00:00:00 | >> SUPPORT FOR THE STATEWIDE |
00:00:07 | BROADCAST OF THE STATE OF OHIO COMES FROM THE LAW OFFICES OF |
00:00:09 | PORTER, WRIGHT, MORRIS LLP. HELPING PEOPLE SOLVE COMPLEX |
00:00:14 | LEGAL PROBLEMS ARE AROUND THE WORLD. |
00:00:16 | AND FROM THE OHIO EDUCATION ASSOCIATION, REPRESENTING |
00:00:23 | 131,000 TEACHERS, SUPPORT PROFESSIONALS, AND FACULTY TO |
00:00:27 | ARE WORKING FOR GREAT PUBLIC SCHOOLS FOR EVERY CHILD. |
00:00:29 | OHEA.ORG. ADDITIONAL SUPPORT FOR THE STATE |
00:00:33 | OF OHIO IS MADE POSSIBLE BY E- TECH OHIO. |
00:00:35 | >> LAWMAKERS MAKE DECISIONS ON EXOTIC ANIMALS AND EXTRACTING |
00:00:45 | WATER, BUT BRING A VOTE ON CHANGING VOTING LAWS TO A |
00:00:47 | SUDDEN STOP. AND RETIREMENT , IT'S A DREAM, |
00:00:49 | A GOAL, AND A WORRY FOR WORKERS ALL ACROSS THE COUNTRY. |
00:00:51 | BUT THERE ARE TWO VERY DIFFERENT SYSTEMS THAT EMPLOYEES |
00:00:54 | WILL USE TO FUND THEIR RETIREMENTS, AND SOME VERY |
00:00:56 | STRONG OPINIONS ABOUT WHICH ONE IS BETTER. |
00:00:58 | AND SINCE ONE OF THEM CAN INVOLVE STATE MONEY, THERE'S A |
00:01:01 | LOT OF TO TALK ABOUT. THAT'S WHAT WE'LL DO, THIS WEEK |
00:01:03 | IN "THE STATE OF OHIO". >> IT WAS A BUSY WEEK AT THE |
00:01:10 | STATEHOUSE. THE SENATE PASSED A BILL THAT |
00:01:12 | TO BAN RESIDENTS FROM ACQUIRING NEW EXOTIC ANIMALS AND REGULATE |
00:01:17 | THE CURRENT OWNERS OF TIGERS, LIONS AND OTHER CREATURES. |
00:01:21 | ZOOS, CIRCUSES AND SOME ACCREDITED SANCTUARIES WOULD BE |
00:01:26 | EXEMPT, AND THOSE EXCEPTIONS HAVE INFURIATED OPPONENTS, |
00:01:30 | WHO'VE PACKED HEARINGS ON THE BILL. |
00:01:32 | THE MEASURE NOW MOVES TO THE HOUSE. |
00:01:34 | THE HOUSE OKAYED SEVERAL BILLS RELATED TO GOV. JOHN KASICH'S |
00:01:37 | BIG BUDGET UPDATE, THE MID- BIENNIUM REVIEW OR MBR. |
00:01:40 | GOP LAWMAKERS NEVER PUT BACK IN A TAX ON OIL AND NATURAL GAS |
00:01:45 | DRILLERS THAT THE GOVERNOR PROPOSED TO FUND A STATE INCOME |
00:01:48 | TAX CUT. AND THEY TOOK OUT A PROVISION |
00:01:52 | THEY HAD ADDED TO CUT FUNDS TO PLANNED PARENTHOOD. |
00:01:54 | BUT THEY REJECTED THE DEMOCRAT- BACKED PLAN TO SET UP A $400 |
00:01:57 | MILLION FUND FOR SCHOOL DISTRICTS AND COMMUNITIES THAT |
00:02:01 | GOT BIG CUTS IN LAST YEAR'S BUDGET. |
00:02:04 | THE HOUSE ALSO APPROVED A DEAL STRUCK BETWEEN GOV. JOHN KASICH |
00:02:08 | AND REP. LYNN WACHTMANN OVER THE GREAT LAKES COMPACT, THE |
00:02:11 | AGREEMENT BETWEEN EIGHT STATES AND TWO CANADIAN PROVINCES |
00:02:15 | DESIGNED TO SAFEGUARD THE LAKES FROM MASSIVE WITHDRAWALS OF |
00:02:18 | THEIR FRESH WATER. ENVIRONMENTALISTS SAY THE DEAL |
00:02:21 | IS BETTER THAN THE BILL PASSED LAST YEAR, WHICH GOT GOV. |
00:02:24 | KASICH'S FIRST AND ONLY VETO, BUT THEY STILL FEEL IT DOESN'T |
00:02:28 | OFFER ENOUGH PROTECTION FOR WATERWAYS THAT RUN INTO LAKE |
00:02:31 | ERIE. AND THE HOUSE WAS ON THE VERGE |
00:02:34 | OF VOTING FOR A REPEAL OF LAST YEAR'S CHANGES IN ELECTIONS |
00:02:37 | LAWS, WHICH INCLUDES SHORTENING THE EARLY VOTING PERIOD AND |
00:02:41 | ELIMINATING VOTING THE WEEKEND BEFORE ELECTION DAY. |
00:02:44 | REPUBLICANS HAD PUSHED THROUGH THOSE CHANGES, AND DEMOCRATS |
00:02:47 | GOT THE LAW TO THIS FALL'S BALLOT. |
