Thank you, Bill Winegarner, you explained "being unfunded" quite well!
The current historic declines in the stock markets and increases in health-care costs have caused the current funding shortfalls, not the structure of how pensions are funded in Ohio. For those not up on their pension jargon, being unfunded, or not meeting one’s funding requirements, simply means not having enough cash in the bank today to cover all of your outstanding future obligations. To explain it on a personal basis, if you buy a home for $100,000, payable over 30 years, your future debt will be approximately $300,000. If you don’t have $300,000 in the bank today, you are considered unfunded.
Ohio pension systems are not broke. They are not in economic crisis. They are attempting to get legislators to make some specific and measured pension-plan adjustments to ensure that they adjust to current actuarial trends. Throughout the article, Mayer alluded to taxpayer bailout. Once taxpayers pay their employees, they have absolutely no further obligation to bail out anyone.
What he omitted is the fact that investment returns on those contributions count for the other 79 percent — not one dime of which comes from taxpayer money. What information in his paragraph on this topic could logically lead one to his conclusion: “As a result, three pension systems don’t meet their funding requirements”?
The current historic declines in the stock markets and increases in health-care costs have caused the current funding shortfalls, not the structure of how pensions are funded in Ohio. For those not up on their pension jargon, being unfunded, or not meeting one’s funding requirements, simply means not having enough cash in the bank today to cover all of your outstanding future obligations. To explain it on a personal basis, if you buy a home for $100,000, payable over 30 years, your future debt will be approximately $300,000. If you don’t have $300,000 in the bank today, you are considered unfunded.
Ohio pension systems are not broke. They are not in economic crisis. They are attempting to get legislators to make some specific and measured pension-plan adjustments to ensure that they adjust to current actuarial trends. Throughout the article, Mayer alluded to taxpayer bailout. Once taxpayers pay their employees, they have absolutely no further obligation to bail out anyone.
Ohio’s pension plans are private enterprises under the oversight of the legislature. The money in the pension systems belongs to the contributors, not the taxpayers; therefore, taxpayers already have all the security they need.It is almost laughable to extol the advantages of defined-contribution plans over defined-benefit plans. As to economy of cost and return on investment, there is a truckload of third-party data illustrating the advantages and cost savings of defined-benefit plans, compared with a teaspoon of speculative data on the 401(k) plans.
So where is the Ponzi scheme? It is in Mayer’s inflammatory words and qualifiers.
What we do know is that for the past 75 years, Ohio’s defined-benefit pension plans have provided Ohio’s retired public employees with a good pension and benefits at no cost to the taxpayers beyond the employer’s initial contribution.
Mayer’s column falls in line with the nationwide effort to eliminate all defined-benefit pension systems. This process was first acknowledged in the May 14, 2001, issue of The Nation newsletter, in which contributing editor Robert Dreyfuss wrote the following after listening to a speech by Grover Norquist, founder and president of Americans for Tax Reform: “There’s the matter of all those state and local pension plans. State by state, he’s planning to launch a campaign to dismantle and privatize state pension plans and their trillions of dollars of public funds held as investments for retirees.
“Just 115 people control $1 trillion in these funds,” he says. “We want to take that power and destroy it.”
There are two primary business sectors that profit from the elimination of defined-benefit pension plans: corporations that need the capital investment but don’t want investors who effectively have the ability to vote their shares; and stock brokerages, which will reap billions of dollars in fees managing hundreds of thousands of individual portfolios.
There are also two sectors that would suffer from the elimination of defined-benefit pension plans: Taxpayers would have to increase their cost to fund and manage the retirement programs, and they would have to establish and manage a separate fund to care for those on disability.
State employees would suffer because their ability to retire would be solely dependent on the economy and their financial adviser’s skills, and they would lose their health-care support, which, by the way, is made available by returns on investments, and costs the taxpayers nothing.
So there is the choice our legislators have: to continue with a program that has proved itself over the past 75 years, or to get suckered into big businesses’ investment scam.
BILL WINEGARNER
Administrator
Public Employee Retirees Inc. Westerville
posted by Kathie Bracy at 11:00 PM
<< Home