News
Updated August 5, 2010
Member only News updated on 8-05-10 click on the Minutes link on the home Page.
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___Vital details omitted about pension fund
Sunday, May 23, 2010 2:58 AM
The May 13 Dispatch article, “Pensions held risky assets for too long,” reported that Ohio’s public pension funds were slow to sell off certain investments.
I would like to ask why facts supplied by the Ohio Police & Fire Pension Fund were not included in this report, and why important additional details have not yet been reported.
These include:
• OP&F had divested in all of its Lehman Brothers common-stock holdings by the end of September 2008, nearly all of it prior to the firm’s collapse.
• By August 2007, OP&F was no longer investing in the specific Lehman assets the state treasurer’s office called “toxic” (this is the same action taken by the state treasurer, only months earlier).
• OP&F had actual losses from exposure to Lehman holdings of $720,000, not the $11 million reported in Dispatch accounts.
Much of the article was already written before contacting OP&F or the state’s other retirement systems.
The story remained unchanged even after we provided significant information.
We have responded promptly to many requests by The Dispatch in recent months. It is frustrating that when important details are presented, the newspaper chooses not to include them.
Studies regularly show that the investment decisions made at OP&F have proved over time to be both prudent and successful as we provide retirement benefits to Ohio’s public-safety officers.
We don’t expect praise for doing our job. However, we do expect The Dispatch to responsibly report the facts.
WILLIAM J. ESTABROOK
Executive director
Ohio Police
& Fire Pension Fund
Columbus
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Many States Tackle Pension Costs
Even
as Rep. Todd Book (D-McDermott) is looking to introducing comprehensive
"pension fix" legislation to shore up the
state's
five pension funds after the economic collapse (see The Hannah Report,
3/10/10), Stateline.org reports that
nationally
this is turning out to be a pivotal year in public pension policy, as states
move to bring down escalating
retirement
costs that threaten their governments' stability.
According
to Book, his legislation will be largely consistent with the recommendations
made by the five pension systems in
September
2009. Those recommendations included later retirement ages, lower
cost-of-living adjustments, higher
contributions
for workers and the governments that employ them, and less money for retiree
health care benefits.
However,
according to the Stateline.org article, Ohio's pension systems fall into the
84.1 percent to 91.5 percent tier of
being
fully funded, along with Pennsylvania, Iowa, Nebraska, North Dakota, Vermont,
Arkansas, Texas, Utah and California.
Only
four states are fully funded - Florida, New York, Washington and Wisconsin -
with North Carolina, Tennessee,
Delaware,
Georgia, South Dakota and Idaho falling into the 91.6 percent or more funded
tier.
Stateline.org
reports that since the Wall Street meltdown in 2008, nearly every state has
taken some steps to curb rising
pension
costs. But many of those steps have been minor ones. This year, however, a
dozen states have enacted reforms
more
substantial than those in the past: Illinois raised its retirement age to 67
from 62 for new hires, the highest retirement
age
in the country. Wyoming started asking current state workers to contribute to
their retirement; up to now, the state
paid
the cost. Utah closed its defined benefit plan to new workers, one of a handful
of states to move away from traditional
pension
systems that have been in place for decades.
All
this has happened against the backdrop of the pension crisis in Europe, and of
global fears that unsustainably generous
pension
commitments in American states could cause the same disastrous consequences as
they have already caused in
Greece.
The events in Europe brought into focus growing worries about public pension
costs as large numbers of baby
boom
workers near retirement. It also magnified a change in the tone and visibility
of the public pension issue that had
already
been gathering momentum.
Several
governors have elevated pension reform to the same level of urgency as
Medicaid, corrections and education
spending.
New Jersey Gov. Chris Christie said the public retirement system is
"bankrupting our state" as he pushed through
a
package of benefit limits. Unions representing New Jersey police, firefighters
and teachers filed lawsuits challenging
Christie's
changes, which affect newly hired employees. Hundreds of current and retired
Utah employees rallied at the state
capitol
in a losing effort to persuade lawmakers to reject a proposal to institute a
non-guaranteed retirement plan similar to
a
401(k) for new hires. New Hampshire's local governments and schools mounted a
court challenge to the state
Legislature's
vote to effectively increase pension contributions from municipalities.
Stateline.org
notes that the tone is coarser this year because states are facing a third year
of cutting services and programs
and
are raising taxes to cover budget shortfalls that have topped $230 billion since
2008. Elected officials are targeting
state
retirement plans because contributions and investment gains are not keeping up
with the cost of benefits. A report
released
in February by the Pew Center on the States (Stateline's parent organization)
said states are $1 trillion short of the
money
they need to pay their public pension and retiree health care benefits.
The Disappearing Guarantee
The
long-term sustainability of Utah's public pension plan was the issue that led
state lawmakers to push through a major
overhaul.
Current workers will remain in the defined (guaranteed) benefit plan, in which
retirees receive a monthly pension
based
on age and service for life. But new workers will choose between a
non-guaranteed 401(k) style defined contribution
plan
or a hybrid of the two. Neither option is as generous as the current plan, and
both are riskier because employees
choose
their investments, which can fall in value. But states are moving in this
direction because of the savings; Utah would
have
to pay $400 million a year to fully fund its current retirement system.
