Pension politics
GOP gubernatorial hopeful John Faso raises an issue that deserves full debate

Republican John Faso probably wasn’t counting on the support of public employee unions in his race for governor this year. But if he was, he has surely lost all chances of getting it now that he has proposed a sweeping reform that would replace traditional public pensions with 401(k)-type plans for new public workers.

Nonetheless, Mr. Faso has done New Yorkers a favor by raising an issue that is not going to go away, no matter the outcome of November’s election. Pension costs are a major expense that, until now, have been largely borne by taxpayers. By transitioning to 401(k) plans, the state would be joining a trend that has been sweeping the private sector, and which President Bush would apply to Social Security.

To be sure, not all public pensions are the same. In an earlier era, New York state workers contributed nothing to their pensions, and were entitled to a defined benefit after so many years of service. But in more recent times, as state officials began to look to ways to control pension costs, different tiers were adopted, with workers required to contribute a portion of their salaries toward their pensions.

Mr. Faso’s plan would go one step further by requiring state and local governments, along with school districts, to provide new workers with only a 401(k) plan that would be funded with employer and employee contributions.

There are advantages to this approach besides the obvious savings that would result by relieving the cost to taxpayers. One is that workers could take their 401(k) plan with them if they change jobs. This flexibility would allow them greater choices in career moves, without losing their benefits if they moved off the public payroll. And workers could make their own choices on investing, depending on their financial situation.

Of course, there are downsides as well. Not all 401(k) plans are the same. Some might take more risks in the stock market than others, and, as a consequence, workers would be taking a gamble on which plan they choose. Thus, two workers who earned the same salaries over the same time period could end up with vastly different nest eggs when it comes time to retire — an inequity that would not occur with a fixed pension plan.

So which is the better pension approach? Mr. Faso deserves credit for raising the issue. His Democratic opponent, who will be chosen in the September primary, should continue the debate.

I like the idea and it needs to be an intregal part of reforming Albany and state politics, I don’t care what the unions have to say about it. It is time to reign in the costs and this is just one of the killers in the budgets of all NYers.