00:00:00>> SUPPORT FOR THE STATEWIDE
00:00:07BROADCAST OF THE STATE OF OHIO
COMES FROM THE LAW OFFICES OF
00:00:09PORTER, WRIGHT, MORRIS LLP.
HELPING PEOPLE SOLVE COMPLEX
00:00:14LEGAL PROBLEMS ARE AROUND THE
WORLD.
00:00:16AND FROM THE OHIO EDUCATION
ASSOCIATION, REPRESENTING
00:00:23131,000 TEACHERS, SUPPORT
PROFESSIONALS, AND FACULTY TO
00:00:27ARE WORKING FOR GREAT PUBLIC
SCHOOLS FOR EVERY CHILD.
00:00:29OHEA.ORG.
ADDITIONAL SUPPORT FOR THE STATE
00:00:33OF OHIO IS MADE POSSIBLE BY E-
TECH OHIO.
00:00:35>> LAWMAKERS MAKE DECISIONS ON
EXOTIC ANIMALS AND EXTRACTING
00:00:45WATER, BUT BRING A VOTE ON
CHANGING VOTING LAWS TO A
00:00:47SUDDEN STOP.
AND RETIREMENT , IT'S A DREAM,
00:00:49A GOAL, AND A WORRY FOR WORKERS
ALL ACROSS THE COUNTRY.
00:00:51BUT THERE ARE TWO VERY
DIFFERENT SYSTEMS THAT EMPLOYEES
00:00:54WILL USE TO FUND THEIR
RETIREMENTS, AND SOME VERY
00:00:56STRONG OPINIONS ABOUT WHICH ONE
IS BETTER.
00:00:58AND SINCE ONE OF THEM CAN
INVOLVE STATE MONEY, THERE'S A
00:01:01LOT OF TO TALK ABOUT.
THAT'S WHAT WE'LL DO, THIS WEEK
00:01:03IN "THE STATE OF OHIO".
>> IT WAS A BUSY WEEK AT THE
00:01:10STATEHOUSE.
THE SENATE PASSED A BILL THAT
00:01:12TO BAN RESIDENTS FROM ACQUIRING
NEW EXOTIC ANIMALS AND REGULATE
00:01:17THE CURRENT OWNERS OF TIGERS,
LIONS AND OTHER CREATURES.
00:01:21ZOOS, CIRCUSES AND SOME
ACCREDITED SANCTUARIES WOULD BE
00:01:26EXEMPT, AND THOSE EXCEPTIONS
HAVE INFURIATED OPPONENTS,
00:01:30WHO'VE PACKED HEARINGS ON THE
BILL.
00:01:32THE MEASURE NOW MOVES TO THE
HOUSE.
00:01:34THE HOUSE OKAYED SEVERAL BILLS
RELATED TO GOV. JOHN KASICH'S
00:01:37BIG BUDGET UPDATE, THE MID-
BIENNIUM REVIEW OR MBR.
00:01:40GOP LAWMAKERS NEVER PUT BACK IN
A TAX ON OIL AND NATURAL GAS
00:01:45DRILLERS THAT THE GOVERNOR
PROPOSED TO FUND A STATE INCOME
00:01:48TAX CUT.
AND THEY TOOK OUT A PROVISION
00:01:52THEY HAD ADDED TO CUT FUNDS TO
PLANNED PARENTHOOD.
00:01:54BUT THEY REJECTED THE DEMOCRAT-
BACKED PLAN TO SET UP A $400
00:01:57MILLION FUND FOR SCHOOL
DISTRICTS AND COMMUNITIES THAT
00:02:01GOT BIG CUTS IN LAST YEAR'S
BUDGET.
00:02:04THE HOUSE ALSO APPROVED A DEAL
STRUCK BETWEEN GOV. JOHN KASICH
00:02:08AND REP. LYNN WACHTMANN OVER
THE GREAT LAKES COMPACT, THE
00:02:11AGREEMENT BETWEEN EIGHT STATES
AND TWO CANADIAN PROVINCES
00:02:15DESIGNED TO SAFEGUARD THE LAKES
FROM MASSIVE WITHDRAWALS OF
00:02:18THEIR FRESH WATER.
ENVIRONMENTALISTS SAY THE DEAL
00:02:21IS BETTER THAN THE BILL PASSED
LAST YEAR, WHICH GOT GOV.
00:02:24KASICH'S FIRST AND ONLY VETO,
BUT THEY STILL FEEL IT DOESN'T
00:02:28OFFER ENOUGH PROTECTION FOR
WATERWAYS THAT RUN INTO LAKE
00:02:31ERIE.
AND THE HOUSE WAS ON THE VERGE
00:02:34OF VOTING FOR A REPEAL OF LAST
YEAR'S CHANGES IN ELECTIONS
00:02:37LAWS, WHICH INCLUDES SHORTENING
THE EARLY VOTING PERIOD AND
00:02:41ELIMINATING VOTING THE WEEKEND
BEFORE ELECTION DAY.
