401(k)-style retirement plans: a viable alternative

Illinois politicians have mismanaged government worker pensions for decades, creating one of the nation’s worst pension crises. Illinois’ five state pension systems collectively have only 41 cents on hand for every dollar they need to pay for future benefits. In the private sector, such a low funding level would mean bankruptcy. Even though politicians have...

Illinois politicians have mismanaged government worker pensions for decades, creating one of the nation’s worst pension crises. Illinois’ five state pension systems collectively have only 41 cents on hand for every dollar they need to pay for future benefits. In the private sector, such a low funding level would mean bankruptcy.

Even though politicians have destroyed the retirement security of government workers in Illinois, some workers expect those very same politicians to keep their promises and behave more responsibly with the pension funds going forward.

Many government workers only want to keep the politician-run pension system because they’ve been told there is no viable alternative.

But there is a viable and widely popular alternative to politician-run pensions: 401(k)-style retirement plans. These plans take politicians out of the retirement business and put workers in control.

401(k)-style retirement plans are the nation’s primary vehicle for retirement savings. Seven in 10 Fortune 100 companies provide only 401(k)-style retirement plans to new employees today. And states across the nation are dropping their traditional defined-benefit pension plans for 401(k)-style retirement plans, with Oklahoma being the most recent state to pass 401(k)-style retirement reform in 2014.

Even Illinois offers a 401(k)-style retirement plan to a small portion of workers. And it has done so since the late 1990s.

Illinois’ State University Retirement System, or SURS, started offering a 401(k)-style retirement plan to university employees in 1998. More than 18,000 SURS employees participate in that plan – with the participation rate for new employees at an all-time high.

It’s not fair that the only 401(k)-style retirement plan for government workers in Illinois is limited to a small group of workers. It’s time to give all government workers in Illinois the ability to control their own retirement future.