00:02:48 | THE HOUSE HAD BEEN IN SESSION FOR HOURS, AND DEBATE ON THE |
00:02:52 | REPEAL WAS GOING STRONG. THEN REPUBLICANS MADE A MOTION |
00:02:55 | TO CONSIDER THE BILL LATER, AND DEMOCRATS AGREED. |
00:02:59 | THE QUESTION THEN IS, SHALL WE - NO, WE DON'T. |
00:03:03 | YEAH. WITHOUT OBJECTION, THE MOTION |
00:03:06 | SHALL BE AGREED TO." >> BATCHELDER TOLD REPORTERS |
00:03:14 | LATER THAT THE SUDDEN HALT TO THE VOTE CAME WHEN BUDISH TOLD |
00:03:16 | HIM DURING SESSION THE GROUP THAT PUT THE LAW ON THE BALLOT |
00:03:22 | WAS WILLING TO TALK OVER A DEAL TO PULL IT. |
00:03:23 | AND GOV. KASICH AND SOME OF HIS STAFF WERE INVOLVED IN A CAR |
00:03:27 | CRASH THIS WEEK ON I-71 IN DOWNTOWN COLUMBUS, AS THEY WERE |
00:03:30 | RETURNING FROM AN EVENT IN ZANESVILLE. |
00:03:32 | POLICE SAY A VEHICLE RAMMED INTO A CAR BEHIND THE GOVERNOR'S |
00:03:35 | SUV WHILE THEY WERE STUCK IN TRAFFIC. |
00:03:38 | INTERESTINGLY, THE TRAFFIC OFFICER ASSIGNED TO THE CRASH |
00:03:42 | WAS FAMILIAR TO KASICH, OFFICER ROBERT BARRETT HAD PULLED |
00:03:45 | KASICH OVER IN 2008 AND THE GOVERNOR REFERRED TO HIM AS "AN |
00:03:48 | IDIOT" IN A SPEECH TO STATE WORKERS LAST YEAR. |
00:03:51 | AND THE VEHICLE THAT STARTED THAT CHAIN REACTION THAT HIT |
00:03:55 | THE GOVERNOR, WHO FAMOUSLY ADVISED SUPPORTERS ONCE HE WAS |
00:03:58 | ELECTED TO GET ON THE BUS OR GET RUN OVER BY THE BUS? |
00:04:01 | IT WAS A CHARTER BUS. MUCH OF THIS WEEK'S SHOW IS |
00:04:05 | ABOUT LIFE AFTER WORK. WHILE MANY PEOPLE DREAM OF |
00:04:08 | RETIREMENT, NOT AS MANY PEOPLE ARE PREPARING AS MUCH FOR IT AS |
00:04:11 | THE EXPERTS SAY THEY SHOULD. AND THERE ARE SEVERAL VERY |
00:04:15 | DIFFERENT SYSTEMS THAT PEOPLE TAP INTO TO RETIRE. |
00:04:17 | FOR MOST PEOPLE IN THE PRIVATE SECTOR, THE 401K ACCOUNT, OR |
00:04:21 | DEFINED CONTRIBUTION PLAN, HAS REPLACED THE PENSION AS THE |
00:04:24 | CHIEF VEHICLE BY WHICH TO FUND RETIREMENT. |
00:04:27 | EMPLOYEES CONTRIBUTE SOME OF THEIR EARNINGS, AND SOME HAVE |
00:04:30 | EMPLOYERS WHO MATCH A PERCENTAGE OF THOSE EARNINGS, |
00:04:32 | WHICH GROW TAX-DEFERRED UNTIL THE EMPLOYEE STARTS TO DRAW DOWN |
00:04:36 | THE MONEY. MANY PUBLIC EMPLOYEES, |
00:04:38 | INCLUDING THOSE WORKING IN CITY, COUNTY AND STATE GOVERNMENT |
00:04:40 | ENTITIES IN OHIO, HAVE PENSIONS, OR DEFINED BENEFITS. |
00:04:43 | THOSE ALSO REQUIRE EMPLOYEE CONTRIBUTIONS, BUT HERE, THE |
00:04:49 | EMPLOYER WITH THE MATCH IS THE GOVERNMENT. |
00:04:52 | AND UNLIKE A 401K, A PENSION PAYS OUT A GUARANTEED AMOUNT |
00:04:55 | THAT TAKES INTO ACCOUNT A RETIREE'S SALARY AND YEARS OF |
00:04:58 | SERVICE. PENSIONS HAVE BEEN UNDER FIRE IN |
00:05:01 | RECENT YEARS, AS CONCERNS HAVE SURFACED ABOUT WHETHER THEY CAN |
00:05:04 | FUND WHAT THEY PROMISED TO FUTURE RETIREES WITH CURRENT |
00:05:07 | ASSETS. SOME HAVE EVEN SAID THE PUBLIC |
00:05:11 | EMPLOYEE PENSION SYSTEM IS UNSUSTAINABLE. BUT ADVOCATES |
00:05:13 | FOR PENSIONS CONTINUE TO MAINTAIN THAT THEY ARE THE MOST |
00:05:16 | SECURE VEHICLE FOR PEOPLE TO SUPPORT THEMSELVES IN |
00:05:19 | RETIREMENT. DIANE OAKLEY IS WITH THE |
00:05:22 | NATIONAL INSTITUTE FOR RETIREMENT SECURITY, AND SPOKE |
