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BOZEMAN - A retirement plan that allows public employees to choose how their money is invested has attracted only a fraction of the eligible employees since being unveiled nearly a year ago.

Since the "defined contribution" plan went into effect, only 600 of the 30,000 eligible public employees have signed up, officials say.

"We had expected a lot more, but when this plan was developed it was before the market downturn," said Mike O'Connor, executive director of the Montana Public Employee Retirement Association.

The new retirement option allows employees to direct their retirement

money into a variety of funds managed by Great West Life Insurance Co. of Denver, Colo. The plan is similar to 401(k) plans many private employers offer.

O'Connor said it cost about $1.5 million to create the plan, paid for with a loan from the Montana Board of Investments. But that money is to be repaid beginning in August, O'Connor said, through monthly fees charged to plan participants. He said he is seeking to have repayment deferred so the startup costs won't be borne by relatively few people.

Current employees have only until June 30 to elect the new plan or stay with the old "defined benefit" plan, under which they are guaranteed a retirement income based on years of service and earnings.

In 1999, when the Legislature authorized the new plan, the country was in the midst of one of the greatest stock market booms in history. Many people figured they could do better investing their own retirement funds.

But the bubble burst in 2000.

Still, O'Connor said he expects the number of employees taking advantage of the new plan will grow.

"What we anticipate is a lot the new hires will generally be younger and will go into the defined contribution plan," O'Connor said.

Also, many procrastinators may make the switch in the next six weeks, he said.

Montana's system covers some 550 different government agencies including counties, incorporated towns and school district classified employees.

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