Bill Brady on Social Security

Last Updated : Jul 27, 2010

Summary

Bill Brady supports enrolling state employees into a 401(k) style plan instead of a pension. He states that the social security tax would still be paid by the state. This places public employees on the social security system and on their own retirement plan, instead of a pension.

 

Pension Savings Plan

State Senator Brady has proposed putting new state employes on a 401(k) plan instead of the traditional state pension plan. The state would continue to make contributions to the social security plan.

State Sen. Bill Brady (R-Bloomington) proposes putting new state employees in a 401(k)-type plan, instead of a traditional pension plan. He says the state would contribute 6.2 percent of salaries to Social Security, but would not make an employer contribution to the 401(k).

Many private-sector employers make a contribution of 3-6 percent of their workers' wages to their 401(k) plans, but Brady says the state has generous pension benefits because politicians have used them as a way to buy the affections of state workers at elections, and he believes an employer contribution from the state would be as tempting.

Brady estimates current pension costs at 25 percent of state workers' pay, but that includes the debts resulting for the state not making payments into pension funds over the decades, and having to catch up and pay interest. The normal costs are about 9 percent. The Social Security contribution, which the state does not pay now but would have to pay under the Brady scenario, is 6.2 percent.

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