Should we, shouldn't we? State retirement system officials are having a tough time deciding whether to convert their old-line defined benefit pension plans to defined contribution retirement plans, and adding Social Security coverage.
According to a new report from the General Accounting Office, the investigative arm of Congress, 21 of the 48 state retirement systems with traditional pension plans had contemplated switching to defined contribution plans and Social Security coverage instead. Nonetheless, only one state, Michigan, actually went ahead with the change, in 1997.
The other states studied the issue and concluded changes weren't required, the report notes. Opposition by labor unions also was a factor cited by the state plans.
But officials representing 27 state retirement plans with defined benefit plans view them as superior to defined contribution plans and never considered changing them.