00:02:44REPUBLICANS HAD PUSHED THROUGH
THOSE CHANGES, AND DEMOCRATS
00:02:47GOT THE LAW TO THIS FALL'S
BALLOT.
00:02:48THE HOUSE HAD BEEN IN SESSION
FOR HOURS, AND DEBATE ON THE
00:02:52REPEAL WAS GOING STRONG.
THEN REPUBLICANS MADE A MOTION
00:02:55TO CONSIDER THE BILL LATER, AND
DEMOCRATS AGREED.
00:02:59THE QUESTION THEN IS, SHALL WE
- NO, WE DON'T.
00:03:03YEAH.
WITHOUT OBJECTION, THE MOTION
00:03:06SHALL BE AGREED TO."
>> BATCHELDER TOLD REPORTERS
00:03:14LATER THAT THE SUDDEN HALT TO
THE VOTE CAME WHEN BUDISH TOLD
00:03:16HIM DURING SESSION THE GROUP
THAT PUT THE LAW ON THE BALLOT
00:03:22WAS WILLING TO TALK OVER A DEAL
TO PULL IT.
00:03:23AND GOV. KASICH AND SOME OF HIS
STAFF WERE INVOLVED IN A CAR
00:03:27CRASH THIS WEEK ON I-71 IN
DOWNTOWN COLUMBUS, AS THEY WERE
00:03:30RETURNING FROM AN EVENT IN
ZANESVILLE.
00:03:32POLICE SAY A VEHICLE RAMMED
INTO A CAR BEHIND THE GOVERNOR'S
00:03:35SUV WHILE THEY WERE STUCK IN
TRAFFIC.
00:03:38INTERESTINGLY, THE TRAFFIC
OFFICER ASSIGNED TO THE CRASH
00:03:42WAS FAMILIAR TO KASICH, OFFICER
ROBERT BARRETT HAD PULLED
00:03:45KASICH OVER IN 2008 AND THE
GOVERNOR REFERRED TO HIM AS "AN
00:03:48IDIOT" IN A SPEECH TO STATE
WORKERS LAST YEAR.
00:03:51AND THE VEHICLE THAT STARTED
THAT CHAIN REACTION THAT HIT
00:03:55THE GOVERNOR, WHO FAMOUSLY
ADVISED SUPPORTERS ONCE HE WAS
00:03:58ELECTED TO GET ON THE BUS OR GET
RUN OVER BY THE BUS?
00:04:01IT WAS A CHARTER BUS.
MUCH OF THIS WEEK'S SHOW IS
00:04:05ABOUT LIFE AFTER WORK.
WHILE MANY PEOPLE DREAM OF
00:04:08RETIREMENT, NOT AS MANY PEOPLE
ARE PREPARING AS MUCH FOR IT AS
00:04:11THE EXPERTS SAY THEY SHOULD.
AND THERE ARE SEVERAL VERY
00:04:15DIFFERENT SYSTEMS THAT PEOPLE
TAP INTO TO RETIRE.
00:04:17FOR MOST PEOPLE IN THE PRIVATE
SECTOR, THE 401K ACCOUNT, OR
00:04:21DEFINED CONTRIBUTION PLAN, HAS
REPLACED THE PENSION AS THE
00:04:24CHIEF VEHICLE BY WHICH TO FUND
RETIREMENT.
00:04:27EMPLOYEES CONTRIBUTE SOME OF
THEIR EARNINGS, AND SOME HAVE
00:04:30EMPLOYERS WHO MATCH A
PERCENTAGE OF THOSE EARNINGS,
00:04:32WHICH GROW TAX-DEFERRED UNTIL
THE EMPLOYEE STARTS TO DRAW DOWN
00:04:36THE MONEY.
MANY PUBLIC EMPLOYEES,
00:04:38INCLUDING THOSE WORKING IN CITY,
COUNTY AND STATE GOVERNMENT
00:04:40ENTITIES IN OHIO, HAVE PENSIONS,
OR DEFINED BENEFITS.
00:04:43THOSE ALSO REQUIRE EMPLOYEE
CONTRIBUTIONS, BUT HERE, THE
00:04:49EMPLOYER WITH THE MATCH IS THE
GOVERNMENT.
00:04:52AND UNLIKE A 401K, A PENSION
PAYS OUT A GUARANTEED AMOUNT
00:04:55THAT TAKES INTO ACCOUNT A
RETIREE'S SALARY AND YEARS OF
00:04:58SERVICE.
PENSIONS HAVE BEEN UNDER FIRE IN
00:05:01RECENT YEARS, AS CONCERNS HAVE
SURFACED ABOUT WHETHER THEY CAN
00:05:04FUND WHAT THEY PROMISED TO
FUTURE RETIREES WITH CURRENT
00:05:07ASSETS.
