From John Curry, January 11, 2010
Defined-benefit public employees’ pensions save tax money
Letter to the Editor
Canton Repository, January 11, 2010
Regarding the Jan. 4 Associated Press stories “Taxpayers are being asked to cover increasing pension costs” and “Health costs burden pensions”:
Defined-benefit pensions such as the one provided via the State Teachers Retirement System are the best deal for Ohio taxpayers.
According to the National Institute on Retirement Security, defined-benefit pensions can provide the same retirement income as defined contribution plans — cash accounts such as a 401(k) — at 46 percent of the cost due to economic efficiencies from pooled investment risk, higher returns and lower fees.
It’s important for Ohioans to understand that public employees’ own contributions and investment returns fund approximately three-quarters of their lifetime retirement benefit.
As for STRS, educators themselves are being asked to take responsibility for the lion’s share of the adjustment necessary to adequately fund the pension system.
Educators will be reducing their future benefits, increasing their own contributions and working longer to pay for the needed funding. It is also important to note that public-sector retirees do not receive Social Security benefits like most Americans.
Employers are being asked for a modest increase in their contribution to share in the cost of maintaining a secure retirement plan. For this investment, employers will help to maintain the solvency of a retirement plan that is an important tool in their recruitment and retention of a high-quality workforce.
By extension, taxpayers benefit from a high-quality educational system, which is mandatory for the economic success of Ohio.
WILLIAM W. LEIBENSPERGER,
LARRY M. LEWELLEN, GAHANNA
CO-CHAIRS, HEALTHCARE & PENSION
ADVOCATES FOR STRS