Zippo’s recent retirement plan transition is another example of why Pennsylvania state government should do the same. As Zippo CFO Don Hall said, defined contribution plans like 401(k)s carry more predictable costs while offering valuable retirement benefits.
Zippo, the iconic lighter manufacturer, is switching from a traditional pension plan even as its plan is reportedly “in good shape.” Pennsylvania’s two state-run pension plans, meanwhile, are an astounding $63 billion in debt. The state Senate is poised to consider a proposal co-sponsored by Senator Joseph Scarnati that shifts away from unsustainable defined benefit pension plans—as the vast majority of private companies have done—and includes a 401(k)-style component. Similar legislation has also been introduced in the state House, and most voters favor this type of reform.
As with Zippo’s move, under the legislative proposals no current state worker or retiree would lose any pension benefits now owed them. Instead, these proposals would give state employees more options and place our pension system on stable financial footing.