Adam Summers addresses California's pension crisis.
California needs to switch to a defined-contribution system for all new employees, as the private sector has been doing for decades. This would work just like 401(k) retirement plans do for so many nongovernment workers. The state would contribute a certain percentage of the employee's pay, and possibly match up to an additional portion, to that employee's individual retirement account.
Since contributions are essentially a fixed percentage of payroll, they do not vary widely from year to year based on pension fund performance. Contributions must be paid in full every year so there is no such thing as an unfunded pension liability in a defined-contribution plan.
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Politicians can't continue to merely nibble around the edges of the state's pension crisis. It's time to admit that the 401(k)-style retirement plans that are good enough for nearly every private sector worker are going to have to be good enough for state workers, too.