SOME HAVE EVEN SAID THE PUBLIC
00:05:11EMPLOYEE PENSION SYSTEM IS
UNSUSTAINABLE. BUT ADVOCATES
00:05:13FOR PENSIONS CONTINUE TO
MAINTAIN THAT THEY ARE THE MOST
00:05:16SECURE VEHICLE FOR PEOPLE TO
SUPPORT THEMSELVES IN
00:05:19RETIREMENT.
DIANE OAKLEY IS WITH THE
00:05:22NATIONAL INSTITUTE FOR
RETIREMENT SECURITY, AND SPOKE
00:05:25RECENTLY BEFORE THE COLUMBUS
METROPOLITAN CLUB.
00:05:27>> WE HAVE FOUND THAT THE MOST
COST-EFFICIENT WAY TO REALLY
00:05:36PROVIDE FOR RETIREMENT INCOME SO
IT LASTS FOR A LIFETIME AND TO
00:05:40KNOW THAT IS A DEFINED BENEFIT
PLAN.
00:05:44A DEFINED BENEFIT PLAN CAN GIVE
YOU A GIVEN LEVEL OF INCOME AT
00:05:5046% LESS THAN HOW MUCH MONEY YOU
WOULD HAVE TO PUT ASIDE IF YOU
00:05:54TRY TO DO IT ON YOUR OWN AND TO
TRY TO MAKE SURE YOU HAVE AN
00:05:58INCOME THAT WOULD LAST AS LONG
AS YOU LIVE.
00:06:01IF YOU HAD TO MAKE ANY
INVESTMENT DECISIONS WITHOUT
00:06:05PROFESSIONAL GUIDANCE, THAT
WOULD BE THE INVESTMENT PLAN
00:06:10HERE IN OHIO.
>> OAKLEY SAYS 53% OF HOUSEHOLDS
00:06:12IN OHIO WITH PEOPLE OVER AGE 60
HAVE AT LEAST ONE PERSON GETTING
00:06:13AN INCOME FROM A DEFINED
BENEFIT PLAN.
00:06:15AND SHE SAYS THOSE ON DEFINED
BENEFIT PLANS ARE SIX TIMES LESS
00:06:17LIKELY TO FALL INTO POVERTY OR
NEAR POVERTY IN RETIREMENT.
00:06:20EVEN ADVOCATES FOR DEFINED
CONTRIBUTION PLANS SUCH AS
00:06:24401KS ADMIT THAT THEY ARE LESS
SECURE, AND THAT WHILE HIGH-
00:06:28INCOME RETIREES HAVE BEEN
MANAGING THEIR INCOME AND
00:06:33EXPENSES WELL, LOW INCOME
HOUSEHOLDS HAVE BEEN STRUGGLING.
00:06:36BUT THEY SAY THERE'S A REASON
FOR THE PERCEIVED SUCCESS OF
00:06:38PENSION PLANS, AND IT'S IN THE
EMPLOYEES WHO DRAW ON THEM.
00:06:41ANDREW BIGGS IS WITH THE
AMERICAN ENTERPRISE INSTITUTE.
00:06:45I SPOKE TO HIM WITH THE HELP OF
THE CREW AT THE PBS NEWSHOUR
00:06:49STUDIO AT WETA IN WASHINGTON DC.
>> OBVIOUSLY, THERE ARE A LOT OF
00:06:58AMERICANS WHO ARE NOT DOING VERY
WELL OR ADEQUATELY PREPARED FOR
00:07:02RETIREMENT.
IF YOU WANT TO KNOW WHY WORKERS
00:07:04WITH DEFINED BENEFIT PLANS ARE
LESS LIKELY TO RETIRE INTO
00:07:08POVERTY, IT IS BECAUSE MOST
WORKERS WITH A DEFINED BENEFIT
00:07:13PLANS ARE PUBLIC-SECTOR
EMPLOYEES AND THEY ARE WELL-
00:07:17PAID.
IT HAS LESS TO DO WITH THE
00:07:19DEFINED BENEFIT PLANS, ALTHOUGH
THOSE PLANS ARE VERY GENEROUS.
00:07:23>> WHILE BIGGS DOES AGREE THAT
DEFINED BENEFITS PLANS DO HAVE
00:07:27SOME EFFICIENCIES OVER DEFINED
CONTRIBUTION PLANS, HE SAYS
00:07:30PUBLIC PENSION SYSTEMS ARE
UNDERFUNDED, HAVE ACCOUNTING
00:07:33PRACTICES THAT ARE MUCH MORE
FORGIVING THAN THOSE IN THE
00:07:36PRIVATE SECTOR AND INVOLVE TOO
MUCH RISK.
00:07:38AND BIGGS SAYS WHAT THEY
PROVIDE TO PUBLIC SECTOR WORKERS
00:07:41IS INEQUITABLE AND UNFAIR
COMPARED TO WHAT PRIVATE SECTOR
00:07:44WORKERS GET.
