Alaska State Workers Hoodwinked Into Believing 401(k)-Style Retirement Plan Was As Good As A Pension

From Alaska to Florida, America’s state and local governments have long been pushing their workers out of pensions into 401(k)-type retirement plans in response to looming budget deficits—misleadingly claiming the retirement benefits are comparable. Nearly two decades later, state workers have awakened to discover they were hoodwinked by their employers and retained financial advisors. Warnings that 401(k)-style plans provide significantly smaller benefits than pensions should have been heeded.

In April 2011, I stood with over 200 City of Atlanta, Georgia police officers jammed into a crowded Committee Room at City Hall for a workshop held by the Finance Committee of the City Council. By the end of the tense four-and-a-half-hour marathon session, hundreds of other city employees had lined the corridors watching the closed-circuit broadcast on television monitors throughout the building.