Wednesday, March 2, 2011

States look at 401(k) plans to replace pensions

Lawmakers and governors in many states, faced with huge shortfalls in employee pension funds, are turning to a strategy that a lot of private companies adopted years ago: moving workers away from guaranteed pension plans and toward 401(k)-type retirement savings plans....
Utah lawmakers voted last year to make a partial changeover to a 401(k)-type plan, following in the footsteps of Alaska, Colorado, Georgia, Michigan, Ohio and several other states, which offer at least some version of it.
In February, Kentucky’s Senate approved a full switch to a 401(k)-type plan, although the bill faces uncertain prospects in the House. In Oklahoma and Kansas, legislative committees will be studying the issue intensively over the next few weeks. Gov. Sam Brownback of Kansas has made it clear he hopes the state Senate will embrace some form of a 401(k)-type plan. Texas is also considering a switch. 
Pension Funds Strained, States Look at 401(k) Plans

1 comment:

  1. In higher ed, we pioneered this approach years ago. My guess is that teachers will just move onto the same TIAA-CREFs that state university professors have already used since at least the 60's (my father retired with one of those). It will probably have the effect, though, of pushing salaries higher.