BUT OAKLEY AND OTHER PENSION
00:07:47BACKERS ALSO SAY THAT THE
SYSTEM PROVIDES MORE THAN JUST
00:07:50A BENEFIT TO RETIREES.
>> THE GENERATE -- THEY
00:07:59GENERATE $14 BILLION FROM PUBLIC
SECTOR PENSION PAYMENTS.
00:08:03WHEN YOU LOOK AT THE NATION, AND
RETIREES ALL OVER THE COUNTRY,
00:08:12THOSE RETIREES ARE GENERATING
OVER $1 TRILLION OF ECONOMIC
00:08:18OUTPUT IN 2009.
IN 2009, THAT WAS REAL
00:08:23IMPORTANT.
THEY ARE RESPONSIBLE AND
00:08:26SUPPORTED 6.5 MILLION JOBS
NATIONALLY AND THE PENSION JOBS
00:08:32IN OHIO SUPPORTED ALMOST 111,000
JOBS.
00:08:36IN OHIO.
SUGGESTION.
00:08:39>> THE IDEA THAT THE DEFINED
BENEFIT PENSION IT CREATES AN
00:08:48ECONOMIC STIMULUS IS ESSENTIALLY
NONSENSE.
00:08:49IF YOU COUNT THAT OUT AS A
STIMULUS, YOU IGNORE ENTIRELY
00:08:55COST OF MAINTAINING THOSE
BENEFITS.
00:08:57IT IS A TALKING POINT AND NOT A
SERIOUS ARGUMENT.
00:09:00>> HERE TO TALK MORE ABOUT THE
STATE OF OHIO'S PENSION SYSTEM
00:09:03VERSUS SOME OTHER OPTIONS ARE
LISA MORRIS, THE EXECUTIVE
00:09:05DIRECTOR OF THE SCHOOL
EMPLOYEES RETIREMENT SYSTEM OF
00:09:06OHIO, THE THIRD LARGEST OF THE
STATE'S FIVE PENSION SYSTEM WITH
00:09:08MORE THAN $10 BILLION IN ASSETS
AND $125,000 ACTIVE EMPLOYEES
00:09:10AND MORE THAN 67,000
BENEFICIARIES, AND MATT MAYER,
00:09:15WHO RESEARCHED, WROTE AND SPOKE
EXTENSIVELY ABOUT OHIO'S PENSION
00:09:18FUNDS WHEN HE WAS THE PRESIDENT
OF THE CONSERVATIVE THINK TANK
00:09:21THE BUCKEYE INSTITUTE, HE'S NOW
A VISITING FELLOW WITH THE
00:09:24HERITAGE FOUNDATION.
LISA, I KNOW YOU CAN ONLY SPEAK
00:09:30TO ONE PENSION SYSTEM AND THAT
IS RCIS.
00:09:35HOW IS IT DOING?
>> THANK YOU FOR HAVING US ON TO
00:09:41TALK ABOUT THIS IMPORTANT ISSUE.
THE RETIREMENT SYSTEM IS SOUND
00:09:50FINANCIALLY.
THERE IS NO CRISIS.
00:09:52WE ARE WEATHERING WHAT WE CALL
THE GREAT RECESSION, AND WE'RE
00:09:57COMING OUT OF THIS.
WE ARE LONG-TERM GENERATIONAL
00:10:02INVESTORS, WISE TO THE UPS AND
DOWNS OF INVESTING.
00:10:07SO, WE ARE IN GOOD SHAPE.
WE DID A PENSION FUND IN 2008.
00:10:13WE'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
00:10:23FOR ARE CHANGING DEMOGRAPHICS.
WE ARE LIVING LONGER.
00:10:27ALL NEW EMPLOYEES COMING INTO
THE SYSTEM, WE RAISED THE
00:10:31RETIREMENT AGE.
ANY NEW EMPLOYEES WHO MAY WISH
00:10:35TO RETIRE EARLY, WE SET IT UP SO
THAT THEY WOULD ACTUALLY FIND
00:10:40THEIR OWN EARLY RETIREMENT.
>> LET ME ASK YOU -- THE
00:10:44BUCKEYE INSTITUTE LAST YEAR SAID
YOU HAVE BEEN FUNDED LIABILITY
00:10:49OF $4.1 MILLION.
IS THAT RIGHT?
00:10:52>> THAT IS CORRECT.
DEFINED BENEFIT PLANS ARE NOT
00:10:59DESIGNED SO THEY STOP ON ONE DAY
AND EVERYTHING IS PAID.
00:11:02THE LAW IN OHIO REQUIRES THAT
YOU BE ABLE TO PAY OFF ALL YOUR
00:11:08LIABILITIES WITHIN 30 YEARS.
LIKE A MORTGAGE.
00:11:12IS A ROLLING FORWARD PLAN.
I DO WANT TO CLARIFY ONE THING.
00:11:16EACH MEMBER WHEN THEY RETIRE HAS
ALREADY PRE-FUNDED THEIR
00:11:22RETIREMENT.
