The Feb. 27 editorial “In our view: State Needs Pension Reform — Defined-contributions retirement plan would be better for taxpayers, workers” sang the praises of state Senate Majority Leader Rodney Tom’s proposal to give state workers a 401(k)-like product instead of the pensions they get now.
Among arguments launched by the editors was that, if 401(k)s are good enough for most of the private-sector workers, they are good enough for public workers too. The single, most significant fact completely overlooked by The Columbian is that 401(k)s are largely considered a massive failure by people who pay attention (e.g. Ted Siedle, contributor to Forbes Magazine).
The average amount saved by private-sector workers is far less than what’s needed to last for their entire retirement.
Tom’s idea might look good in the context of reducing state pension expenses (a very short-term view) but completely misses the mark when it comes to the larger picture of providing retirement security for American workers, private or public.