When a former Vice Chair of the Federal Reserve talks about you or your program, you’ve either done something very right, or something VERY wrong.

In this case, Orange County made Roger Ferguson’s radar for the right reasons.

Last year, Orange County proposed a new, hybrid pension plan that combines the traditional defined benefit plan with an individual account, much like a 401K or IRA. This allows an employee to contribute to a transferrable account. Should they leave the county, they could move their account with them.  

The plan, which has the backing of the major unions in the county, would allow employees the choice to continue in a 2.7 at 55 plan, or opt for a lower defined benefits package coupled with a matching 401K from the city.

Should an employee opt for the new plan, they’d take home more pay, while receiving 2% matching funds from the County to their 401K.

From the Orange County Register:

Roger Ferguson, former vice chair of the Federal Reserve, lauded the County of Orange’s new hybrid pension system in a Wall Street Journal commentary over the weekend, holding it up as a shining example to other local and state governments how to begin navigating their way out of the public pension disaster.

“Orange County’s approach, which has the support of the county’s largest public employee union, the Orange County Employees Association, deserves the attention of public employers and workers across the countrybecause it shows how to provide retirement security in a financially sustainable way,” Ferguson wrote.”Orange County’s approach increases cost certainty for the county while providing a meaningful path to retirement security for workers,” he wrote. “It also stems the tide of unfunded public liabilities without wholly shifting the retirement funding risk to workers.”

Read the full article here.