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Chicago Proposes 401(k) Accounts for Transit

Dennis Byrne 19 July 2007 One Comment

A groundbreaking effort to switch a public employee pension system from a defined benefit plan to a defined contribution plan is underway in Chicago.

The Chicago Transit Authority wants to follow a growing trend in the private sector toward a 401(k)-type retirement system in which the employer and employee make regular contributions into a retirement account controlled by the employee. Supporters say this approach can save taxpayers money while still providing solid retirement income for state workers.

A CTA spokeswoman said Chicago Mayor Richard M. Daley, the state’s most powerful Democrat, has signed on to the retirement restructuring.

One Comment »

  • Michael Livshutz (author) said:

    Good to see the glacier moving! This deserves to be just the beginning of reforms. CTA pension plan has been the most generous in Illinois – better than the pensions for other unionized State of Illinois employees. And far beyond anything that a regular enterprise can possibly afford.

    Last note – this proposal has not been implemented. It’s just a proposal. I hope the legislature keeps the pressure on CTA to keep going.

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