In Washington State, a group of state legislators is taking steps toward a defined-benefit pension plan for public workers. A bill proposed today by a Republican State Senator would offer public-sector workers a $10,000 signing bonus if they switch from their defined-benefit plans to a defined-contribution plan. The bill is modeled after a similar measure going into effect at Boeing, and although it is modest in scope—limited to only 2,000 workers—it could be a sign of bigger things to come. As the Seattle Times reports, it has already sparked a discussion about pensions in the state:
Tim Welch, a spokesman for the Washington Federation of State Employees, said there is no financial need to end public pensions, calling efforts to do so “a mean and nasty effort to harm public employees.”If anything, Welch said, pensions enjoyed by public employees should be restored to the private sector, because 401(k) plans weren’t meant to provide a secure retirement for average workers.But state Senate Majority Leader Rodney Tom predicted it would be difficult for the state to sell tax increases for schools or roads if public employees continue to hold on to pensions unavailable to most workers.
The measure is widely expected to fail, as the state government is mostly run by Democrats who oppose the measure. Moreover, Washington’s pension funds are among the healthiest in the country, reducing some pressure for immediate reform. But this doesn’t mean it’s not a good idea: as we’ve seen in cities and states around the country, healthy plans can get into big trouble quickly, and defined-contribution plans are considerably more stable than their defined-benefit counterparts. Unions and their supporters have been relatively successful at demonizing these plans as an attack on workers, but they are actually good for public employees, ensuring that they aren’t at the mercy of massive investment returns or the funding decisions of lawmakers. Unions aren’t likely to support this measure, but giving workers a financial incentive to switch could be a way to build support for the idea within the ranks.