Pensions for public employees are often the target of news media and conservatives who claim - incorrectly - that such retirement plans are costly and fail to serve the public good. On the contrary, defined benefit public pensions like OPERS, SERS and STRS to which OFT members belong, provide greater retirement security to workers at a lower cost to employers.
In the wake of such “pension envy” tirades, remember that
The cost of the pension systems to employers has remained relatively unchanged for decades. The employer cost for STRS members, for example, is the same that it was in 1984 when many of you who are now eyeing retirement were just starting your careers. For every dollar paid to a retired public employee, taxpayers contributed about a quarter. Two-thirds of the benefits come from investment returns, the rest comes from employee contributions.
So what do retirees do with their pension dollars? Expenditures made by state and local government retirees provide a steady economic stimulus to
According to a study by the National Institute on Retirement Security, every dollar paid to a retiree in benefits, returns $1.33 to the
A defined benefit pension provides benefits more efficiently, better fuels our economy and provides true retirement security. It is more fiscally responsible. And let’s be clear, defined contribution 401(k) plans - which are vulnerable in the stock market - were always intended to merely supplement a pension, not replace it. They were not designed to provide a full retirement and relying on them to do so wreaks havoc with any attempt to allow for a secure retirement and a natural progression of retiring older workers to make room for young people entering the job market.
The switch to defined contribution pensions in the private sector was never about ensuring retirement security - it was about shifting risk and costs to employees and off the books of corporations. This is why many Americans who have only defined contribution 401(k) type plans are neither ready for retirement nor able to retire. Americans who have only a defined contribution plan are at huge risk of outliving their assets. Adding public workers to this mix is the wrong answer for everyone including taxpayers.