"The
number one goal ... is to ensure the state can meet 100 percent of the pension
obligations it has made to current
employees,"
state Sen. Dan Liljenquist, who sponsored the Utah legislation, said after the
Senate vote. "There is only one
thing
that could bankrupt this state, and that is an unfunded liability that comes
from our pension program."
Michigan
and Alaska are the only states that have moved to a defined contribution plan
for state workers; several others
are
offering hybrid plans similar to Utah's. A coalition of Alaska lawmakers,
retirees and labor and education groups tried to
repeal
the revisions to the pension plan this year, saying the savings were not
clearly demonstrated while the retirement
benefits
were less generous. Supporters said the 401(k) type plan is needed to address a
projected shortfall nearing $10
billion
in retirement system funding.
Usually
state lawmakers aim reforms at future employees because pension obligations
made to current employees must be
honored
under state law. But in this year of aggressive approaches, some states are
going after current employees -
keeping
their promises to pay benefits but asking workers to contribute more money.
Colorado,
Iowa, Minnesota, Mississippi, Vermont and Wyoming hiked contributions from some
or all current employees,
according
to a tally by the National Conference of State Legislatures. Gov. Tim Pawlenty
signed the Minnesota legislation on
May
15. It lowered annual cost of living increases and raised vesting requirements.
Colorado
made large-scale changes in its public retirement system after years of failing
to meet its required contributions.
The
Legislature, with Gov. Bill Ritter's approval, enacted bipartisan legislation
shoring up the pension fund for nearly
438,000
state and local employees and retirees.
Instead
of paying Social Security, most Colorado state and local employees and teachers
contribute to pension plans
administered
by the state Public Employee Retirement Association (PERA). Local police and
firefighters and county
employees
in 54 of 64 counties are covered by a separate statewide pension system.
The
latter system is funded at a level higher than 100 percent. The reform
legislation this year was aimed at PERA, which
had
an unfunded liability of $30 billion and was projecte d to be broke within 20
years if no action were taken. Investment
losses
experienced during the recession contributed to the funding gap, but a 1999
decision by the Legislature and the
PERA
board to increase benefits and lower contributions was the main cause. The
board at that time was dominated by
public
employees who stood to gain as beneficiaries of the benefit improvements.
The
2010 bill approved by Colorado lawmakers and signed by Ritter increased
employer and employee contributions, raised
the
minimum retirement age for new employees from 55 to 60, capped cost of living
adjustments for current and future
retirees
at 2 percent instead of 3.5 percent, and froze them for a year. A group of
retirees has filed a lawsuit challenging
the
cost-of-living reduction, saying it violates U.S. and state constitutional
protections against reducing benefits to existing
pension
plans.
When
he signed the legislation, Ritter couched the rationale for the changes in
purely fiscal terms. "We are all confronting
the
harsh economic realities of the worst recession since the Great
Depression," he said. "This is a fiscally responsible bill,
and
it represents another difficult but necessary decision that will require shared
sacrifice and shared solutions from public
employers
and employees alike without imposing an unfair or undue burden on either
group."
New Approaches
Neighboring
Vermont and New Hampshire came up with novel approaches to address their
pension gaps.
Vermont
preserved its defined benefit plan for teachers, thus avoiding a fight with its
largest public employee union. But
teachers
will be required to work additional years and make higher contributions to
their pension fund in exchange for a
larger
pension check on retirement. The state will initially save $15 million per
year, or about 10 percent of Vermont's
current
budget shortfall.
New
Hampshire set an example for states struggling with how to pay the bill for
retiree health care, which accounts for
more
than half of the $1 trillion pension-related gap that states face. Under the
New Hampshire plan, government workers
will
have the chance to make tax-free contributions from their paychecks to pooled
investment accounts managed by their
unions.
Those accounts will cover retiree health care costs and will save state and
local governments $60 million per year in
health
care subsidies currently paid to retirees.
Despite
the increasing mood of pension realism in state capitols, more than a few
states still face enormous challenges that
they
are struggling to deal with. Illinois is considering borrowing $4 billion to
make its public pension payment. Michigan's
Legislature
approved a plan last week to lure 30,000 school employees into retirement.
"This
is a long-term problem that will require a long-term solution," says Susan
Urahn, managing director of the Pew Center
on
the States. "States won't be able to invest their way out their
shortfalls. They need to responsibly make the necessary
contributions,
in good times and bad, and look for ways to better manage costs."
Be
it enacted by the Senate and House of Representatives of the
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Need help finding the right gift for your future firefighter? Our gift shop can provide you and your child’s guests with plastic fire helmets, firefighting toys, books, puzzles and inexpensive items for party grab-bags.
See the back for details
Captain’s Party
(Basic Party) $100.00 + $5.00 each child
Museum member $ 75.00
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-10% discount in the gift shop
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and fire prevention hand-outs; all provided at the end of the party
You may supply place settings, table decorations and balloons as desired for tables. No decorations are permitted on walls. Additional tables for gifts, cake or beverages will be supplied. The beginning tour allows parents time to set up the cake and beverages. After the cake and opening of gifts the children will enter the Future Firefighters Training Area for play time on the fire pole and fire trucks. During this play time the adults can conveniently clean up the eating area prior to the end of the party time.
Chief’s Party
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The Deluxe Package includes everything in the Captain’s Basic Party PLUS!
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A $50.00 non-refundable deposit is required at the time of reservation.
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