The National Institute on Retirement Security (NIRS) lists economic advantages of pensions, particularly defined benefit pension plans, to the individual, their community and state. The study shows that for each dollar paid out in pension benefits, $1.33 in total economic activity in Ohio is generated.  More importantly, each dollar contributed by Ohio taxpayers to Ohio pensions generates $5.73 in total economic activity in the state of Ohio. This adds up to an Ohio economic impact of over $11 billion per year.

The major portion of Ohio retired teachers’ pension income (about 70-75%) comes from investment earnings on the money that teachers and their employers contributed over the course of their careers. The employer's contribution is really the teachers' delayed compension.
 

Defined benefits plans have built-in economic efficiencies such as better management of longevity risk, enhanced returns because of balanced portfolios and professional management. The plans actually save taxpayer dollars. Claims that Defined Contribution (DC) plans will save school districts and towns money are not true.

To learn more about the studies conducted by the National Institute on Retirement Security, read the ORTA Fall Quarterly or visit the website www.nirsonline.org or this website (www.orta.org) . Also the STRS website (www.strsoh.org ) will soon contain information concerning defined benefits. Watch the Winter ORTA Quarterly for a summary of remarks by Ilana Boivie of NIRS as presented at the ORTA Fall Board Meeting concerning this issue.

In this time of economic turmoil, questions are being raised about our pension plan such as “is the pension paid to retired public employees through the Defined Benefit Plans sustainable?” Please join ORTA, STRS and the other pension systems in knowing the facts about the defined benefit and its contribution to the economy in the state of Ohio.  Be prepared to answer the questions. Most answers are available at the web links listed in this article or by contacting your organization.