OF THE $10.5 BILLION PENSION
00:11:29FUND, WERE ALL THE CONTRIBUTIONS
ARE PULLED, THAT INVESTMENT
00:11:34POOL PAYS FOR 70% OF EVERYONE'S
PENSIONS FOR OUR RETIREMENT
00:11:40BENEFITS.
>> I WANT TO BRING MATT INTO
00:11:45THIS.
YOU BROUGHT FORWARD THIS IDEA
00:11:48OF THE UNFUNDED LIABILITY.
YOU SAY ALL PENSION FUNDS HAVE
00:11:52THIS.
>> SHE IS SAYING UNDER THE
00:11:56CURRENT RULES, THE WAY THEY CAN
ACCOUNT FOR IT IS OVER LONG
00:12:00TIME.
>> YOU SAY IT'S AN UNFUNDED
00:12:03LIABILITY MAKES IT SOUND LIKE AN
IMMEDIATE CRISIS.
00:12:07>> IT IS A CRISIS.
BECAUSE OF THAT UNFUNDED CRISIS
00:12:11AND THE INTERVENTION OF THE
MARKET, ALL PENSIONERS WILL HAVE
00:12:16TO PUT MORE AND MORE OF THEIR
ASSETS INTO RISKIER INVESTMENTS
00:12:21BECAUSE THEY CANNOT GET THE
RETURN.
00:12:22THEY HAVE ADJUSTED DOWN THE
ANNUAL RETURN.
00:12:26THE 8% ANNUAL RETURN, WHICH IS
UNREALISTIC IN TODAY'S
00:12:30MARKETPLACE.
TO GET THOSE RETURNS, YOU HAVE
00:12:33TO TAKE GREATER RISKS.
GREATER RISKS CAN LEAD TO
00:12:37GREATER CRISES.
THE REALITY IS, IF THE
00:12:40GOVERNMENT PENSIONS HAVE TO DO
IT IN THE PRIVATE PENSIONS HAVE
00:12:44TO DO IT, THERE ARE RULES THAT
WILL BE CHANGED TO DO THAT.
00:12:47IS GETTING WORSE IN OHIO AND
ELSEWHERE.
00:12:50IT IS A BASIC MATH PROBLEM THAT
IS ONLY GOING TO GET WORSE.
00:12:54MORE PEOPLE ARE RETIRING AT
HIGHER AND HIGHER SALARY RATES
00:12:59AND LIVING LONGER LIVES.
IT WILL ONLY GET WORSE.
00:13:02THE GROWING ISSUE ABOUT PUBLIC
AND PRIVATE PENSION BENEFITS IS
00:13:07A BASIC MATH ISSUE.
IT IS IN AN UNCERTAIN COST.
00:13:11YOU DO NOT KNOW HOW MUCH IS
GOING TO BE UNTIL THE PERSON
00:13:14ACTUALLY RETIRES.
FUNDING THAT AND FOR HOW LONG IS
00:13:17A HORRIBLY DIFFICULT THING TO
FIGURE OUT.
00:13:20>> I WOULD LIKE TO WEIGH IN.
WE DISAGREE.
00:13:23HE BRINGS UP IMPORTANT POINTS TO
TALK ABOUT, HOWEVER.
00:13:28AND THEN THERE IS THE RATE OF
RETURN.
00:13:30YOU ARE CORRECT.
THEY RECENTLY LOWERED THE RATE
00:13:35OF RETURN.
THE SCHOOL SYSTEM OF OHIO WAS
00:13:38THE FIRST TO LOWER THE RETURNS.
THE AVERAGE STILL IS GOING TO BE
00:13:43AROUND 8% ACROSS THE COUNTRY.
WE ARE NOT SHORT-TERM INVESTORS.
00:13:49WE DO NOT INVEST A LITTLE HERE
LIKE INDIVIDUAL INVESTORS WITH
00:13:54OF 401K, WHICH IS ACTUALLY MUCH
RISKIER.
00:13:59WE ARE LONG-TERM GENERATIONAL
INVESTORS.
00:14:02SO, WE LOOK AT OUR RETURNS AND
HOW WE HAVE WEATHERED THE MARKET
00:14:06CYCLE.
WILL LOOK AT A 25-YEAR
00:14:09ANNUALIZED RETURN FOR OUR
EMPLOYEES THAT IS IT WELL OVER
00:14:139%.
OUR ACTUARIES LOOK AT THESE
00:14:16ASSUMPTIONS.
THESE ARE PROFESSIONAL ACTUARIES
00:14:21WHOSE EXPERTISE IS IN PENSION
FUNDS TO FIND PENSION FUNDS.
00:14:25WE DO NOT MAKE CHANGES EVERY
YEAR.
00:14:27WE DO NOT CHANGE OUR ALLOCATION
EVERY YEAR.
00:14:30WE HAVE NOT GONE TO RISKIER
INVESTMENTS.
