The Total Career Benchmark Model
Thomas J. Walker
Page 1 of 57 The Total Career Benchmark Model January 4, 2010 THOMAS J. WALKERThe Total Career Benchmark Model A Pension Model for Retirement 20/20 Thomas J. Walker FSA, FCIA, CFP 1/4/2010 ABSTRACT The Total Career Benchmark (TCB) Model in this paper, consistent with Retirement 20/20 principles, focuses on reconstructing and maintaining a consistent and reasonable sharing of risks and rewards amongst the four stakeholders: Individuals, Society, Employers and the Markets. The model takes advantage of modern technology for the necessary tools. This is done by establishing a series of benchmarks used to define tax shelter limits, target pensions, and other items like accrued benefits to date. The key benchmark in the TCB model (which is referred to as the Annual Service Factor) links “tier I” to “tier II”. The Annual Service Factor is at the root of a system which includes a simplified and predictable “lifetime” component and a very flexible “personal” component for each individual. The “lifetime component” is the insurance aspect whereas the ponent enables individuals to tailor retirement benefits to their own personal needs. Implicit within each of these components is the critical “investment risk” for the contribution streams to cover the “lifetime risk” and the “demographic risk”. Individuals and Employers will look to the Markets as a vehicle to which the “lifetime risk” and a portion of the “investment risk” can be transferred. The ...