The Wall Street Journal, August 4, 2008
Reporter Jennifer Levitz profiles the West Virginia’s switch back to the traditional pension system.
According to the article, West Virginia school employees shifted from a pension plan that guaranteed a monthly check, to a retirement-savings plan that would make the teachers, bus drivers, custodians and other staff responsible for their own investment accounts.
But, as employees began to retire, “most balances were pitifully small.” On July 1, after a vote authorized by the state legislature, 14,871 school employees, or 78%, switched to traditional pension plan.
The article indicates that school employees put their mistakes behind them, but their experience stands as a cautionary tale. As workers start to retire with 401(k) or 401(k)-like plans, what happened in West Virginia is a window into exactly how things can fall apart for workers, and it serves as a wake-up call. And, current bear market may be wreaking on older workers’ accounts if they are too aggressively invested in stocks. Read the full article here.