00:14:33WE ARE GLOBAL INVESTORS.
HIGHLY DIVERSIFIED.
00:14:38WHICH IT ACTUALLY LOWERS RISK.
>> THIS IS WHERE YOU START TO
00:14:42SHAKE THE DEBATE OF IT, RIGHT?
THE REALITY IS YOU HAVE HAD THE
00:14:47LOWEST RATE OF RETURN OVER THE
LAST FIVE YEARS, THE LOWEST OF
00:14:50THE PENSIONS IN OHIO, 5%.
YOU NEED TO TAKE THAT SNAPSHOT
00:14:56AND SAY HOLY MOLY, YOU'RE NEVER
GOING TO GET 8%.
00:14:59THE REALITY IS, GETTING THE 8%
ON AVERAGE YEAR AFTER YEAR IS
00:15:07HIGHLY UNLIKELY AND TO KEEP THAT
NUMBER AT 7.75%, HE WILL HAVE TO
00:15:14PUT YOUR ASSETS IN RISKIER AND
RISKIER INVESTMENTS.
00:15:19ALL THE BENEFITS, PRIVATE OR
PUBLIC, THEY ARE ALL SEARCHING
00:15:21FOR RATES OF RETURN, BECAUSE THE
LOW INTEREST RATE IS KILLING THE
00:15:27PENSION FUND'S ABILITY.
YOU CAN READ THAT ANYWHERE YOU
00:15:31WANT.
>> I LOOK BACK AT ONE YEAR -- I
00:15:41HAVE A LITTLE BIT MORE THAN 21%.
YOU CAN PICK ANY SNAPSHOT IN
00:15:47TIME AND GET A LOW RETURN OR A
HIGH RETURN.
00:15:50THE DEFINED BENEFIT PLAN IS
CONSTRUCTIVE.
00:15:56WHERE IS YOUR HORIZON?
THE REAL CRISIS IS IN THE
00:16:02PRIVATE SECTOR.
1% OF THE POPULATION IS PREPARED
00:16:07FOR RETIREMENT.
THAT IS A TRUE ECONOMIC CRISIS
00:16:13IN THIS COUNTRY.
A DEFINED BENEFIT PLAN TO PAY
00:16:17PUBLIC EMPLOYEES' AVERAGE
BENEFIT WILL BE AROUND $12,000 A
00:16:21YEAR, HARDLY LAVISH, KEEPS THEM
OFF STATE AID AND CONTINUES TO
00:16:27HELP THEM CONTRIBUTE TO OUR
ECONOMY.
00:16:29OUR PENSION FUNDS COLLECTIVELY
PUT AROUND $14 BILLION BACK INTO
00:16:36OUR ECONOMY EVERY YEAR.
IF YOU TAKE $1 OF A TAXPAYER
00:16:42CONTRIBUTION, THAT EQUATES TO
ABOUT A $5 RETURN.
00:16:46>> WE CAN TALK ABOUT THOSE
MULTIPLIERS, AND IT DID IT WORK
00:16:52FOR THE OBAMA ADMINISTRATION.
AS WE ALL KNOW, THAT IS NOT THE
00:16:56REAL NUMBER FOR A CAREER
EMPLOYEE HE.
00:16:59IT IS ON MUCH HIGHER NUMBER.
>> THE CAREER EMPLOYEES FOR THE
00:17:06BUT GUY EIGHT INSTITUTE
EMPLOYEES IT IS $39,000 WHICH IS
00:17:11NOT LIVING AT LAVISH EITHER.
>> DO YOU HAVE SECURITY WITH
00:17:16THAT?
>> IT IS AROUND $20,000 A YEAR.
00:17:19PUT THAT IN PERSPECTIVE.
THIS DEFINED EVERY PENSION -- IT
00:17:25WOULD COST $123 BILLION A YEAR
MORE, WHICH IS A QUARTER OF GDP.
00:17:31THAT IS UNSUSTAINABLE.
YOU CANNOT MANUFACTURE THAT.
00:17:35IF YOU ARE GOING TO SPEND THIS
MONEY IN THE ECONOMY, THAT IS
00:17:40ABSOLUTELY TRUE -- BUT THE
REALITY IS, TO GET THIS MONEY IN
00:17:43THEIR POCKET, IT HAS TO BE TAKEN
FROM SOMEONE ELSE'S POCKET.
00:17:4914% OR MORE COMES FROM THE
TAXPAYER, AND THE REALITY IS --
00:17:55RIGHT, 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
00:18:11NO FIFTH 14 -- NO 14%.
PUBLIC EMPLOYEES DO NOT GET
00:18:18SOCIAL 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
00:18:35BENEFITS TAKEN AWAY FROM YOU,
WHICH IS QUITE AN INTERESTING
00:18:41PENALTY.
IF YOU ARE NOT PAYING THE 14%
00:18:46EMPLOYER CONTRIBUTION AND 10%
EMPLOYEE HE MATCH, THAT IS
00:18:52CAPPED, YOU WOULD BE PAYING
SOCIAL SECURITY --
00:18:58>> 6.2%.
