Beacon Journal: Pension-fund perspective
Pension-fund perspective
Akron Beacon Journal, January 3, 2010
Ohio is among eight states whose public employees do not pay into Social Security and therefore do not qualify for Social Security retirement benefits — unless they also had a job in the private sector.
Ohio's state and local government retirees receive an average pension benefit of $25,736 a year, or about 7 percent more than the $24,052 average for government retirees nationwide.
Nationally, private-sector pensions and annuities average $13,326, but unlike public employees, those retirees also receive Social Security benefits, which average $12,699 a year. State breakdowns are not available.
At the end of fiscal year 2008, state pensions had lost $36.3 million, or 19 percent of their value, from the previous year. The decline did not reflect the entire period of the market crash.
Ohio's pension funds also provide health care to retirees, although that is not required by law. Many retire in their 50s before they are eligible for Medicare. Health costs were creating financial problems for Ohio's funds before the stock market crash of 2008. From 2007-08, those costs increased 7 percent, or $141 million.
Public and private pension funds alike face funding problems because of the market crash. New York and California have imposed higher contribution rates by local governments and workers that are similar to those proposed in Ohio.
Here is a description of Ohio's five public pension funds for the fiscal year 2008 and proposals to solve their funding shortfalls.
State Teachers Retirement System
Covers: Teachers, administrators and other certificated staff.
Assets: $70.8 billion.
Retirement benefits paid: $4.9 billion.
Health expenses: $540 million.
Contributing members: 179,755.
Beneficiaries: 126,506.
Public Employees Retirement System
Covers: State and local employees, including elected officials, administrative staff, highway, sanitary and trash workers, and sheriff departments.
Assets: $59.2 billion.
Retirement benefits paid: $4.8 billion.
Health expenses: $1.4 billion.
Contributing members: 374,002.
Beneficiaries: 166,516.
School Employees Retirement System
Covers: Nonteaching employees, such as secretaries, bus drivers, maintenance staff.
Assets: $11.2 billion.
Retirement benefits paid: $905 million.
Health expenses: $226.4 million.
Contributing members: 124,370.
Beneficiaries: 64,818.
Ohio Police & Fire Pension Fund
Covers: Local fire departments and some police.
Assets: $8.2 billion.
Retirement benefits paid: $1 billion.
Health expenses: $153.4 million.
Contributing members: 28,927.
Beneficiaries: 25,317.
Highway Patrol Retirement System
Covers: State Highway Patrol.
Assets: $571.4 million.
Retirement benefits paid: $53.3 million.
Health expenses: $8.5 million.
Contributing members: 1,544.
Beneficiaries: 1,376.
Highlights of changes under consideration:
• Payroll contributions: Employer and employee to increase rate of contributions for STRS and OP&F. For HPRS, employer contribution went into effect in July; employee increase is proposed.
• Eligibility: Increase years of service for PERS from 30 to 32 and STRS from 30 to 35; increase age eligibility to 57 from 55 for SERS and to 52 from 48 for new hires in OP&F.
• Benefit calculation: Multiplier is reduced for PERS and STRS; average pay for final years to be done over five rather than last three years for PERS, STRS, OP&F and HPRS.
• COLA: Cost-of-living increase no longer automatic 3 percent for PERS, STRS, HPRS. New formula varies by fund, with largest impact on future retirees.
• Health care: Benefit reductions for PERS, SERS, OP&F and HPRS.
Sources: Congressional Research Service, Ohio Retirement Study Council, Columbus Dispatch, Beacon Journal research.
From John Curry, January 3, 2010
posted by Kathie Bracy at 8:26 PM
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