With our blogging vacation behind us, we have some catching up to do around here. One particularly interesting item that appeared over the last week is Janice Revell's story on the choice faced by public school teachers in West Virginia: Stay with the 401(k)-style defined contribution plan that replaced the schools' traditional pension system, or abandon the DC plan in favor of returning to a defined-benefit pension system.
We'd excerpt the story, but we'd end up passing along just about the entire thing, so instead we'll insist that you spend two minutes reading this very revealing piece. Just about every element of the bigger story in the U.S. retirement system is here: underfunded pensions, employers' cost-conscious transition from DB to DC plans, expensive/underperforming insurance-focused products, poor decision-making by participants, and, as a consequence of all of that and more, grossly inadequate outcomes for rank-and-file participants.
Revell is right to wonder about taxpayers' potential costs in all this. But the teachers' interests represent the other side of this troublesome coin: American workers who need--but generally aren't getting--the best possible retirement savings programs.
Source
Janice Revell, "Take this 401(k) and shove it," Money, May 20, 2008
