Should all new state workers be moved into defined contribution plans?

Budget

New workers should be enrolled into a 401(K) plan. Some workers may not have the knowledge to invest wisely so some consulting/advising may be necessary.

I would support the idea if the defined contribution plan used a deferred income annuity to guarantee a future income to the participants. This plan would look like a 401k plan, but smell like a pension plan, which is important. It's important to keep in mind that a pension is not an opportunity to be rich but a guarantee to never be poor. Read any Dalbar report on "average investor rate of return" and you'll see why fiduciaries of 401k plans are incorporating various types of income and deferred income annuities. Defined Contribution plans have a mindset toward accumulation while defined benefit plans (pensions) specify the exact retirement income. A retirement plan is supposed to replace your income which is why I support using deferred income annuities as part of pension reform. These have fully funded guarantees and satisfy fiduciary standards

A promise made should be a promise kept. It is of the utmost importance that any pension reform protects the benefits of current and retired workers. Our state constitution and Supreme Court precedent are abundantly clear — we cannot reduce retirement benefits for workers. As it relates to current workers and retirees, any changes made must involve voluntary cooperation, such as a lump sum payment or transferal into a pension plan tier. For future workers, a new tier should be made with hybrid features that combines aspects of both defined benefit and contribution plans. Workers deserve retirement security and peace of mind, but at the same time, we must consider risk Illinois taxpayers assume with defined benefit plans.

Pension costs have grown out of the control of legislators because the total future costs of pensions are not appreciated when signing contracts. New workers should be moved to 401k or 403b defined contribution plans, so that they control their money and it is protected from legislators that fail to make pension payments.

Allow individual state employees to voluntarily shift pension donations into self-managed plans. No, but the benefits to the newly hired workers of defined contributions should be made competitive with conventional pensions so that new state employees have a greater likelihood of selecting defined contributions as an option.

No. They should be given the choice. Or the State could give up running its own pension systems and put state workers into the Social Security system. Of course then the State would HAVE to make its payments into the system.

Not necessarily and the proposal may not pass Constitutional muster.

Defined contribution plans is something that I'm used to in my line of profession. It makes sense, but I'm not going to make that decision on this questionnaire without discussion with state workers and others.

Defined contribution plans is something that I'm used to in my line of profession. It makes sense, but I'm not going to make that decision on this questionnaire without discussion with state workers and others.

Yes, I think we should move all new state workers into defined contribution plans. That is how the vast majority of non-governmental workers have their retirement pensions established.

Yes. A 401k system has worked in corporate America for decades and millions of Americans already use it. It would work for new state employees, too.

All current state workers should be offered the option to move into a 401K style plan, and all new state employees should be presented with a 401K style plan as their only option if they want to have a state pension upon retirement.

Yes---to control costs, but also to (1) give state workers more control and portability over their retirement, (2) put state workers in line with their private sector counterparts, and (3) get politicians out of the retirement planning business, something for which they are demonstrably unqualified. Once again, it is not a matter of funding, it is a matter of fairness.

Yes, and those that are in defined benefit plans should have the option to switch, but not be required to switch

Ideally, new state workers with Social Security coverage should be moved in a defined contribution plan. In reality, it would be on a voluntary basis.

That is one option, I would also consider supporting a pension formula that is sustainable.

As previously mentioned, new state workers should be moved into defined contribution plans, like a 401(k) plan. Such plans effectively balance retirement portfolio risk between the taxpayer and state worker, while offering portability, as it is a transferable asset. This type of pension reform is one of many ways that state government can transform itself into a 21st century institution in a competitive global economy.

I believe all new employees should be put into a defined contribution plan.

I believe that all new state workers should be moved into a self managed style 401K plan. This would allow the individual to have control of the plan and take pressure off of taxpayers. The state worker would benefit tremendously in this program. The state will be unable to cheat them out of their retirement and it is transferable in the event that the worker decides to change careers.

Not only should we look at a defined contribution plan, but also look at other options.