00:05:25 | RECENTLY BEFORE THE COLUMBUS METROPOLITAN CLUB. |
00:05:27 | >> WE HAVE FOUND THAT THE MOST COST-EFFICIENT WAY TO REALLY |
00:05:36 | PROVIDE FOR RETIREMENT INCOME SO IT LASTS FOR A LIFETIME AND TO |
00:05:40 | KNOW THAT IS A DEFINED BENEFIT PLAN. |
00:05:44 | A DEFINED BENEFIT PLAN CAN GIVE YOU A GIVEN LEVEL OF INCOME AT |
00:05:50 | 46% LESS THAN HOW MUCH MONEY YOU WOULD HAVE TO PUT ASIDE IF YOU |
00:05:54 | TRY TO DO IT ON YOUR OWN AND TO TRY TO MAKE SURE YOU HAVE AN |
00:05:58 | INCOME THAT WOULD LAST AS LONG AS YOU LIVE. |
00:06:01 | IF YOU HAD TO MAKE ANY INVESTMENT DECISIONS WITHOUT |
00:06:05 | PROFESSIONAL GUIDANCE, THAT WOULD BE THE INVESTMENT PLAN |
00:06:10 | HERE IN OHIO. >> OAKLEY SAYS 53% OF HOUSEHOLDS |
00:06:12 | IN OHIO WITH PEOPLE OVER AGE 60 HAVE AT LEAST ONE PERSON GETTING |
00:06:13 | AN INCOME FROM A DEFINED BENEFIT PLAN. |
00:06:15 | AND SHE SAYS THOSE ON DEFINED BENEFIT PLANS ARE SIX TIMES LESS |
00:06:17 | LIKELY TO FALL INTO POVERTY OR NEAR POVERTY IN RETIREMENT. |
00:06:20 | EVEN ADVOCATES FOR DEFINED CONTRIBUTION PLANS SUCH AS |
00:06:24 | 401KS ADMIT THAT THEY ARE LESS SECURE, AND THAT WHILE HIGH- |
00:06:28 | INCOME RETIREES HAVE BEEN MANAGING THEIR INCOME AND |
00:06:33 | EXPENSES WELL, LOW INCOME HOUSEHOLDS HAVE BEEN STRUGGLING. |
00:06:36 | BUT THEY SAY THERE'S A REASON FOR THE PERCEIVED SUCCESS OF |
00:06:38 | PENSION PLANS, AND IT'S IN THE EMPLOYEES WHO DRAW ON THEM. |
00:06:41 | ANDREW BIGGS IS WITH THE AMERICAN ENTERPRISE INSTITUTE. |
00:06:45 | I SPOKE TO HIM WITH THE HELP OF THE CREW AT THE PBS NEWSHOUR |
00:06:49 | STUDIO AT WETA IN WASHINGTON DC. >> OBVIOUSLY, THERE ARE A LOT OF |
00:06:58 | AMERICANS WHO ARE NOT DOING VERY WELL OR ADEQUATELY PREPARED FOR |
00:07:02 | RETIREMENT. IF YOU WANT TO KNOW WHY WORKERS |
00:07:04 | WITH DEFINED BENEFIT PLANS ARE LESS LIKELY TO RETIRE INTO |
00:07:08 | POVERTY, IT IS BECAUSE MOST WORKERS WITH A DEFINED BENEFIT |
00:07:13 | PLANS ARE PUBLIC-SECTOR EMPLOYEES AND THEY ARE WELL- |
00:07:17 | PAID. IT HAS LESS TO DO WITH THE |
00:07:19 | DEFINED BENEFIT PLANS, ALTHOUGH THOSE PLANS ARE VERY GENEROUS. |
00:07:23 | >> WHILE BIGGS DOES AGREE THAT DEFINED BENEFITS PLANS DO HAVE |
00:07:27 | SOME EFFICIENCIES OVER DEFINED CONTRIBUTION PLANS, HE SAYS |
00:07:30 | PUBLIC PENSION SYSTEMS ARE UNDERFUNDED, HAVE ACCOUNTING |
00:07:33 | PRACTICES THAT ARE MUCH MORE FORGIVING THAN THOSE IN THE |
00:07:36 | PRIVATE SECTOR AND INVOLVE TOO MUCH RISK. |
00:07:38 | AND BIGGS SAYS WHAT THEY PROVIDE TO PUBLIC SECTOR WORKERS |
00:07:41 | IS INEQUITABLE AND UNFAIR COMPARED TO WHAT PRIVATE SECTOR |
00:07:44 | WORKERS GET. BUT OAKLEY AND OTHER PENSION |
00:07:47 | BACKERS ALSO SAY THAT THE SYSTEM PROVIDES MORE THAN JUST |
00:07:50 | A BENEFIT TO RETIREES. >> THE GENERATE -- THEY |
00:07:59 | GENERATE $14 BILLION FROM PUBLIC SECTOR PENSION PAYMENTS. |
00:08:03 | WHEN YOU LOOK AT THE NATION, AND RETIREES ALL OVER THE COUNTRY, |
00:08:12 | THOSE RETIREES ARE GENERATING OVER $1 TRILLION OF ECONOMIC |
00:08:18 | OUTPUT IN 2009. IN 2009, THAT WAS REAL |
00:08:23 | IMPORTANT. THEY ARE RESPONSIBLE AND |
00:08:26 | SUPPORTED 6.5 MILLION JOBS NATIONALLY AND THE PENSION JOBS |
