Last fiscal year, Michigan paid $370 million into the pre-1997 pension fund and $96 million into 401(k) plans as of Sept. 30, 2010, according to the Office of Retirement Services.
The average monthly benefit to retirees in the old plan was $1,497 as of Sept. 30, 2009. Thirty percent -- those with 30 years' service -- received an average $2,234.
Teachers have a separate pension, and since 2010 new ones have been placed in a hybrid plan that combines features of traditional program and a 401(k).
Michigan's cost-cutting retirement programs don't get good reviews from all its members.
Tapping the Fund
Amanda Sweet, 35, said her 401(k) isn't helping her save much. She's worked 11 years as a disability examiner for the Department of Human Services in Traverse City.
With five children, she's had to often tap her account for expenses, even with a combined $80,000 annual income with her husband, a charter-flight pilot.
"The 401(k) plan is really for people who can save their money, put as much into a savings as they can and never withdraw it, who don't have kids," Sweet said.
Some states give employees the option of either a traditional pension or a defined-contribution plan. And Michigan, Utah, Georgia, Indiana and Oregon have plans that combine pensions with defined contribution deals.
New York Comptroller Thomas DiNapoli is among those who say 401(k)s are no substitute for the security of traditional government pensions. They are, he said, "a bad idea."