administration career is in its take-off phase, it is also valuable to celebrate the sense of stability that comes with retirement vesting. The HR Doctor sees thousands of job applicants each year. Most of them end up getting a letter back signed by the HR Doctor pointing out that, regrettably, another candidate will be employed for this or that vacancy.

Often one of the major characteristics that helps move a decision is the extent to which the candidate displays mature judgment and behavior. Becoming vested in a retirement system is a sign of those characteristics.

When an employee vests, whether that requires six years of service, as the statewide system in Florida mandates, or five or 10 years with many agencies operating their own plans require, reaching this milestone is increasingly difficult as plans move to defined contribution models and as employees move around in the workforce more.

That provides all the more reason to stop for a moment, put on your vest and see if anybody else appreciates the basis for your unusual dress.

It is also a milestone to be connected clearly with other personal planning activities such as taking good care of yourself so that you will have only limited contact with medical providers and need to use health insurance less frequently. Investing time in developing hobbies, making friends and engaging in social and civic activities are as important, in the HR Doctor’s opinion, as maintaining your flu shots and getting regular check- ups. 

Vesting in the retirement system is part of a larger recipe for a productive, long and happy future. What more can I wish for my beautiful daughter Elyse or for my colleagues who read the HR Doctor column!

Phil Rosenberg
The HR Doctor • www.hrdr.net