>> ARE AROUND 6.2%.
00:19:02YOU ARE ACTUALLY -- AND THAT
MONEY LEAVES THE STATE.
00:19:09THE MONEY THAT IS PAID INTO THE
DEFINED BENEFIT PENSION PLAN
00:19:15STAYS HERE IN OHIO.
92% OF THE PUBLIC RETIREE'S STAY
00:19:20HERE AND SPEND MONEY, AND IT IS
TAXED.
00:19:22>> SURE, BUT THE COMPARISON IS
6.2% FOR SOCIAL SECURITY, AND
00:19:30YOUR LOOKING AT 10.2% COMPARED
TO 14%.
00:19:33AND YOUR RIGHT, YOU WERE NOT
ASKING TAXPAYERS TO PAY MORE.
00:19:37BUT YOU HAVE THE CADRES,
TAXPAYERS WOULD HAVE TO PAY
00:19:41MORE.
I AM NOT NAIVE.
00:19:43I KNOW IF WE HAD A DEMOCRAT IN
OFFICE AS GOVERNOR WITH THE
00:19:48SENATE, THEY WOULD HAVE THE
EMPLOYER CAP RAISED.
00:19:52WE CAN DENY IT, BUT IT WOULD
HAPPEN.
00:19:55>> I WANT TO ASK YOU A LITTLE
BIT ABOUT THE 401KS.
00:19:59WE DO NOT DO DEFINED BENEFIT
PLANS.
00:20:04OR WE DO SOME KIND OF HYBRID.
THE EMPLOYEES TO WORK IN
00:20:10PRIVATE SECTOR COMPANIES -- A
LOT OF EMPLOYEES TO NOT SAVE
00:20:14ENOUGH.
>> THAT IS RIGHT.
00:20:17A LOT OF PEOPLE IN 401K TO NOT
PUT ENOUGH MONEY INTO IT.
00:20:22DATA SOMETHING -- YOU HAVE SEEN
THE PLANS COME OUT AND TRY TO
00:20:26DEAL WITH AUTOMATIC WITHDRAWALS
AND THINGS LIKE THAT.
00:20:28YOU HAVE TO MAKE SURE, WHETHER
YOU'RE A GOVERNMENT WORKER OR A
00:20:32PRIVATE WORKER, YOU DO WHAT YOU
HAVE TO DO TO TAKE CARE TRUST TO
00:20:37HAVE A SAFETY NET.
>> ABSOLUTELY CORRECT.
00:20:40>> THERE IS NO ARGUMENT THAT
EITHER SIDE HAS LIMITATIONS DO
00:20:47WITH.
BUT THE IDEA THAT YOU FULLY FUND
00:20:48YOUR 401K TO THE DEGREE THAT YOU
CAN, THAT HE WILL NOT HAVE
00:20:52ENOUGH RETIREMENT?
THERE ARE WAYS TO SET YOUR
00:20:57FEDERAL SAVINGS PLAN.
IT HAS FIVE OPTIONS.
00:20:59THOSE ARE SAFE.
THERE ARE WAYS TO STRUCTURE IT
00:21:03SO YOU MINIMIZE THE RISK AND
MAKE SURE YOUR GIVING
00:21:07CONTRIBUTIONS INTO THE SYSTEM.
>> WHY NOT GO WITH THAT OR A
00:21:10HYBRID SYSTEM?
>> BEFORE A ONE K IS THE
00:21:15RISKIEST WAY TO PREPARE FOR
RETIREMENT -- BEFORE A ONE K IS
00:21:19THE RISKIEST WAY TO PREPARE FOR
RETIREMENT.
00:21:21THEY SIMPLY DO NOT WORK THAT
WAY.
00:21:24I AM TALKING ABOUT BUS DRIVERS,
SCHOOL COUNSELING -- SCHOOL
00:21:33CROSSING GUARDS --
>> AND PEOPLE WHO ARE LOW-PAID.
00:21:41>> THERE ARE SCHOOL TREASURERS,
BUSINESS OFFICIALS.
00:21:46THESE ARE NOT INVESTORS.
IF WE HAD HAD -- LET'S JUST TAKE
00:21:55A BUS DRIVER WHO RETIRED IN
2008.
00:21:59THAT PERSON WOULD HAVE RETIRED
WITHOUT A DEFINED BENEFIT.
00:22:05I THINK THAT IS VERY POOR PUBLIC
POLICY.
00:22:08I DO WANT TO ADD 41 K -- 401KS
ARE THE MOST EXPENSIVE WAY TO
00:22:17PROVIDE A BENEFIT.
401KS --
00:22:20>> IF THE BUS DRIVER CONTRIBUTED
TO THE 401K TO ROUTE THEIR
00:22:28CAREER, THEY WOULD HAVE SOCIAL
SECURITY IS A PRIMARY ELEMENT.
