Making Public Servants Millionaires When They Retire

Government workers receive gold-plated pensions and can retire in your 50s while the rest of us will have to work until we're 70 to pay for those pensions.

Government employees receive much higher compensation than the private sector especially considering retirement benefits and job security. Government pay scales never decrease. Private sector compensation fluctuates. Retirement benefits for government employees are off the charts. The compensation value of the benefits is outrageous. Government employees think they have birthright to retire in their 50s with inflation protection, early retirement medical care, and high replacement income. Elimination of pay raises should be part of the solution for the short term. If you think that elimination of pay raises is not justified, try to find work in the private sector now.

Many federal and state workers get in young, work their 20 years (not very long...many retire in their 50's) and are set for life with every benefit paid for, perhaps living another 30 to 40 years. Private workers have more ups and downs because they work in a competitive environment. The government environment is funded by money not earned by competition but by electing the right bureaucrats who bilk the taxpayers. The disparity between retirees in the public and private sectors is going to cause tremendous problems in the future as the availability of private pensions decreases. These same private workers who are funding the government workers who are set for life are eventually going to become very upset.

Federal, state and most local workers get cost of living increases, fat pensions, health care, two hundred days off a year, stipends for parking and commuting, and lifelong protection against layoffs. And they are the biggest whiners around. Private sector workers are losing the few benefits they have or their jobs, have seen their wages actually go down in real purchasing power, and see their jobs going overseas or to illegal aliens. Which ones voted overwhelmingly for Obama? -- the government workers. And all of this is being paid for by the increasingly distressed private sector workers. Any government employee who is a union member is working against this country's best interests; and they are the people protesting any time budgets need to be cut. It is the weight of these unions that keep driving our country further and further into the red. The revolution is coming.

Ohio Police & Fire Pension Fund: The Nibbling on the Margins Continues

February 8, 2011

Buckeye Institute - Changes are under way at the Ohio Police & Fire Pension Fund (OP&F) so it can comply with the 30-year solvency requirement law.

The latest and greatest idea for the fund to save money is adjusting the annual three percent cost of living allowance (COLA) for future retirees. Going forward, the COLA will either be three percent or tied to the consumer price index – whichever one is lower.

The second piece of yesterday’s agreement reshuffles money from health care into the pension fund because the health care account is not required to have its 30-year liabilities funded.

Fundamentally, this does nothing to save the taxpayers money.

These “reforms,” coupled with prior agreed upon changes (raising retirement age from 48 to 52, delaying COLA adjustments until age 55, increasing employee contribution rate from 10 percent to 12.25 percent, and calculating retirement benefits based on five highest years of pay), return OP&F to a state of solvency, but they are only a band-aid and provide little cost savings to taxpayers.

As the Buckeye Institute’s report Dipped in Gold: Upper-Management Police and Fire Retirees become Public-Service Millionaires suggests, a great start to true pension reform would be eliminating the costly Deferred Retirement Option Plan (DROP), which allows double dipping.

An even better solution is moving everyone in the state’s five pensions to defined contribution plans as Illinois recently did.

While OP&F may legally pass muster, the pension fund is certainly no friend to the taxpayer.

Police & Fire Retirees Become Public-Service Millionaires

“Making public servants millionaires when they retire is not the bargain you agreed to as a taxpayer. Ohioans bear the seventh highest state and local tax burden due to expensive programs like DROP. Private-sector taxpayers, many of whom have experienced job losses, pay freezes or cuts, and benefit reductions, cannot afford to finance the gold-plated compensation packages of their police officer and firefighter neighbors.” - Mary McCleary, Buckeye Institute Policy Analyst

October 23, 2010

Xenia Citizen Journal - The Buckeye Institute for Public Policy Solutions today released “Dipped in Gold: Upper-Management Police and Fire Retirees become Public-Service Millionaires.”

Through the Deferred Retirement Option Plan (DROP), public safety officials are eligible to retire on paper, yet continue to work for up to eight years while their pensions (along with three percent cost-of-living allowances and five percent interest payments) accumulate in untouchable accounts.

When the officers exit DROP, it is not uncommon for them to collect lump sum payments totaling roughly $1 million dollars. Since they are treated as if they are in year 9 of retirement when they exit DROP, many in upper management also collect yearly pension payments in excess of $100,000 for the rest of their lives.

Since the Ohio Police & Fire Pension Fund (OP&F) is a highly secretive entity, the report details DROP payouts and pensions for hypothetical Columbus and Cincinnati police officers. Supposing the average DROP participant is a Columbus police officer, taxpayers would save nearly $1.2 billion if the DROP program were eliminated and the retirement age were raised from 48 to 55.

The report also suggests several other money-saving options such as terminating cost-of-living allowance increases during DROP, tying the interest payments to market rates, and disallowing participants to keep their required employee contributions to OP&F.