00:08:32 | IN OHIO SUPPORTED ALMOST 111,000 JOBS. |
00:08:36 | IN OHIO. SUGGESTION. |
00:08:39 | >> THE IDEA THAT THE DEFINED BENEFIT PENSION IT CREATES AN |
00:08:48 | ECONOMIC STIMULUS IS ESSENTIALLY NONSENSE. |
00:08:49 | IF YOU COUNT THAT OUT AS A STIMULUS, YOU IGNORE ENTIRELY |
00:08:55 | COST OF MAINTAINING THOSE BENEFITS. |
00:08:57 | IT IS A TALKING POINT AND NOT A SERIOUS ARGUMENT. |
00:09:00 | >> HERE TO TALK MORE ABOUT THE STATE OF OHIO'S PENSION SYSTEM |
00:09:03 | VERSUS SOME OTHER OPTIONS ARE LISA MORRIS, THE EXECUTIVE |
00:09:05 | DIRECTOR OF THE SCHOOL EMPLOYEES RETIREMENT SYSTEM OF |
00:09:06 | OHIO, THE THIRD LARGEST OF THE STATE'S FIVE PENSION SYSTEM WITH |
00:09:08 | MORE THAN $10 BILLION IN ASSETS AND $125,000 ACTIVE EMPLOYEES |
00:09:10 | AND MORE THAN 67,000 BENEFICIARIES, AND MATT MAYER, |
00:09:15 | WHO RESEARCHED, WROTE AND SPOKE EXTENSIVELY ABOUT OHIO'S PENSION |
00:09:18 | FUNDS WHEN HE WAS THE PRESIDENT OF THE CONSERVATIVE THINK TANK |
00:09:21 | THE BUCKEYE INSTITUTE, HE'S NOW A VISITING FELLOW WITH THE |
00:09:24 | HERITAGE FOUNDATION. LISA, I KNOW YOU CAN ONLY SPEAK |
00:09:30 | TO ONE PENSION SYSTEM AND THAT IS RCIS. |
00:09:35 | HOW IS IT DOING? >> THANK YOU FOR HAVING US ON TO |
00:09:41 | TALK ABOUT THIS IMPORTANT ISSUE. THE RETIREMENT SYSTEM IS SOUND |
00:09:50 | FINANCIALLY. THERE IS NO CRISIS. |
00:09:52 | WE ARE WEATHERING WHAT WE CALL THE GREAT RECESSION, AND WE'RE |
00:09:57 | COMING OUT OF THIS. WE ARE LONG-TERM GENERATIONAL |
00:10:02 | INVESTORS, WISE TO THE UPS AND DOWNS OF INVESTING. |
00:10:07 | SO, WE ARE IN GOOD SHAPE. WE DID A PENSION FUND IN 2008. |
00:10:13 | WE'RE THE ONLY PENSION FUND IN A HIGH OF TO DO PENSION REFORM. |
00:10:18 | >> WHAT DID YOU DO? >> THE LAW WAS CHANGED TO ADJUST |
00:10:23 | FOR ARE CHANGING DEMOGRAPHICS. WE ARE LIVING LONGER. |
00:10:27 | ALL NEW EMPLOYEES COMING INTO THE SYSTEM, WE RAISED THE |
00:10:31 | RETIREMENT AGE. ANY NEW EMPLOYEES WHO MAY WISH |
00:10:35 | TO RETIRE EARLY, WE SET IT UP SO THAT THEY WOULD ACTUALLY FIND |
00:10:40 | THEIR OWN EARLY RETIREMENT. >> LET ME ASK YOU -- THE |
00:10:44 | BUCKEYE INSTITUTE LAST YEAR SAID YOU HAVE BEEN FUNDED LIABILITY |
00:10:49 | OF $4.1 MILLION. IS THAT RIGHT? |
00:10:52 | >> THAT IS CORRECT. DEFINED BENEFIT PLANS ARE NOT |
00:10:59 | DESIGNED SO THEY STOP ON ONE DAY AND EVERYTHING IS PAID. |
00:11:02 | THE LAW IN OHIO REQUIRES THAT YOU BE ABLE TO PAY OFF ALL YOUR |
00:11:08 | LIABILITIES WITHIN 30 YEARS. LIKE A MORTGAGE. |
00:11:12 | IS A ROLLING FORWARD PLAN. I DO WANT TO CLARIFY ONE THING. |
00:11:16 | EACH MEMBER WHEN THEY RETIRE HAS ALREADY PRE-FUNDED THEIR |
00:11:22 | RETIREMENT. OF THE $10.5 BILLION PENSION |
00:11:29 | FUND, WERE ALL THE CONTRIBUTIONS ARE PULLED, THAT INVESTMENT |
00:11:34 | POOL PAYS FOR 70% OF EVERYONE'S PENSIONS FOR OUR RETIREMENT |
00:11:40 | BENEFITS. >> I WANT TO BRING MATT INTO |
00:11:45 | THIS. YOU BROUGHT FORWARD THIS IDEA |
00:11:48 | OF THE UNFUNDED LIABILITY. YOU SAY ALL PENSION FUNDS HAVE |
00:11:52 | THIS. >> SHE IS SAYING UNDER THE |
00:11:56 | CURRENT RULES, THE WAY THEY CAN ACCOUNT FOR IT IS OVER LONG |
00:12:00 | TIME. >> YOU SAY IT'S AN UNFUNDED |
00:12:03 | LIABILITY MAKES IT SOUND LIKE AN IMMEDIATE CRISIS. |