00:22:30IF THEY PUT MONEY IN, THEY WOULD
HAVE THAT.
00:22:33THE VAST MAJORITY OF AMERICANS
LIVE IN A SYSTEM OF SOCIAL
00:22:37SECURITY, THERE FOR 1 K, AND
PERSONAL SAVINGS.
00:22:41THE ONLY PEOPLE NOT IN THAT
WORLD ARE THE PUBLIC SECTOR
00:22:45WORKERS AND THE UNIONIZED
WORKERS.
00:22:47EVEN DEMOCRATS IN RHODE ISLAND
ARE REFORMING THE SYSTEM,
00:22:52BECAUSE FOLKS UNDERSTAND THAT
THERE IS A BASIC MATH ISSUE THAT
00:22:57EVENTUALLY YOU'RE GOING TO HAVE
TO SOLVE.
00:22:58IF WE DO NOT HAVE A MARKET LIKE
WE HAD IN THE MID-1990'S, THERE
00:23:05IS JUST NO WAY IN THE LONG
TERM, WHETHER IT IS THEIR
00:23:09PENSION FUND OR ANOTHER ONE, THE
CRISIS IS GROWING AND IT WILL
00:23:14CAUSE A MATH CRUNCH.
YOU JUST CANNOT SOLVE IT UNLESS
00:23:19YOU RAISE TAXES TO PAY FOR.
>> WE AGREE.
00:23:22THE PENSION CRISIS IS GROWING IN
THE PRIVATE SECTOR.
00:23:25THERE IS NOT A CRISIS HERE.
THESE PLANS ARE RUN BY
00:23:31FIDUCIARIES.
THEY ARE HIGHLY DIVERSIFIED.
00:23:36NON-RISKY INVESTMENTS.
>> MOST PEOPLE CANNOT GET THIS
00:23:40BENEFIT.
I THINK THAT IS PART OF THE
00:23:43FRUSTRATION.
"I WANT TO GET THOSE BENEFITS,
00:23:47BUT I CANNOT WORKING IN THE
PRIVATE SECTOR."
00:23:51>> AND THAT SHOULD BE THE
CONVERSATION.
00:23:54THIS WILL BE A TRUE CRISIS FOR
THE COUNTRY.
00:23:57NOT FOR OHIO PUBLIC EMPLOYEES.
THE PENSION FUND NEEDS FIXING.
00:24:04IT IS STILL FIXABLE.
THE DEFINED BENEFIT PLAN -- IT
00:24:10IS 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
00:24:19PRIVATE SECTOR WORKERS GETTING
JEALOUS AND THAT IS WHERE THIS
00:24:22IS COMING FROM?
>> THEY ARE ALSO WATCHING THEIR
00:24:25TAXES GO UP BECAUSE THEY
PARTIALLY -- NOT ENTIRELY --
00:24:28PARTIALLY BECAUSE THEY HAVE TO
PAY 14% TO THIS WORKER.
00:24:32I AGREE.
IT IS DRIVEN PARTIALLY BY THE
00:24:36HUGE CONTRIBUTION RATES THAT
AGAIN, EVEN IF YOU USE SOCIAL
00:24:40SECURITY, IT IS STILL FROM 3.8%
MORE FOR FDRS TO MORE FOR
00:24:52FIREFIGHTERS AND POLICE.
THE TAXPAYER SAYS, WAIT A
00:24:56MINUTE.
>> EMPLOYEES ARE CONTRIBUTING.
00:24:59WHICH IS ABOUT DOUBLE WHAT YOU
FIND NATIONALLY.
00:25:04>> THAT IS RIPE.
IF WE WANT TO GO BACK -- THAT IS
00:25:08RIGHT.
IF WE WANT TO GO BACK AND HAVE A
00:25:12LION BE THE LAST STATE TO THE
NEW ECONOMY WE HAVE TO DEAL
00:25:16WITH, THE REALITY IS WE MOVE
EVERY PERSON IN A WIRED TO A
00:25:21DEFINED BENEFITS PLAN, IT WILL
COST US $100,000 A YEAR.
00:25:26DO THE MATH.
THE MATH IS PRETTY BASIC.
00:25:32>> I WANT TO TELL YOU THE ONLY
PEOPLE WHO BENEFIT -- AND THE
00:25:37ECONOMY WILL SUFFER GREATLY --
TO A TRANSITION AWAY FROM
00:25:42DEFINED BENEFIT PLANS FOR
PUBLIC EMPLOYEES WILL BE THOSE
00:25:47IN 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.
00:26:03FOR MY COLLEAGUES AT OHIO PUBLIC
RADIO AND TELEVISION, THANKS FOR
00:26:04WATCHING.
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00:26:13AND PLEASE JOIN US AGAIN NEXT
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00:26:29-- THROW TO OHIO, ACROSS THE
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Note : Transcripts are compiled from uncorrected captions