DEFINED CONTRIBUTION, NOT DEFINED BENEFIT:

The Utah Pension Model: The state adopts 401(k)s for new state employees. (WSJ, 1/19/11)

Utah's constitution bars pension changes for current workers—short of an imminent financial crisis in the fund—so the legislature created a defined contribution plan for all new hires starting this year. The state contributes 10% of each worker's salary (12% for public safety workers and firefighters), a generous amount by private company standards. If they wish, new workers can choose a defined benefit plan, but the state contribution to such a plan is no longer open-ended but is legally capped at 10%.

The reform has benefits for taxpayers and public employees. Workers own their retirement account and can carry it to another job. They also benefit because politicians can no longer steal from the pension plan to pay for other government spending. As for taxpayers, the reform will eventually slash state pension liabilities in half and they no longer bear the risk of having to pay higher taxes if the stock market declines.