00:12:07 | >> IT IS A CRISIS. BECAUSE OF THAT UNFUNDED CRISIS |
00:12:11 | AND THE INTERVENTION OF THE MARKET, ALL PENSIONERS WILL HAVE |
00:12:16 | TO PUT MORE AND MORE OF THEIR ASSETS INTO RISKIER INVESTMENTS |
00:12:21 | BECAUSE THEY CANNOT GET THE RETURN. |
00:12:22 | THEY HAVE ADJUSTED DOWN THE ANNUAL RETURN. |
00:12:26 | THE 8% ANNUAL RETURN, WHICH IS UNREALISTIC IN TODAY'S |
00:12:30 | MARKETPLACE. TO GET THOSE RETURNS, YOU HAVE |
00:12:33 | TO TAKE GREATER RISKS. GREATER RISKS CAN LEAD TO |
00:12:37 | GREATER CRISES. THE REALITY IS, IF THE |
00:12:40 | GOVERNMENT PENSIONS HAVE TO DO IT IN THE PRIVATE PENSIONS HAVE |
00:12:44 | TO DO IT, THERE ARE RULES THAT WILL BE CHANGED TO DO THAT. |
00:12:47 | IS GETTING WORSE IN OHIO AND ELSEWHERE. |
00:12:50 | IT IS A BASIC MATH PROBLEM THAT IS ONLY GOING TO GET WORSE. |
00:12:54 | MORE PEOPLE ARE RETIRING AT HIGHER AND HIGHER SALARY RATES |
00:12:59 | AND LIVING LONGER LIVES. IT WILL ONLY GET WORSE. |
00:13:02 | THE GROWING ISSUE ABOUT PUBLIC AND PRIVATE PENSION BENEFITS IS |
00:13:07 | A BASIC MATH ISSUE. IT IS IN AN UNCERTAIN COST. |
00:13:11 | YOU DO NOT KNOW HOW MUCH IS GOING TO BE UNTIL THE PERSON |
00:13:14 | ACTUALLY RETIRES. FUNDING THAT AND FOR HOW LONG IS |
00:13:17 | A HORRIBLY DIFFICULT THING TO FIGURE OUT. |
00:13:20 | >> I WOULD LIKE TO WEIGH IN. WE DISAGREE. |
00:13:23 | HE BRINGS UP IMPORTANT POINTS TO TALK ABOUT, HOWEVER. |
00:13:28 | AND THEN THERE IS THE RATE OF RETURN. |
00:13:30 | YOU ARE CORRECT. THEY RECENTLY LOWERED THE RATE |
00:13:35 | OF RETURN. THE SCHOOL SYSTEM OF OHIO WAS |
00:13:38 | THE FIRST TO LOWER THE RETURNS. THE AVERAGE STILL IS GOING TO BE |
00:13:43 | AROUND 8% ACROSS THE COUNTRY. WE ARE NOT SHORT-TERM INVESTORS. |
00:13:49 | WE DO NOT INVEST A LITTLE HERE LIKE INDIVIDUAL INVESTORS WITH |
00:13:54 | OF 401K, WHICH IS ACTUALLY MUCH RISKIER. |
00:13:59 | WE ARE LONG-TERM GENERATIONAL INVESTORS. |
00:14:02 | SO, WE LOOK AT OUR RETURNS AND HOW WE HAVE WEATHERED THE MARKET |
00:14:06 | CYCLE. WILL LOOK AT A 25-YEAR |
00:14:09 | ANNUALIZED RETURN FOR OUR EMPLOYEES THAT IS IT WELL OVER |
00:14:13 | 9%. OUR ACTUARIES LOOK AT THESE |
00:14:16 | ASSUMPTIONS. THESE ARE PROFESSIONAL ACTUARIES |
00:14:21 | WHOSE EXPERTISE IS IN PENSION FUNDS TO FIND PENSION FUNDS. |
00:14:25 | WE DO NOT MAKE CHANGES EVERY YEAR. |
00:14:27 | WE DO NOT CHANGE OUR ALLOCATION EVERY YEAR. |
00:14:30 | WE HAVE NOT GONE TO RISKIER INVESTMENTS. |
00:14:33 | WE ARE GLOBAL INVESTORS. HIGHLY DIVERSIFIED. |
00:14:38 | WHICH IT ACTUALLY LOWERS RISK. >> THIS IS WHERE YOU START TO |
00:14:42 | SHAKE THE DEBATE OF IT, RIGHT? THE REALITY IS YOU HAVE HAD THE |
00:14:47 | LOWEST RATE OF RETURN OVER THE LAST FIVE YEARS, THE LOWEST OF |
00:14:50 | THE PENSIONS IN OHIO, 5%. YOU NEED TO TAKE THAT SNAPSHOT |
00:14:56 | AND SAY HOLY MOLY, YOU'RE NEVER GOING TO GET 8%. |
00:14:59 | THE REALITY IS, GETTING THE 8% ON AVERAGE YEAR AFTER YEAR IS |
00:15:07 | HIGHLY UNLIKELY AND TO KEEP THAT NUMBER AT 7.75%, HE WILL HAVE TO |
00:15:14 | PUT YOUR ASSETS IN RISKIER AND RISKIER INVESTMENTS. |
00:15:19 | ALL THE BENEFITS, PRIVATE OR PUBLIC, THEY ARE ALL SEARCHING |
