Your Oct 30 Page 1 article "Candidates spar on DB vs. DC" presents a false choice for policy-makers and others who design retirement benefits for the nation's 16 million employees of state and local government.
For years, elements of defined contribution plans have been incorporated into traditional pension plans for public employees. For example, a growing number of states have adopted hybrid pension plans, combining features of DB and DC plans. Most public pension plans offer options to transfer and purchase service credit, increasing the portability of retirement assets. Some public pension plans share investment gains with participants, or give participants access to partial lump sums. Among other benefits, these and other DC-like plan features have helped moderate employer costs and liabilities; increased plan flexibility; enlarged the total pool of retirement assets; and increased the number of employees who qualify for a retirement benefit.
Likewise, Fidelity's Abby Johnson recently spoke about the benefits of injecting certain DB plan elements into DC plans such as automatic enrollment, the use of lifecycle and asset allocation funds and increased annuitization of DC plan assets. Hybrid and cash-balance plans are receiving increased attention in the U.S. and abroad.
Presenting the debate as DB vs. DC is obsolete and ignores the vast middle ground of options available for those who design retirement benefits. Progressive pension plan design can include the best of both worlds for the benefit of everyone — public employers, taxpayers, and public employees.
M. Steve Yoakum
National Association of State Retirement Administrators
EDITOR'S NOTE: Mr. Yoakum is also executive director of the Public School Retirement System of Missouri, Jefferson City.