Candidate did not respond

I am not sure it is appropriate to mandate every pension plan be a defined contribution plan, but this has potential but several other factors would need to addressed like social security costs. The savings of such a plan may reduce pension costs, but may not necessarily reduce overall expenses because it depends how much payment on the front end is increased in order to reach an agreement with the union workers.

New state workers should not be moved into defined contribution plans. We need to find a sensible solution to ballooning pension debts.

Defined plans by there very nature increase long term liability. What we have now is a defined contribution plan developed years ago. As previously mentioned, I am open to further modifications in the defined contribution plans in place as well as another tier and an SMP.

Any alternative proposals need to be developed in partnership with workers through their unions to include a cost benefit analysis. At this time, I do not support moving to a defined contribution plan because I believe that the overall costs would be higher.

That would be an option.

I believe that new state workers should be moved into a new plan where they are able to choose their own contributions or benefits in order to control our pension costs.

Absolutely, and some progress was made towards that with the enactment of Tier III this session, which got very little attention with the budget issues stealing all the thunder. It created a combination of a defined benefit and a defined contribution program, but it was optional for new employees. Much more has to be done. The reason that we must move to a defined contribution plan is that we cannot afford the market risk of a defined benefit plan. Just as is done in the private world, we need to let our state employees invest their funds themselves. It also allows portability.

The last five years have been a good example of why it is important to the state. Our workers have been receiving a 3% COLA that is compounded annually, while in comparison social security benefits (which the great majority of our state workers do not receive) increased by more than 1% only in one year. To be fair, there have been other years where the COLA did not work out well for our workers. But the point is that when we get hit with a down market (loss of pension funds) plus pay a COLA above the cost of living increases, it creates a tension on the pension system that the state cannot handle. We need more predictability, which in turn will ease the fears of analysts and the business community.

Yes, a decent salary is one thing, but excess pension is another. There is always someone willing to work for a fair and honest pension plan.

Yes, if the constitution permits it. We should also not limit ourselves to just defined benefit options. We should explore all options for new hires.

From Previous Question: 5. Reverse the Obama Medicaid expansion, which has cost the state billions more than originally projected. The Medicaid program exists to benefit the most vulnerable people in our state, chiefly persons who are disabled, single mothers and children, and low-income seniors. Under the expansion, this program now covers able-bodied persons of working age. The expansion has created a significant administrative burden on DHS, which has to process and prioritize thousands more Medicaid applications, takes the focus of Medicaid away from the people it was created to serve, and incurs a massive financial liability for the state. Additional Medicaid savings may be possible by reducing the time it takes to process a Medicaid application, which is currently highly labor intensive. Current Question: Yes, all new workers must move into a defined contribution retirement system.

No. The problem we face is the debt for unfunded pension liability, not the normal (current) cost of paying pensions. Even for Tier I employees, the normal cost is very close to what an employer would pay in Social Security, Medicare, and a 401(k) match. The cost to the State is even lower for Tier II employees. By cutting off Tier II and creating a defined contribution plan, the total current debt does not disappear. What happens is that Tier II employees no longer subsidize Tier I debt. The other consequence is that the full cost of pensions becomes due immediately — you have to pay the legacy pensions, plus you cannot reamortize 401(k) contributions. That's why states that have switched to even a partial defined contribution pension ended up seeing unfunded liabilities actually grow rather than decrease.

No. The State of Illinois has already reduced pension benefits for new hires. Adequate pension benefits are important to attract talented people to work in the State, and employees need stable and predictable benefits. In addition, most State employees are not eligible for Social Security.

No. According to new data from the U.S. Census Bureau, only about a third of workers are saving in a 401(k) or similar tax-deferred retirement plan. There are lower costs to defined contribution plans in current data because the plans are not producing enough to guarantee retirement for Americans. Why would we do that to workers in Illinois when a lifetime of public service should provide retirement security, not insecurity.

