Public employees retire younger, richer

Pension plans for workers in private industry are being redefined, reduced and even eliminated, but in Ohio, public employee pensions have been increasing steadily. And, to add insult to injury, taxpayers are being forced to pick up much of the bill.
Public pensions are part of a disturbing trend that shows public payroll, public pay scales and pensions and other fringe benefits increasing at a rate faster -- sometimes much faster -- than in the private sector.
An Associated Press story based on reporting by The Plain Dealer estimated that the amount of tax money spent on public pensions in the state increased by nearly a third over six years. The cost of supporting the pension funds for state and local employees will be 3.5 billion in 2007.
Who pays?
Defenders of public pensions are fond of pointing out that deductions form their pay checks fund the system. But typically, the employee deduction is at most 10 percent, while the government entity pays anywhere from 14 percent to 25 percent.
Picking up a larger share of the match in lieu of announcing a large increase in base pay has been a tactic used by public officials and the employee unions with whom they negotiate. Such agreements lessen the likelihood of a backlash from the taxpayers.
It's not until the numbers begin to add up or, for instance, a report comes out such as the one in Austintown this week that noted that the school district is paying the entire 25 percent pensions match for the superintendent, that eyebrows are raised.
Government retirees in Ohio earned a median pension of 21,804, according to the Plain Dealer's analysis. The average for private sector workers, including Social Security, was 18,390.
Age difference
But the difference is more dramatic than that, because many public employees are able to retire with full benefits at younger ages and with fewer years of service than workers in private industry. And their pensions are guaranteed and carry cost-of-living provisions. Someone who has worked a lifetime for private companies can't begin collecting Social Security until age 63, and that age will increase as baby boomers approach retirement. In Ohio, a police officer with 25 years on the job can begin collecting retirement at age 48.
"States like Ohio offer far better plans than anything that is available in the private sector," said E.J. McMahon, a pension expert at the Manhattan Institute in New York, which analyzes government policy.
Taxpayers are becoming aware of the growing inequities, but since the politicians who write the laws reap the pension benefits themselves, it is going to take an uproar to effect a change.