Time for real pension reform

Full Op-Ed posted on Commonwealth Magazine

By Steve Eide

IN JANUARY, GOV. Deval Patrick filed a pension reform proposal that could save $5 billion over 30 years, through measures such as raising the retirement age and basing pension payments on an employee’s five highest years of salary, instead of the current three. The governor’s plan represents solid reform, but it doesn’t go far enough. Beacon Hill should take advantage of the unique opportunity created by the current budget crisis to transition state and local employees from a defined benefit to a defined contribution system.

This would require bold leadership. At present, only two states (Alaska and Michigan) have adopted pure, mandatory defined contribution systems for their employees. Even Republican governors who have made pension reform a signature issue, such as New Jersey’s Chris Christie and Wisconsin’s Scott Walker, have limited themselves to reforming their states’ existing defined benefit systems.

Click here to read full Op-Ed.