Switching to 401(k)s would not save state money
To emulate Boeing in its employment practices is hardly a desirable goal [“Bill would phase out pensions for public employees in state,” Local News, Jan. 12]. Does the state really want to support employment practices that harm the middle class?
Studies have demonstrated that 401(k)s are not a reliable source of retirement income. A 401(k) system might facilitate employee turnover, but that is hardly a desirable goal for the state or taxpayers. Employee turnover increases cost with reduced output.
As a Public Employees Retirement System (PERS) Plan 1 employee, 6 percent of my monthly salary was deducted for the State Investment Board (SIB) to use. Although the state was mandated to contribute, it failed to do so, creating an unfunded liability. In spite of this, the SIB has earned excellent returns on investments — one of the highest returns in the nation — reducing the state’s liability.
According to a report by state Treasurer James McIntire, moving to a defined contribution plan may even increase costs for the state. Paying employees to go into a 401(k) system would jeopardize the current public employee retirement plans. This would not result in savings for the state that would enable it to fund schools and roads.
Thinking that funding for schools or roads should be on the backs of public employees is nonsensical.
Gwen Rench, president, Retired Public Employees Council of WA
GOP caucus could move, just like Boeing threatened
I read with interest yesterday that state Sen. Doug Ericksen, R-Ferndale, proposes converting public employee pensions to 401(k)s as Boeing has done with its machinists.
Sen. Ericksen should remember that Boeing threatened to move if the Machinists didnt agree. Perhaps his proposal should include the threat that if public employees reject the plan, the State Republican Party Caucus would move to South Carolina.
Kate A. Hunter, Vashon