According to The Virginian-Pilot, Del. Chris Jones will no longer pursue the replacement of Virginia’s defined benefit retirement plan with a defined contribution plan, like a 401(k), for state workers.
The Suffolk Republican had proposed phasing out the Virginia Retirement System’s current pension model, which promises a specified payout amount at retirement, in favor of a defined-contribution plan similar to a 401(k) for new state, local and public school employees. Such a system would not guarantee any payout amount.
The proposal produced an outcry from public employee groups, prompting Jones to back off.
Hindsight is 20-20 but I believe the state made a mistake in making the contributions to the retirement plan on behalf of employees in lieu of raises all these years. There is no easy way to correct the problem, and the projected $17.6 billion shortfall has to be dealt with.
There is going to be some pain in the not-too-distant future for both the state and the employees. The sooner this issue is resolved, the better it will be for all. I am not in favor of replacing the defined benefit plan with a defined contribution plan. That the private sector has done so has been an issue for me for a long time, as I see far too many folks who have not been able to save sufficiently for them to ever retire. (And that doesn’t include the self-employed people who have no retirement savings at all.)
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