At a meeting called primarily to change the city’s retirement system, the Winder City Council voted unanimously Tuesday night to replace the “defined benefit” plan with a “defined contribution” plan. Under a defined benefit plan, which is the traditional retirement plan for government employees, a government commits to benefit based on salary level and years of service. And the plan provider manages the pooled investments. But a defined contribution plan, which is the counterpart to the private sector’s 401k plans, limits the government’s financial exposure by having the government contribute only a percentage of an employee’s salary. The employee then manages his own investments, and his future benefit in large part will depend on how well he does that.
For the full story, see the Aug. 14 issue of the Barrow Journal.