Misconceptions are hard to correct. Some Ohioans believe -- mistakenly -- that our state's public-employee pension systems are in dire need of funding.
The terms "insolvent" and "bankrupt" are used recklessly. They can cause unwarranted alarm among those who only hear a sound bite or read a headline.
Ohio's retirement systems are still recovering from the financial market turmoil of 2008. But they are all relatively healthy.
The Ohio Police & Fire Pension Fund is financially strong. Even without any changes to our funding formula, we will be able to pay all promised benefits for decades to come.
Confusion over the financial stability of our fund stems from the fact that, like each of the other public retirement systems in Ohio, we do not meet the state's mandated 30-year funding requirement. This benchmark aims to measure the long-term financial health of the systems.
It requires a pension fund to have enough money on hand to pay off all of its current obligations within 30 years. But it has nothing at all to do with the current financial strength of the plan.
Each system has developed long-term funding recommendations to comply with the requirement. Ohio Police and Fire has offered a set of proposals in each of the past seven years.
But these changes require action by the General Assembly, and lawmakers have not acted on any of our proposals. They have simply gathered dust on Statehouse shelves.
Pension reform is essential to the long-term health of our system. Demographics show that we are all living longer. In turn, we are able to work longer, even in the more-dangerous professions of law enforcement and firefighting.
To address these realities, we recommend raising the retirement age for our members, increasing the amount that police officers and firefighters contribute to fund their own pensions, and curtailing cost-of-living allowances for retirees.
Our recommendations do not seek one additional dime from taxpayers. The funding corrections would be entirely on the backs of our members.
We firmly believe in the defined-benefit pension model, which has provided retirement security for Ohio's public employees for decades. To fund a member's pension, we depend on fixed contributions from both members and their employers.
However, the largest funding piece comes from investment returns managed by seasoned financial professionals. This formula continues to provide a dependable pension for people who dedicate their career to public safety, and is the most efficient use of money entrusted to us.
We administer pensions for more than 26,000 members. They have an average annual benefit of $28,540, and are not eligible for Social Security. Considering the inherent danger of the job and the increased likelihood of a disability shortening their careers, providing a defined pension amount provides peace of mind at a reasonable cost.
We urge state lawmakers to get down to business and address our recommendations. We've had plenty of discussions, including 11 hearings before a House subcommittee.
The proposed changes have been thoroughly vetted and written into legislation. The time has come for the General Assembly to approve this important measure.
William J. Estabrook is executive director of the Ohio Police & Fire Pension Fund.