WHEREAS:

The American Legislative Exchange Council (ALEC) advocates that existing public sector defined benefit (DB) pension plans be replaced by defined contribution (DC) plans; and

WHEREAS:

Michigan passed a law converting the pensions of state and judicial employees from DB to DC plans. Three other states, Washington, West Virginia and Colorado, have also made some movement toward DC plans; and

WHEREAS:

ALEC and other groups consistently point out that the rapid growth in private sector DC plans represents a shift from DB to DC plans that should be followed by public employers. However, statistics show that the growth in private sector DC plans is mainly fueled by newly adopted plans at small employers that did not previously offer a pension, and by DC plans adopted by employers to supplement existing DB plans; and

WHEREAS:

It is often stated that DC plans are less expensive than DB plans because DC plans do not require actuarial valuations and usually have lower legal and administrative costs. In fact, an Illinois study shows that the costs of DC plans are higher; and

WHEREAS:

Only DB plans can provide a guaranteed income at retirement; DC plans cannot guarantee what the retirement benefit will be. Further, DC plans usually pay out benefits in a single lump sum (or a fixed number of years) at retirement, subjecting retirees to the very real risk of out-living their retirement benefits.

THEREFORE BE IT RESOLVED:

That AFSCME continue to oppose replacement of existing public sector DB plans with DC plans; and

BE IT FURTHER RESOLVED:

That AFSCME International continue to combat the efforts of ALEC to undermine our members’ retirement security and provide educational materials and technical support to affiliates on this issue.

SUBMITTED BY:

John F. Cole, Delegate
AFSCME Local 1619, Council 2
Washington