Governor Terry Branstad does not expect to approve changes in the pension systems for government workers in Iowa before he resigns and heads to China to serve as U.S. Ambassador.
“It’s not something that could be done that quickly,” says Branstad, who has been nominated by President Trump to serve as Ambassador to China. “…I think it would make sense to have a long-range study that would look at moving a defined contribution as opposed to a defined benefit system as a lot of companies have already done.”
The phrase “defined benefit” is another way to say a pension. The 401(k) programs in the private sector use the “defined contributions” of workers who save for their own retirement, sometimes with a matching contribution from their employer. Branstad has long been an advocate of changing IPERS, the state pension system for 335-thousand current, former and retired workers, for new workers entering government employment are no longer promised a pension, but have 401(k) style accounts.
“If you’re going to do that, it’s a long-term committment and I think you need to look at maybe even a hybrid system over the period of adjustment,” Branstad says. “A number of states and communities are looking at that.”
Branstad made his comments today during his weekly news conference. This weekend, the governor’s former budget director who now heads a taxpayers group said she hopes legislators are “teeing up a look” at pension reform.