Benefits April 14, 2006

Ohio Funds Ask for Contribution Hikes

April 14, 2006 (PLANSPONSOR.com) - State of Ohio public pension funds are seeking worker and employer contribution increases in an effort to address rising health-care costs combined with investment returns still slowly crawling back from their 2002 low point.
Reported by

The Ohio Police and Fire Pension Fund became the latest to seek an increase this week. Board members voted 6-3 to ask lawmakers to approve a plan that would increase pension contribution rates for workers and employers over the next five years, raising $75 million more a year when fully implemented in 2011, the Associated Press reported.

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

The plan would also require more out-of-pocket health care expenses from retirees. The fund hopes to make the changes in January.

“It’s the health care that has primarily put them in a pinch,” Aristotle Hutras, executive director of the Ohio Retirement Study Council, which oversees the state’s five funds, told the Associated Press . “Everybody’s had to do something.”

The funds are obligated by law to maintain income to pay pension costs over the next 30 years, while health care is optional. Boards reluctant to slash health care benefits are seeking ways to shore up both sides of the retirement system.

Contribution rates, controlled by caps set in law for each fund, have been stable for years – some have not increased since the 1970s, Hutras noted. Raising rates now “could be a fix for a good while,” he said.

Benefits April 13, 2006

Bad Hires a Big Cost to Employers

April 13, 2006 (PLANSPONSOR.com) - Replacing a bad hire can cost as much as five times the employee's annual salary in recruitment, training, severance and lost productivity, according to a new survey.
Reported by

According to The Canadian HR Reporter, 42% of the organizations surveyed by Right Management said a bad hire cost them twice the employee’s annual salary. Twenty-six percent said it cost them three times the employee’s annual salary, while 15% reported an amount equal to the employee’s annual salary.

Get more!  Sign up for PLANSPONSOR newsletters.

Eleven percent of survey respondents reported that it cost them five times the employee’s annual salary to correct the mistake of a bad hire.

“A bad senior-level hire or promotion can severely damage a company’s external brand, affecting customer trust and loyalty, and resulting in lost commercial opportunity,” said Mary Marcus, vice-president and national practice leader of Right Management, in the news report. “Similarly, erosion of shareholder and investor confidence in leadership can result in declining stock values. The higher the position, typically the more costly the hiring or succession mistake.”

The primary repercussions of a bad hire cited by organizations included:

  • Lower employee morale – 68%,
  • Decreased employee productivity – 66%,
  • Lost customers or market share – 54%,
  • Higher training costs – 51%,
  • Higher recruitment costs – 44%, and
  • Higher severance costs – 40%.

Survey results are from 444 North American organizations.

«