No. The problem we face is the debt for unfunded pension liability, not the normal (current) cost of paying pensions. Even for Tier I employees, the normal cost is very close to what an employer would pay in Social Security, Medicare, and a 401(k) match. The cost to the State is even lower for Tier II employees. By cutting off Tier II and creating a defined contribution plan, the total current debt does not disappear. What happens is that Tier II employees no longer subsidize Tier I debt. The other consequence is that the full cost of pensions becomes due immediately — you have to pay the legacy pensions, plus you cannot reamortize 401(k) contributions. That's why states that have switched to even a partial defined contribution pension ended up seeing unfunded liabilities actually grow rather than decrease.

No. The State of Illinois has already reduced pension benefits for new hires. Adequate pension benefits are important to attract talented people to work in the State, and employees need stable and predictable benefits. In addition, most State employees are not eligible for Social Security.

No. According to new data from the U.S. Census Bureau, only about a third of workers are saving in a 401(k) or similar tax-deferred retirement plan. There are lower costs to defined contribution plans in current data because the plans are not producing enough to guarantee retirement for Americans. Why would we do that to workers in Illinois when a lifetime of public service should provide retirement security, not insecurity.

Should all new state workers be moved into defined contribution plans? Yes, when you look at the state's current pension obligation, and the soaring cost to taxpayers; it makes more sense to transition all new state workers to a defined contribution plan or 401k. It will greatly relieve some of the cost burden from the state, while also still allowing state workers to save and live comfortably in retirement.

Should all new state workers be moved into defined contribution plans? Yes, when you look at the state's current pension obligation, and the soaring cost to taxpayers; it makes more sense to transition all new state workers to a defined contribution plan or 401k. It will greatly relieve some of the cost burden from the state, while also still allowing state workers to save and live comfortably in retirement.

There isn't evidence that this has worked in other states. To go down this path, instead of being All In for finding a path to full funding, just seems irresponsible. Our first priority has to be to show we can pay our current bills. Second, pensions and other key benefits help ensure teachers and other public sector employees that they can actually work today and have something for retirement tomorrow. Public employees serve the community. The community has the expectation of that service and provides the intention of supporting a modest retirement retirement in return. Substitutes to the pension plans are not tested, may be unreliable, and will then put us in a worse footing than we already are.

I have been supportive of efforts to reform the pension system for new employees, and it is important to ensure that new hires don't leave us in a similar situation thirty years down the road.

Well we have to be very careful because some states such as Pennsylvania that have tried to move to defined contribution plans have found that the transition costs are very high and don't really reduce costs. Some states have experimented with a hybrid defined contribution and defined benefit system as kind of compromise position and it should maybe be something we can look into but overall I am quite skeptical of defined contribution plan proposals.

Well we have to be very careful because some states such as Pennsylvania that have tried to move to defined contribution plans have found that the transition costs are very high and don't really reduce costs. Some states have experimented with a hybrid defined contribution and defined benefit system as kind of compromise position and it should maybe be something we can look into but overall I am quite skeptical of defined contribution plan proposals.

Only if those plans offer fair return on the employees investment.

That is one possible solution that can be studied. However, we see that many US workers with such plans are not able to contribute at a level that ensures financial well being in their retirement. New hybrid programs seem promising.

A defined contribution plan (401K or 403B) is in many ways the model for public employees. Being aware that at the City level, new employees are offered an opportunity to enroll in both a City Pension and a 403B which is something that we can look at for State employees (and further rolling them off of a state pension plan system in lieu of). I am hopeful that they are looking at this now in the General Assembly.

A defined contribution plan (401K or 403B) is in many ways the model for public employees. Being aware that at the City level, new employees are offered an opportunity to enroll in both a City Pension and a 403B which is something that we can look at for State employees (and further rolling them off of a state pension plan system in lieu of). I am hopeful that they are looking at this now in the General Assembly.

The pension system does not need to be reformed, our state government have to be held accountable and not dip and dab into the pensions until they can stabilize themselves.

