When you think about public pensions, do you think about Guam? If the answer is no… well, I’m assuming everyone’s answer was no, so you’re not alone. The U.S. Territory of Guam does have something valuable to say about public pensions though because its government is considering moving away from a defined contribution system and adopting a hybrid pension system.

According to the Pacific Daily News, Guamanian lawmakers are considering a proposal to move government employees to “a hybrid plan that guarantees retirees an annuity payment, supplemented by the cash from their retirement investments.” At one time, Guam offered its public employees a defined benefit pension, but it abandoned this system in favor of a defined contribution, 401(k)-style plan in 1995. Guam’s public workers do not participate in Social Security and the combination of no Social Security benefits and a 401(k)-style retirement plan has led to most Guamanian public employees only having $40,000 in total savings at retirement. This is nowhere near the amount of replacement income recommended by retirement experts.

Guam has learned the same lesson as states like Alaska, Michigan, and West Virginia: defined contribution, 401(k)-style plans fail to offer an adequate retirement to working families. West Virginia reopened its defined benefit plan for teachers in response to the failure of the defined contribution system and Alaska, like Guam, is considering a proposal to move back to a pension system. Let’s hope that Guam’s legislative leaders make the right decision and choose to provide a safe and secure retirement for their public employees.