Wisconsin: 69 Percent Favor 401(k)-Style Accounts for Government Workers

The latest Reason-Rupe poll of 708 Wisconsin adults on landline and cell phones finds support among Wisconsin voters to reform public employee retirement plans. 69 percent support transitioning new government employees who have not been promised pension benefits from a defined-benefit guaranteed pension plan to a 401(k)-style account based on the amount they’ve saved for retirement and investment returns.

In fact, even a majority (53 percent) of current government workers favor such a transition, as well as 79 percent of private sector workers. Nevertheless, since the proposed change would not affect current public workers it’s difficult to say whether they would favor such a change for their own retirement plans. Moreover, support for transitioning to 401(k)-style accounts extends beyond partisanship, education, income, and vote choice.

Currently in Wisconsin, government employees are promised defined-benefit pension plans that promise a guaranteed amount of income in retirement.  Although these plans were once fairly popular, the private sector has largely shifted toward 401(k)-style accounts, which offer lower guaranteed benefits but also have the prospect of earning even higher income when the market does well. These accounts tend to cost the government less but also offer a lower guaranteed return for retirees.

Perhaps Wisconsinites are open to reforming government worker retirement plans because 65 percent believe public workers receive better retirement benefits than workers with similar jobs in the private sector.

Government employees will typically get guaranteed pension payments during retirement, while private sector workers will typically get payments from 401(k) -style accounts based on the amount they saved for retirement and investment returns. For new government employees who have not been promised pension benefits, would you favor or oppose shifting them from guaranteed pensions to 401(k) -style accounts?

Full poll results can be found here and cross tabs here.

ORC International conducted fieldwork for the poll, May 14th-18th 2012 of both mobile and landline phones, 708 Wisconsin adults, margin of error +/- 3.7%.  Likely Wisconsin voters (609, MOE +/-4%) include registered respondents who said they are absolutely certain to vote or very likely to vote in the June 5th recall election for governor.

Emily Ekins is the director of polling for Reason Foundation where she leads the Reason-Rupe public opinion research project, launched in 2011. Follow her on Twitter @emilyekins.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • Concerned Citizen||

    Why do they hate state workers?

  • R C Dean||

    I think the better question is "Who doesn't hate state workers, and why the hell not?"

  • Christ on a Cracker||

    It's the "transition" that's the problem. There will be temporary period where current employees receive 401k+match and eligible for the current (unfunded) defined pension plan with increasing benefits over time. Ending this "transition period" will translate into "pension and pay cut" and employees will effectively receive both for a long, long time.

    You can never go wrong underestimating the spinelessness of Congress.

  • R C Dean||

    It's the "transition" that's the problem.

    Actually, the transition is relatively easy if your pension is fully funded.

    You just calculate the present value of each participant's benefits, and fund their new 401k account with that much cash (or, just give them the cash). I know this, because we are cashing out our defined benefit plan right now.

    If your pension is underfunded, of course, you have the problem of raising the cash.

  • wareagle||

    interesting that no group in the chart above opposes the switch.

  • BarryD||

    Gov. Walker's new campaign slogan:

    "69, dudes!"

  • creech||

    The heck with transition period. What should happen is at the end of existing contracts, the pension plans are frozen with vested benefits in place and all workers - new or existing - start on 401K plans.

  • Drake||

    The real benefit is that 401k's can't be underfunded or raided. The employer obligation never goes further than the next paycheck.

    Once an employee retires, dies, or leaves work, there is no future obligation - and we all know how great the government is at managing future obligations.

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