Governments struggling to cover their growing pension benefits for employees are increasingly turning to 401(k)-style arrangements long embraced by the private sector, a transition that supporters say would ease the strain of retirement perks engulfing both Maryland and Virginia budgets.
“I think that governments should adopt defined-contribution plans for new employees,” said Montgomery County Councilman Phil Andrews, D-Gaithersburg/Rockville. “It not only saves taxpayers’ money but gives employees a lot more flexibility if they don’t want to stay in one job for 25 years — they can take the benefits with them.”
For example, just half of Montgomery County general government employees last fiscal year received traditional pensions in which retirees earned a set monthly payment from retirement until death. Yet they accounted for 88 percent of taxpayer money — $103 million — pumped into the retirement system.
