OKLAHOMA CITY – State workers are fighting for their retirement, protesting two measures that would directly impact their financial future.
If passed, SB 2120 and HB 2630 will get rid of state pensions for a 401(k) savings plan.
With their pension plans on the line, state employees like firefighters and teachers knocked on the doors of their representatives, making sure their voices were heard.
Jim Long, a firefighter in Tulsa, says, “A 401(k) is nothing but a savings account. You will outlive a savings account.”
But Oklahoma Sen. Randy McDaniel believes 401(k) plans are more sustainable for the economy.
“We want to have a sustainable future,” says McDaniel. “We need predictable costs. It’s a good solution.”
Under the existing pension plan, the state government was $16 billion in debt while paying public employee pensions.
“We still have over $11 billion of unpaid obligations,” says McDaniel. “So clearly, that system led us down a path that’s affecting everything else in government.”
Lawmakers believe their way is better for state employees but there are pros and cons to each.
A pension plan has traditionally been an award for long-time loyalty.
The employee does not have to worry about funding because the employer foots the bill.
However, that means the state is responsible for the worker’s financial future.
With a 401(k) savings plan, the employee is responsible for funding their own retirement, contributing their own money and letting it grow.
It’s also portable, meaning you can carry that money over no matter where you work.
However, experts say not very many people save for the future without the direction of a pension plan.
Protestors just hope the switch in policy doesn’t discourage the next generation of state employees.
Jim Long says, “If you’re going to cut their compensation on the pension side as well as on the pay side, you’re really going to have a hard time recruiting and retaining qualified employees going forward.”
Financial planning experts have seen this coming.
They say the state government simply cannot meet the commitment of pension plans anymore.