[mosholu]

Originally Posted by Jim in CT

Easy in my opinion. You do what the private sector did. WShen those contracts come up, you modify them and say "on such-and-such a date, contributions to your pension will cease. You will be vested in any contributions already made to your pension, and therefore you have earned a portion of the future benefit. Henceforth, future contributions will be made to a 401(k), and like everyone else, you need to live on whatever you can accumulate"

Try suggesting that to a teacher or a cop (or better yet, to a union rep), and watch the reaction you get. No one will say "hey, I recognize the economic realities of today, so let's discuss this". What they'll say is that, for example, you don't care about kids getting quality education, or that you are anti-cop. There is no talking to these people, not till states file bankruptcy.

I do not think it is as easy as that for the following reason: Isn't the main problem with the pension systems for the states is that they have been underfunded. Are you suggesting that the pension plans would lose any amounts that have not been funded yet. If so, I think that would be difficult from a political and legal stand point. It would be a hard argument to make that people should take dramatic cuts to their benefits accrued because prior governments ignored their pension obligations. As far as turning them into 401(k) plans I think it results in just another large subsidy to the financial sector. Maybe they can be self directed but to be honest I really do not know how much flexibility there is.