Which brings me to my main arguments for 401 style pensions. Inevitably, these fund managers are going to have a bad year, no matter how well they are doing now, and taxpayers will foot the bill. The entire system is rigged so that the taxpayer shoulders all the risk, but the fund manager and employee beneficiaries are guaranteed their pay days. Further, as we have seen with CalPERS pensions, which invested $500 million in green energy in 2010, investments can be influenced by political considerations, again to the detriment of the taxpayers, who are on the hook for losses.
However, under a 401style plan, employees shoulder the risk, but they can adjust their individual pension risk to their personal situation, shifting more to bonds as they approach retirement, for example. Further, they can protect themselves by managing their own investments and avoiding high fee management firms. This way taxpayers are protected and employees can be as well. The counter-argument is that individual employees may not invest wisely, but I think that is changing as financial literacy is more common in the general population. Should taxpayers take all the risk just because some employees will be foolish? Further, the union could do an actual service to the employees by providing them with sources of financial advice.
Vocabulary clarification, I use the term 401 style, because government employee defined contribution plans are considered 401(a) plans, not 401(k) which are private sector plans.