Buckeye Institute Releases "Hanging by a Thread" Report on Ohio Pensions and a New "Pensions 101" Website
COLUMBUS - Today, the Buckeye Institute for Public Policy Solutions released another groundbreaking report focusing on Ohio's five government defined benefit pension systems. The report, titled "Hanging By a Thread: Big Payouts and Promises Leave Ohio Pension Plans on the Brink of Collapse--or a Massive Bailout" highlights the dire shape of each of the pensions and offers several options for reform that would prevent Ohio taxpayers from being forced to foot the bill for expensive bailouts of an unsustainable system.
The study finds that the combined unfunded liabilities from all of Ohio's pension systems have reached over $66 billion in 2010. That's $5,725.82 owed by every Ohioan and 118 percent of Ohio's biennial budget. Overall, Ohio's pension funds are only 67 percent funded, leaving only 67 cents of assets to pay for every one dollar of liabilities.
Several funds have seen double digit increases in the size of their retiree pension pools over the past decade. Further, monthly pension benefits for career employees also have increased over the past decade anywhere from 12 to over 40 percent.
"The numbers do not lie, there is no way that the current structure of Ohio's pensions is sustainable," said report author Adam Schwiebert. "Should the pensions not earn their assumed 8 percent rate of return, which seems increasingly likely given current global events, taxpayers will inevitably be asked to pick up the difference."
The report concludes by arguing that minimal reform will at best earn a temporary reprieve and that real reform would entail shifting from defined benefit plans to defined contribution plans similar to the 401(k)s that are almost exclusively what is available in the private sector.
Along with the report, the Buckeye Institute is launching a dedicated website page, "Pensions 101," aimed at providing Ohioans with a compilation of information concerning Ohio's government pensions and their potential cost to taxpayers.
Included on this page is another innovative Buckeye Institute tool--the Retirement Comparison tool. This simple, but powerful, tool allows users to see the amount of cash they already need today and the amount of cash they will need at age 60 to fund the yearly retirement they'd like to have. To put these figures in perspective, data on the average yearly pension paid by the five government pensions to career retirees, as well as the total payout government retirees could receive over their retirement, is also provided.
"When taxpayers realize exactly what kind of benefits they are on the hook guaranteeing for government workers, they will be shocked," stated Buckeye Institute President, Matt Mayer. "Government workers should have solid retirements; they should not be retiring before the vast majority of private sector workers while getting benefits that far eclipse what the average private sector worker can expect."
Monday, December 05, 2011
Press Release from Buckeye Institute - note that there is a new Retirement Comparison tool featured on their website which allows you to compare your potential retirement to those of public employees. As the release says, you "will be shocked."