Since then, some states have moved to replace their traditional defined benefit plans with defined contribution plans. Under defined benefit plans the state owns and invest funds and pays people based on a formula. So far ten states have set up defined-contribution plans or added components of them for state workers. In addition, six states have defined-contribution bills pending and 12 more are studying the idea.
Experts say that West Virginia and Michigan have the best plans.
Workers may chose to invest in any or all of five approved funds ranging from money market to growth and income funds. The employees share of the state contributions is 100 percent at the end of four years. Experts say that Washington lawmakers should closely examine what states are pioneering in the realm of pension privatization.