Opinion

Changes needed for public pensions

Posted March 21, 2008 11:00 pm

As somebody who works in the retirement plan industry, I read with interest John Patterson's March 7 article "Mayors seek an end to pension sweeteners."

In the private sector, when a pension plan becomes grossly underfunded, it becomes frozen under the Pension Protection Act of 2006. All accruals cease, and no new entrants are allowed until the funded status improves.

This procedure needs to be applied to state and municipal plans as well.

It would be wise to switch the state and municipal retirement plan systems from a defined benefit system, which is currently in place, to a defined contribution system analogous to the 401(k) plans that many employees in the private sector are governed by.

For state and municipal employees, this type of system would be governed by Internal Revenue Code Section 457.

Dave Kaufman

Wheeling

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