The change affects only new hires and only one of the state's public pension plans, which happens to be the one that's in the best shape. Inman told the
The change involves a switch to a 401(k) model in which employees and employers contribute toward a tax-deferred retirement savings plan. More than 50 million American workers have a 401(k) plan. That's a lot of future retirees selling pencils to raise money for food.
Oh but don't those workers also have pension plans? Most don't. The percentage of workers covered by a traditional defined benefit plan has been steadily declining. Only about a fifth of American workers are covered by such a plan.
Some workers have both a traditional pension and a 401(k), but the traditional pension model has been unsustainable in the private sector and a factor in the bankruptcy of local governments across the country. Simply put, unsustainable defined benefit retirement plans pose far more of a threat to the wellbeing of future retirees than do defined contribution plans.
Inman's Republican counterparts will continue their efforts to switch more public employees to the 401(k) model, but it will take decades for the change to bring more solvency to public pension plans.
What really galls Inman and other Democrats is that 401(k) plans put more responsibility in the hands of the account holders (employees). The same arguments Inman's been making were heard in
The underlying assumption is that public employees aren't smart enough to make sound fiscal decisions. Big Brother must do it for them. That's an insult to their intelligence, but the argument is yet another chapter in the
Unfunded liabilities can sink pension plans. Funding pension plans can sink governments. In the private sector, employers realized long ago that the defined benefit model was paternalistic and unsustainable. Gradually, responsible government leaders have come to the same conclusion.
Political reality dictates that state government here will embrace the defined contribution model at a very slow pace. But a start has been made. This first step involves only one foot, but a yard's worth of progress has been made in breaking the defined benefit chokehold.
(c)2014 The Oklahoman
Visit The Oklahoman at www.newsok.com
Distributed by MCT Information Services