The Wall Street Journal, June 1, 2009 – The editorial “Golden (State) Opportunity” regarding California’s budget problems is misguided in its suggestion to move the state’s public servants from a defined-benefit pension into individual retirement accounts.
Freezing pensions and switching to a system of individual accounts can carry additional costs. The reason is twofold: Accounting rules can require pension costs to accelerate in the wake of a freeze, and maintaining two plans is more costly than operating one. The last thing California needs right now is to take action that would require more contributions.
Read the full letter to the editor here.