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Old 01-11-2012, 11:10 AM
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Chilango Chilango is offline
Join Date: Aug 2002
Location: Washington, DC
College: Indiana University
Posts: 233

Senator Hatch issued a report stating that defined benefit plans are inappropriate for state and local governments.

From page 9: "Many of the legislative proposals and enactments at the state and federal level are good ideas that would improve the defined benefit pension structure. However, it is becoming increasingly apparent that defined benefit pension plans will never be financially sound enough over the long term for use by state and local governments. The financial risk associated with the defined benefit pension structure may be appropriate in the corporate setting, but it is inherently flawed in the state and local government setting. When defined benefit pension liabilities explode unexpectedly for a private corporation, the harm is usually limited to the corporationís shareholders, employees and customers. In the public sector, by contrast, the harm goes beyond the public employer and employee, and is inflicted directly on taxpayers either through higher taxes, additional borrowing or reduced services. For this reason, the financial risks associated with the defined benefit pension structure are uniquely inappropriate for state and local governments."
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