Milwaukee Journal Sentinel
October 8, 2013
By Steve Schultze
County Executive Chris Abele is attempting to revive the idea of switching from the county’s traditional defined-benefit pension plan to a 401(k)-style plan that’s more common in the private sector.
Abele is calling for a study of a voluntary switch as part of his 2014 budget plan.
Under a 401(k), employees and employers contribute to individual retirement investment accounts.
The same issue was studied in 2010 and advocated by then-County Executive Scott Walker. A study that year projected long-term savings of $557 million to $933 million, depending on details of how such a shift was done.
An alternative of trimming back benefits under the tranditional plan — by raising the retirement age, lowering pension payments and requiring employees to contribute — was projected to save $569 million long-term, under the study.
The 401(k) change was never approved, but the county did raise the retirement age from 60 to 64, cut pension credit by 20% and capped the size of “backdrop” lump sum payments. The latter two changes are under court challenge.
Another study in 2012 projected savings of up to $1 billion over 50 years of a switch to a 401(k)-type pension program.
The county is expected to have $65 million in pension costs next year, with employee contributions picking up $9.5 million of that amount.