00:15:21 | FOR RATES OF RETURN, BECAUSE THE LOW INTEREST RATE IS KILLING THE |
00:15:27 | PENSION FUND'S ABILITY. YOU CAN READ THAT ANYWHERE YOU |
00:15:31 | WANT. >> I LOOK BACK AT ONE YEAR -- I |
00:15:41 | HAVE A LITTLE BIT MORE THAN 21%. YOU CAN PICK ANY SNAPSHOT IN |
00:15:47 | TIME AND GET A LOW RETURN OR A HIGH RETURN. |
00:15:50 | THE DEFINED BENEFIT PLAN IS CONSTRUCTIVE. |
00:15:56 | WHERE IS YOUR HORIZON? THE REAL CRISIS IS IN THE |
00:16:02 | PRIVATE SECTOR. 1% OF THE POPULATION IS PREPARED |
00:16:07 | FOR RETIREMENT. THAT IS A TRUE ECONOMIC CRISIS |
00:16:13 | IN THIS COUNTRY. A DEFINED BENEFIT PLAN TO PAY |
00:16:17 | PUBLIC EMPLOYEES' AVERAGE BENEFIT WILL BE AROUND $12,000 A |
00:16:21 | YEAR, HARDLY LAVISH, KEEPS THEM OFF STATE AID AND CONTINUES TO |
00:16:27 | HELP THEM CONTRIBUTE TO OUR ECONOMY. |
00:16:29 | OUR PENSION FUNDS COLLECTIVELY PUT AROUND $14 BILLION BACK INTO |
00:16:36 | OUR ECONOMY EVERY YEAR. IF YOU TAKE $1 OF A TAXPAYER |
00:16:42 | CONTRIBUTION, THAT EQUATES TO ABOUT A $5 RETURN. |
00:16:46 | >> WE CAN TALK ABOUT THOSE MULTIPLIERS, AND IT DID IT WORK |
00:16:52 | FOR THE OBAMA ADMINISTRATION. AS WE ALL KNOW, THAT IS NOT THE |
00:16:56 | REAL NUMBER FOR A CAREER EMPLOYEE HE. |
00:16:59 | IT IS ON MUCH HIGHER NUMBER. >> THE CAREER EMPLOYEES FOR THE |
00:17:06 | BUT GUY EIGHT INSTITUTE EMPLOYEES IT IS $39,000 WHICH IS |
00:17:11 | NOT LIVING AT LAVISH EITHER. >> DO YOU HAVE SECURITY WITH |
00:17:16 | THAT? >> IT IS AROUND $20,000 A YEAR. |
00:17:19 | PUT THAT IN PERSPECTIVE. THIS DEFINED EVERY PENSION -- IT |
00:17:25 | WOULD COST $123 BILLION A YEAR MORE, WHICH IS A QUARTER OF GDP. |
00:17:31 | THAT IS UNSUSTAINABLE. YOU CANNOT MANUFACTURE THAT. |
00:17:35 | IF YOU ARE GOING TO SPEND THIS MONEY IN THE ECONOMY, THAT IS |
00:17:40 | ABSOLUTELY TRUE -- BUT THE REALITY IS, TO GET THIS MONEY IN |
00:17:43 | THEIR POCKET, IT HAS TO BE TAKEN FROM SOMEONE ELSE'S POCKET. |
00:17:49 | 14% OR MORE COMES FROM THE TAXPAYER, AND THE REALITY IS -- |
00:17:55 | RIGHT, THERE IS NOT THIS NET UP. IT IS CALLED NET ZERO. |
00:18:06 | >> I WANT TO CLARIFY SOMETHING. YOU ARE SPEAKING AS IF THERE IS |
00:18:11 | NO FIFTH 14 -- NO 14%. PUBLIC EMPLOYEES DO NOT GET |
00:18:18 | SOCIAL SECURITY BENEFITS WHILE THEY ARE PUBLIC EMPLOYEES. |
00:18:22 | >> IF YOU ARE A GOVERNMENT EMPLOYEE, GUEST, THEY DON'T. |
00:18:26 | >> WE WILL SEE UP TO TWO-THIRDS OR MORE OF THE SOCIAL SECURITY |
00:18:35 | BENEFITS TAKEN AWAY FROM YOU, WHICH IS QUITE AN INTERESTING |
00:18:41 | PENALTY. IF YOU ARE NOT PAYING THE 14% |
00:18:46 | EMPLOYER CONTRIBUTION AND 10% EMPLOYEE HE MATCH, THAT IS |
00:18:52 | CAPPED, YOU WOULD BE PAYING SOCIAL SECURITY -- |
00:18:58 | >> 6.2%. >> ARE AROUND 6.2%. |
00:19:02 | YOU ARE ACTUALLY -- AND THAT MONEY LEAVES THE STATE. |
00:19:09 | THE MONEY THAT IS PAID INTO THE DEFINED BENEFIT PENSION PLAN |
00:19:15 | STAYS HERE IN OHIO. 92% OF THE PUBLIC RETIREE'S STAY |
00:19:20 | HERE AND SPEND MONEY, AND IT IS TAXED. |
00:19:22 | >> SURE, BUT THE COMPARISON IS 6.2% FOR SOCIAL SECURITY, AND |
00:19:30 | YOUR LOOKING AT 10.2% COMPARED TO 14%. |
00:19:33 | AND YOUR RIGHT, YOU WERE NOT ASKING TAXPAYERS TO PAY MORE. |
