Reform has been the hot topic in the world of public employee retirement plans for years. Too often the conversation immediately turns to tossing out defined benefit pensions for government workers and replacing them with individual investment accounts like 401(k)s. Supporters of the 401(k) approach say these plans are a better fit for the modern worker; they are always fully funded; they give workers control over their own money; the public sector should follow the private sector's lead in eliminating pension plans. However, this thinking does not consider the uniqueness of public sector jobs, workers' lack of understanding of financial products, the impact on workers' retirement security, or the effect on the employer and taxpayers.
At times, when employers are considering joining the LAGERS system, they are choosing to switch from their standalone defined contribution plan to a defined benefit plan with LAGERS. These employers are making the choice to give their employees the ability to earn and receive secure monthly income from LAGERS when they retire. As well, they are setting a plan in place designed to recruit and retain quality workers while providing dedicated employees a path to retirement security. When employers are thinking about making the switch, there are few things they need to know.