Saturday, December 4, 2010

GoverningMagazine on pension reform

Step one, fix a Republican blunder:
First, Congressional Republicans should push to legalize 401(k) for the public sector since they were the ones who outlawed them. Ever since the Reagan tax reforms of 1986, federal law prohibits state and local governments from offering 401(k) plans unless they were then in place already . So we need to stop referencing defined contribution plans for public workers as "K" plans when they are really 401(a) defined contribution plans — at least in the governmental policy media. A 401(a) plan has fixed, non-discretionary contribution rates for employees and employers, unlike the more flexible 401(k) plans in the business world.
The article goes on.

Politicians will be involved in the elimination of defined benefits. Politicians will try and play one union off of another, the result will be a general collapse of public pensions as taxpayers readily see default as the least costly option.

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