Detroit Bankruptcy Reveals 401(k)’s Virtues
When Things Go Bad in Local Government, Having Retirement in an Account You Own Has Advantages


OAKLAND—Detroit’s Chapter 9 bankruptcy case is scheduled for trial beginning this Thursday, August 21, when U.S. Bankruptcy Court Judge Steven Rhodes will decide if the city’s restructuring plan is fair, legal and feasible.

Regardless of the outcome, precedents already have been set in the case that should have public employees elsewhere questioning the wisdom—and soundness—of their traditional “defined-benefit” pension plans.

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Lawrence J. McQuillan is a Senior Fellow and Director of the Center on Entrepreneurial Innovation at the Independent Institute.