TL;DRAbstract
During the year 2002, I was a firsthand witness to a historically unprecedented pension experiment that took place in the state of Florida. Every one of that state's more than 500,000 public employees—in addition to every new employee joining the state's payroll—was given the option of converting their traditional defined benefit (DB) pension plan into an individually managed defined contribution (DC) account. The DC investment plan was similar to a corporate-style 401(k) plan, under which the employee has full control over asset allocation and investment decisions. Florida's new Public Employee Optional Retirement Program (PEORP) was the focus of intense scrutiny by local and national media. This is because it was the largest such pension conversion in the history of the United States and was viewed by many observers as a potential laboratory for Social Security reform. Although at first the take-up rate for the DC plan was low, it is now estimated that over half of the state's new em
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During the year 2002, I was a firsthand witness to a historically unprecedented pension experiment that took place in the state of Florida. Every one of that state's more than 500,000 public employees—in addition to every new employee joining the state's payroll—was given the option of converting their traditional defined benefit (DB) pension plan into an individually managed defined contribution (DC) account. The DC investment plan was similar to a corporate-style 401(k) plan, under which the employee has full control over asset allocation and investment decisions. Florida's new Public Employee Optional Retirement Program (PEORP) was the focus of intense scrutiny by local and national media. This is because it was the largest such pension conversion in the history of the United States and was viewed by many observers as a potential laboratory for Social Security reform. Although at first the take-up rate for the DC plan was low, it is now estimated that over half of the state's new em
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