00:19:37 | BUT YOU HAVE THE CADRES, TAXPAYERS WOULD HAVE TO PAY |
00:19:41 | MORE. I AM NOT NAIVE. |
00:19:43 | I KNOW IF WE HAD A DEMOCRAT IN OFFICE AS GOVERNOR WITH THE |
00:19:48 | SENATE, THEY WOULD HAVE THE EMPLOYER CAP RAISED. |
00:19:52 | WE CAN DENY IT, BUT IT WOULD HAPPEN. |
00:19:55 | >> I WANT TO ASK YOU A LITTLE BIT ABOUT THE 401KS. |
00:19:59 | WE DO NOT DO DEFINED BENEFIT PLANS. |
00:20:04 | OR WE DO SOME KIND OF HYBRID. THE EMPLOYEES TO WORK IN |
00:20:10 | PRIVATE SECTOR COMPANIES -- A LOT OF EMPLOYEES TO NOT SAVE |
00:20:14 | ENOUGH. >> THAT IS RIGHT. |
00:20:17 | A LOT OF PEOPLE IN 401K TO NOT PUT ENOUGH MONEY INTO IT. |
00:20:22 | DATA SOMETHING -- YOU HAVE SEEN THE PLANS COME OUT AND TRY TO |
00:20:26 | DEAL WITH AUTOMATIC WITHDRAWALS AND THINGS LIKE THAT. |
00:20:28 | YOU HAVE TO MAKE SURE, WHETHER YOU'RE A GOVERNMENT WORKER OR A |
00:20:32 | PRIVATE WORKER, YOU DO WHAT YOU HAVE TO DO TO TAKE CARE TRUST TO |
00:20:37 | HAVE A SAFETY NET. >> ABSOLUTELY CORRECT. |
00:20:40 | >> THERE IS NO ARGUMENT THAT EITHER SIDE HAS LIMITATIONS DO |
00:20:47 | WITH. BUT THE IDEA THAT YOU FULLY FUND |
00:20:48 | YOUR 401K TO THE DEGREE THAT YOU CAN, THAT HE WILL NOT HAVE |
00:20:52 | ENOUGH RETIREMENT? THERE ARE WAYS TO SET YOUR |
00:20:57 | FEDERAL SAVINGS PLAN. IT HAS FIVE OPTIONS. |
00:20:59 | THOSE ARE SAFE. THERE ARE WAYS TO STRUCTURE IT |
00:21:03 | SO YOU MINIMIZE THE RISK AND MAKE SURE YOUR GIVING |
00:21:07 | CONTRIBUTIONS INTO THE SYSTEM. >> WHY NOT GO WITH THAT OR A |
00:21:10 | HYBRID SYSTEM? >> BEFORE A ONE K IS THE |
00:21:15 | RISKIEST WAY TO PREPARE FOR RETIREMENT -- BEFORE A ONE K IS |
00:21:19 | THE RISKIEST WAY TO PREPARE FOR RETIREMENT. |
00:21:21 | THEY SIMPLY DO NOT WORK THAT WAY. |
00:21:24 | I AM TALKING ABOUT BUS DRIVERS, SCHOOL COUNSELING -- SCHOOL |
00:21:33 | CROSSING GUARDS -- >> AND PEOPLE WHO ARE LOW-PAID. |
00:21:41 | >> THERE ARE SCHOOL TREASURERS, BUSINESS OFFICIALS. |
00:21:46 | THESE ARE NOT INVESTORS. IF WE HAD HAD -- LET'S JUST TAKE |
00:21:55 | A BUS DRIVER WHO RETIRED IN 2008. |
00:21:59 | THAT PERSON WOULD HAVE RETIRED WITHOUT A DEFINED BENEFIT. |
00:22:05 | I THINK THAT IS VERY POOR PUBLIC POLICY. |
00:22:08 | I DO WANT TO ADD 41 K -- 401KS ARE THE MOST EXPENSIVE WAY TO |
00:22:17 | PROVIDE A BENEFIT. 401KS -- |
00:22:20 | >> IF THE BUS DRIVER CONTRIBUTED TO THE 401K TO ROUTE THEIR |
00:22:28 | CAREER, THEY WOULD HAVE SOCIAL SECURITY IS A PRIMARY ELEMENT. |
00:22:30 | IF THEY PUT MONEY IN, THEY WOULD HAVE THAT. |
00:22:33 | THE VAST MAJORITY OF AMERICANS LIVE IN A SYSTEM OF SOCIAL |
00:22:37 | SECURITY, THERE FOR 1 K, AND PERSONAL SAVINGS. |
00:22:41 | THE ONLY PEOPLE NOT IN THAT WORLD ARE THE PUBLIC SECTOR |
00:22:45 | WORKERS AND THE UNIONIZED WORKERS. |
00:22:47 | EVEN DEMOCRATS IN RHODE ISLAND ARE REFORMING THE SYSTEM, |
00:22:52 | BECAUSE FOLKS UNDERSTAND THAT THERE IS A BASIC MATH ISSUE THAT |
00:22:57 | EVENTUALLY YOU'RE GOING TO HAVE TO SOLVE. |
00:22:58 | IF WE DO NOT HAVE A MARKET LIKE WE HAD IN THE MID-1990'S, THERE |
00:23:05 | IS JUST NO WAY IN THE LONG TERM, WHETHER IT IS THEIR |
00:23:09 | PENSION FUND OR ANOTHER ONE, THE CRISIS IS GROWING AND IT WILL |
