OPERS Pension Plan Draft Legislation Being Modified to Include More Detail
Additional details of the proposal to change Ohio Public Employees Retirement System (OPERS) are being worked into draft legislation. The draft is expected to be completed shortly and then introduced in the Ohio General Assembly.
OPERS is the largest of the five Ohio pension systems that have drafted proposals for changes to Ohio law that would strengthen their financial standing. So it's to be expected that OPERS would face the greatest challenge in making changes that are as fair as they can be to as many stakeholders as possible.
It's likely that some of the specifics won't be known until the legislation is ready to be introduced in the Ohio General Assembly. However, OPERS does appear to be following its own lead of just a few years ago, when modifications to the health care plan were phased in over time, allowing the most generous benefits to those with the least time to adjust their plans, and asking the most of those who had the most time to plan and respond to the modifications.
OPERS has proposed that modifications to the pension plan, as described in the current draft legislation, should be phased in by identifying three groups of participants.
"Group A" would include those eligible to retire within five years after the effective date of the legislation. Except for proposed changes to the Cost-of-Living Adjustment (COLA), these partcipants would be grandfathered, and would not be affected by any other proposed changes to the pension system.
"Group B" would include participants who satisfy either of these criteria:
--those with 20 or more years of service credit by the date the legislation takes effect, or
--those eligible to retire within 10 years after the effective date of the legislation.
Like Group A participants, the COLA provisions would apply. In addition, participants retiring early would see their pensions reduced from the current plan, reflecting longer life expentancies.
"Group C" would include everyone not included in Group A or Group B. Group C OPERS participants would not be eligible for any grandfathering. This is in keeping with the idea that of all three groups, this group has the longest time to plan how they will deal with the changes in the pension system.
How severe will changes be for Group C participants? Different OPERS participants will see different results. One particular OPERS particpant, for example, found that when the benefits he was expecting under the new plan were compared with the existing system, his pension dropped by about 2.5%. So for every $1,000 of benefit, the pension was reduced by about $25. While, of course, it's better to have more money, it was a more measured and limited reduction than many have been fearing.
Once the draft legislation is completed, analyses are expected from the non-partisan Ohio Legislative Service Commission, as well as from the Ohio Retirement Study Council. Until then, we can only speculate on what the draft legislation will actually contain when it is introduced in the Ohio House and Ohio Senate. And of course, eventual passage of the legislation remains subject to all the uncertainties of the political process.
For those anticipating retirement in the near future, there are hopeful signs that the impact they'll experience will be quite limited. And even though we know so little for certain right now, it still appears to be too early to panic.
OPERS