Should the state of Washington consider switching state workers from pensions to 401K-style retirement plans?
David Boze posited that idea in the light of the Boeing machinists’ accepting a labor contract that swaps out pensions for 401Ks, which are also called defined contribution retirement plans. If one of the state’s most notable companies can do it, then why not state government?
“I’d be curious to see if the attitude about defined benefit pensions for state employees change based on the machinists’ vote,” Boze said.
“If it’s OK for Boeing to give up their pensions, then why not public servants for state of Washington? Shouldn’t the state of Washington follow through in solidarity?”
Switching retirement plans types could save taxpayers a lot of money. The biggest difference between pensions and 401Ks is that the latter asks the employee to contribute money for retirement rather than burdening the employer with the whole cost.
According to a study by the Washington Policy Institute, the average annual payout per state worker is $21,493; two of the state’s nine pensions are underfunded to the tune of $5 billion; and that one of the biggest drivers of state budget increases – and sometimes budget shortfalls – are contributions to pension plans.
“If lawmakers fail to adopt effective pension reform in time, Washingtonians may soon face the same pension-debt crisis that threatens state budgets around the country,” read the conclusion of the report.