A U.S. Senate report questioning the liabilities of defined benefit pension plans doesn’t match up with the 76-year experience of the Ohio Public Employees Retirement System.
“State and Local Government Defined Benefit Pension Plans: The Pension Debt Crisis that Threatens America,” points out the effect that pension liabilities could have on “our nation’s debt crisis.” The report was issued by Sen. Orrin Hatch (R-Utah), ranking member of the U.S. Senate Committee on Finance.
It describes pension liabilities and risk among state and local public pension plans across the country and concludes that “a new public pension plan structure is necessary.” The report ultimately recommends mandatory 401(k) plans for public employees and the reluctance of public plan sponsors to require them.
That statement suggests 401(k) plans are an appropriate retirement vehicle on their own, but it fails to mention that 401(k) plans were never meant to be a retiree’s sole retirement source. Nor does it address the lower cost and superior retirement security provided by defined benefit plans, as numerous studies have shown.
The report provides an overview of public pension changes enacted on the state level in the past two years as well as a brief history of failed federal efforts to oversee state and local plans. It lists “retirement security” as one of the requirements of a state pension plan.
OPERS also believes that retirement security is important for every Ohioan. However, study upon study has proven that defined benefit plans provide superior retirement security, at lower administrative costs, than defined contribution plans alone.
We believe that offering public employees a choice of a defined benefit plan, a defined contribution plan, and a hybrid of the two is an appropriate course of action. Our members are not covered by Social Security, and their OPERS pension may be the only retirement benefit they receive.
We agree with the senator that pension plan changes are essential to remaining strong and secure. OPERS continues to work with the Ohio legislature on a final passage of the pension plan legislation that includes the changes our Board of Trustees approved in 2009.
Is OPERS going to write a response to that report where everyone can see it or just on this site, where those who need to know won’t see it? Please fire back at those trying to take our retirement from us! As always thank-you OPERS.
When these politicians make these claims, we really need to follow the money to see who is bankrolling them.
IS ORRIN HATCH CHANGING HIS PENSION TO 401 K .
SS is in trouble so rather than fix their problem, they want to take ours