Wed July 18, 2012
Economic Group Encourages Lawmakers Not to Switch Pensions to 401k Style Plans
A relatively new economic think tank in Kentucky has released a report that pushes back on calls to cut the state's pension benefits.
The report from the Kentucky Center for Economic Policy says the idea that public pensioners are well-compensated compared to their private sector counterparts is a myth.
“If you fairly compare what public workers receive at this point in Kentucky, compared to the private sector in total compensated, wages and benefits, you find that they are actually somewhat under-compensated," says KCEP director Jason Bailey.
Kentucky's own public employee pension system is flailing. Lawmakers from both legislative chambers have formed a task force to look at fixes for Kentucky’s two worst pension plans: the plan for state workers and the plan for county workers.
The KCEP report encourages the panel to avoid cutting benefits or turning to a 401k-style plan.
“If you put a dollar into a 401k, you’re gonna get a lower benefit and less secure retirement for the workers than the same dollar put into a traditional defined benefit pension," says Bailey.