E.J. McMahon of the Empire Center for Public Policy says state workers should have defined-contribution pensions so taxpayers’ costs would be predictable. But his remedy of using 401(k)-style accounts would have downsides.
Management fees—now $350 million a year for the $125 billion state pension fund—would be higher if the 1 million employees in the pension system had individual accounts. Returns would be lower, as laymen tend to buy high and sell low, and run up transaction costs.
But Mr. McMahon says: “Solid and well-financed plans, like the ones offered by SUNY and CUNY, are the answer. Workers wouldn’t be fending for themselves unless they absolutely insisted on it.”…
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