BACK TO THE BELLWETHER:

Bush Lauds Ohio Pension Plan (Edwin Chen, April 15, 2005, LA Times)

During an hourlong discussion here, Bush repeatedly sought to highlight the ability of Ohio state employees to opt between a defined-benefits system run by the state or a defined-contribution program that employees can control.

"See, it's an interesting concept that the people of Ohio put in place. The government said, 'Why don't we trust people — after all it's their own money,'" Bush said.

He received a briefing on the program from five handpicked speakers arrayed around a conference table on a stage in a Lakeland Community College gymnasium here, about 30 miles east of Cleveland.

Under Ohio's public employees retirement system, introduced in 2003, workers contribute 8.5% of their salary to their retirement plan while their employers contribute another 13.31%. An alternate plan, which began in 1998, allows eligible state university workers to contribute up to 10% of their salary while the university contributes 13%.

In a background paper, the White House noted that 97% of Ohio's public employees, or 846,000 people, are exempt from Social Security. While the paper also noted that just "thousands" of them have chosen to participate in the state program, that number "has been growing substantially" since the program's debut in 2003.

One participant today was Ray Sines, an early proponent of the programs. He recalled the initial skepticism he met and recalled his efforts "a tough sell."

Another speaker, Betty Young, head of human resources at the University of Cincinnati, said she has enjoyed a 6% rate of return under the state program. She also said the program has proven attractive to peripatetic university professors because the retirement accounts can be rolled over into IRAs or 401K accounts if they enter the private sector.

"What we're trying to do is to learn lessons from a state like Ohio, apply it at the federal level, so workers get a better deal," the president said. "And part of a better deal is a better rate of return."

Another speaker said he was enjoying a 7.1% rate of return — compared to the 1.8% return from Social Security.

Bush said that when he was briefed on the Ohio program, he was "amazed at the willingness of the great state of Ohio to think differently."

He added: "And it struck me about how relevant this conversation was going to be, for others to listen to what is possible for Social Security."

He urged Congress to "trust people with their own money" and create a system "that would work similar to the state of Ohio."

Let's hear Democrats badmouth Ohio.

Posted by Orrin Judd at April 15, 2005 8:06 PM