00:23:14 | CAUSE A MATH CRUNCH. YOU JUST CANNOT SOLVE IT UNLESS |
00:23:19 | YOU RAISE TAXES TO PAY FOR. >> WE AGREE. |
00:23:22 | THE PENSION CRISIS IS GROWING IN THE PRIVATE SECTOR. |
00:23:25 | THERE IS NOT A CRISIS HERE. THESE PLANS ARE RUN BY |
00:23:31 | FIDUCIARIES. THEY ARE HIGHLY DIVERSIFIED. |
00:23:36 | NON-RISKY INVESTMENTS. >> MOST PEOPLE CANNOT GET THIS |
00:23:40 | BENEFIT. I THINK THAT IS PART OF THE |
00:23:43 | FRUSTRATION. "I WANT TO GET THOSE BENEFITS, |
00:23:47 | BUT I CANNOT WORKING IN THE PRIVATE SECTOR." |
00:23:51 | >> AND THAT SHOULD BE THE CONVERSATION. |
00:23:54 | THIS WILL BE A TRUE CRISIS FOR THE COUNTRY. |
00:23:57 | NOT FOR OHIO PUBLIC EMPLOYEES. THE PENSION FUND NEEDS FIXING. |
00:24:04 | IT IS STILL FIXABLE. THE DEFINED BENEFIT PLAN -- IT |
00:24:10 | IS THE BEST VEHICLE AND IT DOES NOT COST THE TAXPAYER. |
00:24:15 | >> THIS WILL BE THE FINAL WORD, BUT I WANT TO ASK YOU -- ARE |
00:24:19 | PRIVATE SECTOR WORKERS GETTING JEALOUS AND THAT IS WHERE THIS |
00:24:22 | IS COMING FROM? >> THEY ARE ALSO WATCHING THEIR |
00:24:25 | TAXES GO UP BECAUSE THEY PARTIALLY -- NOT ENTIRELY -- |
00:24:28 | PARTIALLY BECAUSE THEY HAVE TO PAY 14% TO THIS WORKER. |
00:24:32 | I AGREE. IT IS DRIVEN PARTIALLY BY THE |
00:24:36 | HUGE CONTRIBUTION RATES THAT AGAIN, EVEN IF YOU USE SOCIAL |
00:24:40 | SECURITY, IT IS STILL FROM 3.8% MORE FOR FDRS TO MORE FOR |
00:24:52 | FIREFIGHTERS AND POLICE. THE TAXPAYER SAYS, WAIT A |
00:24:56 | MINUTE. >> EMPLOYEES ARE CONTRIBUTING. |
00:24:59 | WHICH IS ABOUT DOUBLE WHAT YOU FIND NATIONALLY. |
00:25:04 | >> THAT IS RIPE. IF WE WANT TO GO BACK -- THAT IS |
00:25:08 | RIGHT. IF WE WANT TO GO BACK AND HAVE A |
00:25:12 | LION BE THE LAST STATE TO THE NEW ECONOMY WE HAVE TO DEAL |
00:25:16 | WITH, THE REALITY IS WE MOVE EVERY PERSON IN A WIRED TO A |
00:25:21 | DEFINED BENEFITS PLAN, IT WILL COST US $100,000 A YEAR. |
00:25:26 | DO THE MATH. THE MATH IS PRETTY BASIC. |
00:25:32 | >> I WANT TO TELL YOU THE ONLY PEOPLE WHO BENEFIT -- AND THE |
00:25:37 | ECONOMY WILL SUFFER GREATLY -- TO A TRANSITION AWAY FROM |
00:25:42 | DEFINED BENEFIT PLANS FOR PUBLIC EMPLOYEES WILL BE THOSE |
00:25:47 | IN FINANCIAL SERVICES BECAUSE THEY WILL MAKE FEES. |
00:25:50 | >> THE TAXPAYERS WILL ALSO DO QUITE WELL. |
00:25:53 | [LAUGHTER] >> BAWSCA BUT VERY MUCH. |
00:25:58 | -- THANK YOU VERY MUCH. >> AND THAT'S IT FOR THIS WEEK. |
00:26:03 | FOR MY COLLEAGUES AT OHIO PUBLIC RADIO AND TELEVISION, THANKS FOR |
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00:26:13 | AND PLEASE JOIN US AGAIN NEXT TIME FOR "THE STATE OF OHIO". |
00:26:15 | >> SUPPORT FOR THE STATEWIDE BROADCAST OF THE STATE OF OHIO |
00:26:22 | COMES FROM THE LAW OFFICES OF PORTER, WRIGHT, MORRIS LLP. |
00:26:26 | HELPING PEOPLE SOLVE COMPLEX LEGAL PROBLEMS ARE AROUND THE |
00:26:29 | -- THROW TO OHIO, ACROSS THE COUNTRY, AND AROUND THE WORLD. |
00:26:33 | AND FROM THE OHIO EDUCATION ASSOCIATION, REPRESENTING |
00:26:36 | 131,000 TEACHERS, SUPPORT PROFESSIONALS, AND FACULTY TO |
00:26:39 | -- WHO ARE WORKING FOR GREAT PUBLIC SCHOOLS FOR EVERY CHILD. |
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Note : Transcripts are compiled from uncorrected captions