I read your Pensions & Investments article online (April 12 on Pionline. com and April 18 in P&I print issue) about Florida's proposal to switch to 401(k) plans in lieu of traditional pensions.
I was very pleased to read this, because I have been suggesting the same thing for New Jersey for some time, and I am pleased to see Florida proposing doing just that. I have also recommended that New Jersey enhance such a plan with an indexed annuity, which will create guarantees against account losses as a participant gets closer to retirement. Furthermore, as this is an annuity, the employee can annuitize some or all of the account upon retirement, thereby establishing a guaranteed lifetime income. In other words, the plan allows the employee to convert a 401(k) plan into a private pension plan.
Recent studies indicate that this is the direction employees wish to go, and indeed, the U.S. Department of Labor has been reaching out to obtain opinions on how to do this.