The pension system does not need to be reformed, our state government have to be held accountable and not dip and dab into the pensions until they can stabilize themselves.

I do not agree that all new state workers should mandatorily have defined contribution plans. If there is discussion on the matter it should include the bargaining units and labor leaders for the public sector employees who have unionized. Mandating without discussion, input and feedback does not seem to be realistic option.

No, a defined contribution plan would raise the state's liability and cost more than a defined benefit

I would love to have everyone receive a defined benefit pension. However, I think that State employees must realize that there are significant changes in the private sector in regards to pensions and retirement savings. Perhaps a hybrid system might work.

Illinois should begin to transition the majority of new hires to defined contribution plans. I would stop short of saying "all new state workers" should move to defined contribution plans.

This is a very complicated question that'll take some creative solutions to address. However, it would be wise to move new state employees into a defined contribution, which will in turn help the state to relieve some future debts. As it stands today, the state will not be able to uphold its current plan, adjustments will need to be made for new employees coming in.

Until I have read more about the feasibility, efficacy and projected benefits to the state that such a plan might have, I will not take a defined position on this type of plan. I will, however, agree that any new tiers or contribution plans should only apply to new employees and not foisted upon existing employees against their will (and against their collectively bargained contracts).

No. State employees should have an option, as is now available under Tier II and Tier III. There is a popular wave of support for defined contribution plans. But our aging population should remind us to ensure that our older adults, who can no longer earn an income, have an adequate income and resources to live their lives safely and with dignity. This is essential as a moral compass for our society. It is also essential for the next generation, whose members are working themselves, caring for their children and hopefully saving for their own retirement. Adding a major responsibility to also support non-wage-earning parents is not possible in today's economy, where incomes have not increased in decades. Pensions are key to this commitment.
Then the question becomes what is the most efficient and effective way to structure pensions. While defined benefit plans have fallen out of favor in the private sector, they ensure the economic well being of our older adults by guaranteeing an income after retirement. Defined contribution plans are appealing to employers and many employees and should be offered as an option to state employees, as well. But many workers do not feel that they have the ability to intelligently manage the investments into which their contributions would be placed. Overall the costs to independently manage investments on behalf of thousands of employees is less than each of them paying for investment advice and management on their own. And even with the best advice and intention, the money actually available for retirement is dependent on how their investments are valued at the time of retirement, a variable not under the retirees control. Periodic downturns, as we saw in 2008-10, can snatch insolvency from the jaws of financial solvency just based on when they retire.

No.

No.

The current defined benefit plans are lacking funds due to the state's gross error in not funding the accounts. The current defined benefit crisis - the pension crisis - is the fault of our state and not the workers. Defined contribution plans most often do not provide the same quality and quantity of retirement benefits. For new employees I support moving to a hybrid of defined benefit and defined contribution plan with quality contributions coming from the state and not exclusively the worker. In this new employee hybrid option the employee would be required to enroll and contribute to both the defined benefit and defined contribution plans allowing for a base of funds to be created along with the state contributions making the account viable. We can not balance the budget on the backs of our hardest working citizens.

The current defined benefit plans are lacking funds due to the state's gross error in not funding the accounts. The current defined benefit crisis - the pension crisis - is the fault of our state and not the workers. Defined contribution plans most often do not provide the same quality and quantity of retirement benefits. For new employees I support moving to a hybrid of defined benefit and defined contribution plan with quality contributions coming from the state and not exclusively the worker. In this new employee hybrid option the employee would be required to enroll and contribute to both the defined benefit and defined contribution plans allowing for a base of funds to be created along with the state contributions making the account viable. We can not balance the budget on the backs of our hardest working citizens.

The only condition under which new employees should be moved to a defined contribution plan would be if all components of compensation and benefits are evaluated and negotiated together. When I participated in negotiations with our teacher's union, we looked at only a portion of compensation — setting salary levels, salary growth, and healthcare. It is unfair to the process and to the parties if they can't look at the whole picture during negotiations. I would work to make this a more holistic bargaining process as possible.

