May 14, 2015 -- Connecticut’s largest union of public service workers today pointed to a recent recommendation from the legislative Program Review & Investigations Committee staff as further evidence that replacing real pension plans with 401(k)-style savings plans is flawed public policy.
In an April 17 memorandum to Co-Chairs Sen. John Fonfara and Christie Carpino, PRI Committee staff advised against a feasibility study of establishing a 401(k), or defined contribution, savings plan for state employees. (The memorandum is attached to this release.) Among the reasons cited by PRI:
Committee staff also noted the State could not establish a new plan until the expiration of the SEBAC health and pension agreement in 2022.
Sal Luciano, executive director of the 32,000-member Council 4 labor union, said Connecticut policy makers should continue efforts to protect pensions for those who have it and to ensure the newly-created Connecticut Retirement Security Board fulfills its mission of creating a public retirement plan.
“At a time when millions of working class Americans are watching their hopes of a secure retirement go down the drain,” Luciano commented, “it’s reassuring to see Connecticut take a different approach.”
The PRI recommendations come a month after the release of a new report by the National Institute on Retirement Security showing that the average working household has virtually no retirement savings. According to the NIR study, when all households are included—not just households with retirement accounts—the median retirement account balance is $2,500 for all working-age households and $14,500 for near-retirement households.
One Council 4 local union leader said the NIRS report underscores the risk of substituting risky defined contribution plans for defined benefit plans that promote broad-based prosperity.
“I’m so thankful that I have a pension. It’s the reason I’ll be able to retire with dignity and spend some money in my community,” said Tino Sampaio, an investigator for the Public Defender’s Office and president of AFSCME Local 749, which represents 1,600 state judicial and criminal justice employees.
“The solution to retirement insecurity isn’t taking away pensions from those who have them. It’s making sure everyone has access to a decent retirement and the ability to save for that retirement,” Sampaio added.
Sampaio's right -- that's why our union is fighting to protect state employee pensions from being converted into a risky 401(k)-style plan.
"A traditional defined benefit pension fund is the best deal for both retirees and taxpayers," Luciano said.
Scroll down to Additional Resources to learn more about the American retirement crisis.