State legislators ought to give the Virginia Retirement System approval to create an optional defined contribution plan for participants.
The proposal would allow participants to choose either the existing defined benefit plan or the new defined contribution plan.
The defined contribution plan would offer many VRS participants a better pension than they could get now.
It would take some of the risk away from the state in providing traditional pensions for those electing the defined contribution option.
It would give the state and its employees some flexibility to operate more like a business, particularly to more easily reduce its work force without the burden of jeopardizing or diminishing long-serving employees' pensions. State workers in the existing plan who leave their jobs and take a lump sum receive a diminished pension.
Edwin T. Burton III, VRS chairman, asked legislators to approve the 401(k)-type plan.
The proposal is not without its detractors. A state teachers' representative reacted unfavorably, saying teachers may be too busy in their work to have the time to invest their funds in a defined contribution plan. Such a comment shows teachers and other state employees need more education about the proposal.
Others are worried the new plan might diminish the existing plan in the long run if many employees choose to leave the defined benefit plan for the defined contribution one. But that shouldn't be a concern. A defined benefit plan is designed to fund its future liabilities. It is not a pay-as-you-go scheme, dependent on new entrants paying the pensions of retirees.
Mr. Burton's proposal should win approval. It's fair, it's voluntary, and it offers advantages both to the state government and its employees.