PUBLIC PENSION ARTICLES

From Mario Iacone, January 7, 2010

The recent public pension articles are one sided and not totally accurate regarding PUBLIC PENSION COSTS vs PRIVATE SECTOR COSTS.

For example this excerpt from one of the articles in the Springfield News-Sun.

"The contribution to STRS is 24 percent of an employee’s salary — 10 percent
from the employee and 14 percent from the board — compared to 15.65 percent,
including Medicare, in the private sector, he said

“It’s almost double so you would think that perhaps the message for STRS and
all five Ohio public pension systems is live within your means,” Mohr said."

The comparison is distorted in two ways:

First, almost double is quite a stretch as 15.65 doubled would be 31.3
percent. That is a lot more than 24 percent.

Second, the private sector amount is only for Social Security and Medicare
contributions. It does not take into account the additional cost of private sector entities for Defined Benefit company pension plans and/or matching contributions to employee 401K plans which would raise private sector contributions well above 15.65%.

Furthermore, I am not well versed on private sector costs, but, I would speculate that private sector entities incur additional costs that are not incurred by public sector employers due to the structure of the public pension plans.