Consider the 401k plan
I’m a resident of El Dorado Hills and a current EID customer. I have just finished reading the Letters in the March 13 edition of the Village Life regarding EID salary and pension issues.
I lost my pension about nine years ago at the age of 51. My company was able to ditch their pension obligations in bankruptcy court and ,with the exception of upper management, the employees were left with a much-reduced pension paid through the Pension Benefit Guaranty Corp. The entire amount of money the company had invested to support pension obligations was handed over to the PBGC and unceremoniously dumped into one large pot of money used to pay all PBGC pension obligations – former steel, railroad and other workers who lost pensions, were now drawing on money meant for myself and fellow co-workers. As the pot dwindles down, PBGC pension payments will be rescheduled until the pot is empty or the taxpayers are forced to fund the PBGC — an unlikely option.
What my company did after exiting bankruptcy was establish a defined contribution 401k. They had 401k match and, with other employee groups, they contribute a certain percentage of our gross pay. It is a great system if you are 20 years old but when you are 51, there is not much time to make up for time unless the employee started contributing in their 20s like I did.
To use a much-overused phrase, we have arrived at a “tipping point” with regards to public employee pension systems. With the exception of public safety workers, the time has come to ditch the current defined pension for a less-expensive 401k defined contribution system. That way, if a public employee wants to retire at 50, they can. Heck, they can even retire at 40 for all I care because they will receive only what’s in their 401k — no medical care, no pension, no COLA.
Each public employee would now face retirement like the rest of corporate America. I feel that anybody over 45 should be able to keep their current pension but everyone else should be switched over to the 401k system.
El Dorado Hills