Re: “Public employees deserve a better pension reform,” March 28 Lois Court and Daniel Kagan column
Lois Court and Daniel Kagan, in arguing for yet another increase in taxpayer funds to shore up Colorado’s Public Employees’ Retirement Association pension plan, describe 401(k) style plans as “risky” and “subject to the whims of the market.” PERA also invests in stocks and bonds that are also “risky” and “subject to the whims of the market.”
The difference between a defined benefit pension plan like PERA and a 401(k) account is who takes the risks for the funding and performance of the investments. A person who is a member of defined benefit pension plan receives a specific monthly benefit whether the market performance is good or bad, and takes the risk that their employer will adequately fund the plan. They also give up any upside of a good market performance that could increase their monthly benefit. A person with a 401(k) must adequately fund their plan, assumes the risk should their plan assets underperform, but also reaps the benefit of a larger retirement benefit should the invested assets perform better than expected.
Whether one is better than another depends on an individual’s appetite for control of their own retirement.
Kevin Fletcher, Golden
Submit a letter to the editor via this form or check out our guidelines for how to submit by e-mail or mail.
