The current system takes rich money managers, who ordinarily might be a voice for lower taxes and restrained government spending, and makes them beholden, for business, on public pension boards that sometimes include union officials. Instead of arguing for less generous pensions, or for personal accounts that employees would manage individually, the money managers now have incentives to argue for more generous pensions and to avoid upsetting the system that is enriching them. . . .
What should be done? Shut these pension funds down and turn the money over to the individual employees and retirees. Let the government workers open retirement accounts at Charles Schwab, Vanguard, Fidelity, and so on, just like much of the rest of America does. Let the money managers compete for individual business by advertising on the basis of price, service, or performance, rather than by paying off government officials with shoeboxes or paper bags full of cash.
Link via Glenn Reynolds.