It’s a valid question which has been touted by the Honorable Talmedge Heflin, director of the guts for Fiscal Policy at the Texas Public Policy Foundation, in his opposition to the use of described benefit plans today. It would be folly for the continuing state to try to chase private sector pay during an financial boom, said Talmadge Heflin, director of the Center for Fiscal Policy at the conservative Texas Public Policy Foundation.
Instead, Heflin suggested the state make an effort to lure younger workers by developing a portable retirement plan akin to a 401(k) and dispensing with the pension that serves as a “golden handcuff” that has kept older employees face to face. A good way to probe Heflin’s assertion would be to look at the popularity of defined contribution plans to private sector employees.
We know that open public sector employees accept their fantastic handcuffs as an initial reason to stay face to face. But just how do private sector employees view them? conserving enough for retirement ’t. “In 2012, plan sponsors reported a continued sense of obligation in preparing employees for retirement. Our question is “Why? If 401(k)s are so popular with employees, why are they not appropriately using them?
If as Heflin asserts that 401(k)s should be looked at as an alternative for “golden handcuff” defined benefit programs, why must PSEs go to such measures to market 401(k)s within their organization? Again, we’ve some relevant questions. If 401(k)s are so popular (and a draw to private sector employment), wouldn’t employee involvement increase?
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Another declaration in the report demonstrates this skepticism: “Without taking a dynamic role in handling their 401(k) accounts, employees can remain stuck at a minimal deferral rate and disengaged from investment decisions that impact their pension savings. We are going to look for other research and studies that go more to the center of Heflin’s assertions. While the Deloitte study has fairly consistently found that PSEs feel 401(k)s fit their recruitment and retention requirements, the analysis never asks them any questions comparing their feelings about the use of DB plans for recruitment and retention. And Heflin’s assertion appears to imply the contrary view, that only when DC programs are applied would more employees gravitate toward lower paying authorities work.
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