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Voters may face choice to change state pensions to 401(k) plan

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lovuian Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Jan-08-05 10:05 PM
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Voters may face choice to change state pensions to 401(k) plan
http://www.signonsandiego.com/news/business/20050105-13...

By Jim Wasserman
ASSOCIATED PRESS
1:57 p.m. January 5, 2005

SACRAMENTO In a significant echo of President Bush's plan to privatize part of Social Security, an influential California Republican lawmaker and taxpayers group want California voters to begin a long-term privatizing of two of the nation's largest public pension systems.

The change, if passed during a possible special election later this year, could eventually unravel much of the influence of the state's two massive public pension funds that manage more than $300 billion in assets. With holdings that rival the gross domestic product of many nations, the funds are major proponents for reforms on Wall Street and inside corporate suites, a role that has earned them high-profile opponents in U.S. business circles.





The idea to force new hires into 401(k) plans after 2007 would represent a major change in the nation's public pension landscape where an estimated 90 percent of state and local government employees receive traditional benefits. Though several states, including Florida, Ohio and Michigan, have moved toward 401(k) plans for public employees, participation is voluntary and has been lagging since a major stock market correction in 2000

more...

Interesting!!!
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Erika Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Jan-08-05 10:36 PM
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1. Only moneyexchangers profit from 401's
Our state allows its government employees to contribute individually in a 401. Of course the state government also requires its employees to contibute over 5% of their income to a mandatory retirement account administered by the state.

The individual retirement accounts under the 401 were hit devestatingly hard after 9/11, to the point they are just now reaching the same level. Bush gives me no cofidence the same type disaster won't happen again. The main retirement program survived but only because of the huge $ volume involved.

Those depending on the individual accounts who had hoped to retire after 9/11 couldn't. Their accounts had been drained.

401's are not suitable for retirement purposes. Whether it be in pension plans or SS.
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iamjoy Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Jan-08-05 10:48 PM
Response to Original message
2. What A Shame
This is part of a trend that has been going on for a generation.
Traditionally, employees stayed with a company for several years (or their entire career) and got guaranteed installments after retirement. The "risk" was all with the company. If they had a large number of retirees during a bear market, they would hemorrhage money, but the retiree would still draw the same pension.
Companies also noticed that employees were no longer staying with any one organization for life.

Voila - the 401(k) Plan. This nifty plan shifts the "risk" of investing and saving for retirement from the company to the employee. A beautiful thing, unless you are the employee.

But guys, a 401(k) is still a cool deal, unless it is being substituted for a pension.
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