Can 50 million people be wrong? That’s how many Americans have 401(k)s, with close to $3 trillion invested in the plans.
Looking at it from a taxpayer’s perspective, defined-contribution plans give workers control over their money to set up their own nest eggs, and the ability to borrow against a portion of the benefit should they need to.
The pro-business group Unshackle Upstate points out, “90 percent of the population of New York does not have a guaranteed retirement option” — i.e., a traditional pension.
One surefire benefit to moving to 401(k)s for state pensions would be that the state taxpayers would no longer have to subsidize the pension funds’ shortfalls.
A change to 401(k)s would be close to a $10 billion savings for New York taxpayers.
State union chiefs and some Albany politicians, including State Comptroller Thomas DiNapoli, who administers the state pension funds, are opposed to pension reform, citing additional fees for operating the individual funds and an increased contribution of salary as roadblocks for any type of concession on Gov. Cuomo’s plan.
But new rules released earlier this month by the Labor Department require companies that administer 401(k)s to disclose all fees to employers who sponsor the plans. As a result, some plans are responding with lower-fee options.