On Wednesday, my wife Mary (a 35 Akron Public School teacher retiree) received an interesting brochure from an organization that bills itself as being: Protect Ohio Pensions (POP5). (see face page below and to the left)
The brochure certainly caught our attention.
It appears that someone thinks that Ohio's/Stark County's public employees might be coming under legislative attack once again.
It was only a few years ago that the Republican supermajority controlled Ohio General Assembly launched a political assault on public employees collective bargaining rights. However, Ohio's voters in a referendum beat back the attempt.
Now it appears that there are those who want to weaken the sufficiency and viability of pension benefits that public employees do/will receive on their retirement.
From the general public's standpoint there are two overriding voter/taxpayer considerations/positions which ought to be front and center in any discussion of public employee retirement benefit plans:
One, require Ohio's five retirement funds to be fully funded as we go along. We should not tolerate underfunding which one day might require a major, major infusion of taxpayer subsidies which, of course, become a gigantic political issue demagogued to the point that it will be difficult to determine who to hold responsible and hold them politically accountable.
Two, pay close attention to those whose political focus is to undermine the Middle Class (which pretty much defines the public worker class of employees in America) and in doing so:
- damage America's economic and financial strength,
- dispirit the aspirational goals of everyday American to better their station in life and, of course,
- create conditions for political instability to increase
America does not want to become a nation of the very rich and the very poor with very little in between.
According to POP5, the conversion effort is a shared goal of major corporations, the stock broker industry and conservative think tank/lobbing groups and certain politicians.
There seem to be two primary motivations for the pressure to make public employee retirement plans defined contribution plans.
Note: Here is a LINK to see a direct comparison of defined benefit and defined contribution plans.
First, to save corporations money (e.g. no legal obligation whatsoever that an employer contribute to a defined contribution plan) on the amount they contribute to a defined contribution plan.
No wonder private sector defined benefit plans are down from about 60% in the early 1980s to about 4% now. The complete opposite is the case in the public sector. Some 84% of state and local governments participate in defined benefit plans.
Second, to shift the burden of who loses if an investment or multiple investments do not pan out from private sector companies to their employees.
In the private sector, a failed investment under a defined benefit plan must be made up to the employee under out of corporate/company/partnership revenues.
In the public sector, losses to the extent that a public employee plan cannot itself meet its pay out obligations would have to be made up out of revenues from taxpaying public.
That nearly all defined benefits plans are in the public sector, puts competitive pressure on the private sector in retaining employees.
The solution?
Join forces with those who have other reasons (e.g. economic philosophy, et cetera) for dismantling defined benefit plans.
POP5 says that is exactly what has been happening particularly over the past ten years.
POP5 and Governor Kasich (as of January, 2016) says that Ohio five public pension plans are among some the best funded and most secure in the nation.
But there are those who disagree.
For example:
- Mercatus Center
- American Legislative Exchange Council
- State Rep. Christina Hagan (Republican, Ohio House District #50 [Stark County] is heavily involved with and supportive of ALEC. One has wonder if she embraces ALEC's opposition to defined benefit plans, no?
- John Damschroder (former Gov. George Vionovich aide)
One is the Ohio Retirement Study Council and one of Stark County's very own; namely, state Representative Kirk Schuring (Republican, Ohio House District #48 [mostly Jackson Township) is a key figure on the Ohio General Assembly connected body.
That POP5 has come into existence suggests that there are those who are more than a tad nervous that the ORSC (including, apparently, Stark's Kirk Schuring) is sufficient to ensure Ohio's public employee pension plans are secure in their current defined benefit plan status.
Another check on the viability of Ohio's five public pension funds is the fact that each of them has an assciation of beneficiaries exercising oversight of their respective plans.
However, their effort is not, according to POP5, primarily to ensure the preservation of defined benefit plans but to make sure that the plans are properly managed.
POP5 in its latest newsletter is claiming over 14,000 members in less than a year of operation.
As of now, there are about 1.3 million beneficiaries combined of Ohio's plans.
A barometer of how secure/insecure the beneficiaries of Ohio's five defined benefit plans are is likely to be measured by POP5's membership growth.
You can be sure that the politicians will be watching very closely indeed!
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