No. With the budget agreement, and at the request of the Governor, we passed Tier 3 Legislation. Tier 3 creates a hybrid definted benefit/defined contribution retirement plan. The Governor promised that this would save the state at least $500 million annually. After analysis, it appears that we are not likely to get anywhere near that amount of savings. Part of the reason is that the Tier 2 pension changes that were passed in 2010 have provided substantial savings to the state and in many cases there is ZERO COST to the state for providing this pension for an employee. Tier 3 would save the state money by shifting the responsibility of funding the defined contribution for teachers to local school districts. Yet, once the details had been worked out (in bi-partisan discussions) the Republicans in the legislature opposed implementation and so Tier 3 has never actually been implemented. As I was actively a part of the negotiations for Tier 3, I support implementation of this plan, but it would appear that it has fallen victim

This needs to be negotiated with the working families who would be impacted most. If there is a defined contribution plan that works and makes sense for these families, then yes. I have yet to see that plan.

All new state workers should be moved into defined contribution plans, as long as the plans provide retirement benefits that are competitive with the private sector and are constructed within the confines of Supreme Court rulings and our state constitution. A defined contribution plan would help mitigate risk to taxpayers and would give state workers more flexibility as their situations change either from moving moving around state government or leaving state government altogether.

All new state workers should be moved into defined contribution plans, as long as the plans provide retirement benefits that are competitive with the private sector and are constructed within the confines of Supreme Court rulings and our state constitution. A defined contribution plan would help mitigate risk to taxpayers and would give state workers more flexibility as their situations change either from moving moving around state government or leaving state government altogether.

I support having all new state employees enter into a defined contribution type plan. People who are newly hired should be allowed to contribute to a 401 k type plan with the state employer matching it.

Yes. Defined benefit plans have proven to be unsustainable. Defined contribution plans that work well in the public sector will provide steady and predictable costs for the state going forward.

I support having all new state employees enter into a defined contribution type plan. People who are newly hired should be allowed to contribute to a 401 k type plan with the state employer matching it.

Yes, I strongly support this. I do believe a 401(k) style plan with a state employer match is the best option for new state workers.

Yes. Defined benefit plans have proven to be unsustainable. Defined contribution plans that work well in the public sector will provide steady and predictable costs for the state going forward.

Yes I would be in favor or supporting a defined contribution plan going forward. New employees could be enrolled in this program similar to a private sector or small business approach. I believe that these employees can contribute to the hybrid 401k style plans and also their employers can provide a deposited match.

Yes. The current system is unsustainable.

Yes I would be in favor or supporting a defined contribution plan going forward. New employees could be enrolled in this program similar to a private sector or small business approach. I believe that these employees can contribute to the hybrid 401k style plans and also their employers can provide a deposited match.

Yes. The current system is unsustainable.

I believe that it is an option to consider. Moving new employees to a 401K could be a fiscally sound option just as it has become more commonplace in corporate America.

Yes. This is the direction that the private sector has moved.

I believe that it is an option to consider. Moving new employees to a 401K could be a fiscally sound option just as it has become more commonplace in corporate America.

Yes. This is the direction that the private sector has moved.

Yes, I believe we need to move to a 401k style program. This is critical to taking politicians out of the retirement planning business, a business they have demonstrated failure in being involved in and protecting the livelihoods and homes of families across the state. Additionally, a defined contribution plan will empower state employees to control their own money and allow the flexibility to invest and plan as they see fit.

Yes, I believe we need to move to a 401k style program. This is critical to taking politicians out of the retirement planning business, a business they have demonstrated failure in being involved in and protecting the livelihoods and homes of families across the state. Additionally, a defined contribution plan will empower state employees to control their own money and allow the flexibility to invest and plan as they see fit.

I thought all new workers have to take the defined contribution plan and some workers who have been around for a while can opt in.

As noted in the previous question, I think defined contribution plans should be an option for solving our pension crisis.