December 6, 2005

Benefit cuts hit public workers

Government employees in Michigan have been booted off the gravy train when it comes to benefits as hard-strapped counties and municipalities take a cue from the private sector and cut back on pensions and health benefits. For decades, top-notch benefits have been a selling point for municipal, county and state government jobs, now it may grow more difficult to attract first-rate employees, as benefits have long compensated for lower salaries in government. But as more and more companies realize the huge pension costs they're facing down the road, defined benefit plans could become a thing of the past, according to Sudip Datta, the T. Norris Hitchman endowed chair of finance, at Wayne State University 's Business School . "Defined benefit is going the way of dinosaurs," Datta said. "Defined contribution plans are less risky endeavor because the company is not making any promises."

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