The Ohio Public Employees Retirement System is studying whether to cut the cost of living allowance for its 1-million retirees and members.
OPERS Director Karen Carraher said in a letter to lawmakers that while the system is in a strong financial position now, trustees are exploring options to maintain that fiscal health. “It is important to stress we are in the early stages of considerations with the board and are soliciting feedback from the beginning,” she wrote.
OPERS, which has granted a COLA since 1970, gives a 3 percent bump to people who retired before January 2013. For workers who retired after that, the adjustment will be tied to the consumer price index with a 3 percent cap, starting in 2019.
Any changes to OPERS cost of living allowance will require lawmaker approval. Changes in pension COLAs is a big lever to straighten out a system’s finances. Likewise, retirees rely on COLAs over the long haul to preserve their buying power and keep pace with inflation.
Other public pension systems have already taken steps to cut benefits.
In April, the State Teachers Retirement System of Ohio voted 10-1 to indefinitely suspend the cost of living allowance given to retired teachers and future retirees. The fix, though, may not be enough to shore up the $72-billion fund and more cuts may be needed later, pension officials warned.
STRS covers 490,000 teachers and retirees in Ohio.
School Employees Retirement System, which covers 292,000 janitors, bus drivers, cafeteria workers and retirees, got authority in the state budget bill to reduce its COLA. Currently, retirees get a fixed 3 percent annual COLA. SERS will link the rate to inflation with a 2.5 percent cap and pension trustees have the authority to suspend the payment if actuaries determine it’s necessary.
The Ohio Police & Fire Pension Fund trustees are meeting Tuesday to continue debate over how to restructure its health care benefits for retired cops and firefighters. OP&F spokesman Dave Graham said the fund is in the process of hiring a consultant to advise OP&F on the issue. Starting in 2019, retired cops and firefighters will no longer receive health care benefits through the Ohio Police & Firefighters Pension Fund but instead will receive a stipend to buy coverage on the open market.
OP&F trustees are not expected to make any decisions on details this week, Graham said.
OP&F has $14.8 billion invested for the benefit of 58,000 police, firefighters, retirees and beneficiaries.