Ohio had an optional defined contribution in place when, In 2002, a non-mandatory defined contribution plan was created for education employees and all other state and local government workers. Those who had not joined this plan also can move to the new plan. A third hybrid option also became available to workers which combined defined benefit and defined contribution.
Oregon’s hybrid public employee retirement plan, a defined benefit plan, began in 2003. “The pension program,” as it is called, is funded by employers as well as public employee contributions. The employee contribution aspect is called the “individual account program.” Recently, state legislators ruled that the employee contributions would double beginning this year.
13. South Carolina
In 2000, South Carolina began 401(k)-like optional defined contribution plans both for current and any new non-federal government employees. In 2002, the state extended the option to teachers as well. In 2005, the state increased contribution rates and set a 1% cost-of-living adjustment. That rate can be up to 2% if the funding-to-cost ratio stays the same.
Facing a severe pension budget crisis after being hit by the worst of the recession, Utah underwent major changes to its pension plan in 2010. The state replaced its traditional defined benefit plan with a two tier plan that public employees could choose between. These two options are a defined contribution plan or a hybrid plan.
Washington began a hybrid plan called the Teachers’ Retirement Plan Tier 3, which has components of defined contribution and defined benefits. This plan applies to all teachers, but is only mandatory for teachers who have been hired since 1998. For all other public employees on the local and state level, Washington created a similar hybrid plan called the Public Employee Retirement System. This plan, however, is not mandatory.
16. West Virginia
West Virginia began its defined contribution plan for teachers in 1991, terminating enrollment for its prior defined benefit plan at the same time. In 2005, this defined contribution plan was also closed to all but existing members. The next year, current members of the defined contribution plan opted to merge with the defined benefit plan. After several years of legal battle, it became optional for those who wanted to switch to the new defined contribution plan, called the West Virginia Teachers Retirement System.
-Charles B. Stockdale, Douglas A. McIntyre, Michael B. Sauter