“Just fantastic progress. The system has come a long way in a very short amount of time. We knew it would happen once pension reforms were enacted and we are very pleased to be able to report to the membership that for the fourth year in a row now we’ll be able to say we are complying with state solvency law,” Gallagher said.
State law requires that the pension systems have enough assets to pay off their liabilities within a 30-year window.
Retired police and firefighters, though, are facing dramatic changes to the health care packages offered through OP&F starting Jan. 1, 2019. Trustees for the system will pick a vendor next month to offer health care benefits, Gallagher said. The fund is expected to give stipends to retirees, who will then purchase coverage on their own on the private market. Without making changes, OP&F is expected to run out of health care funds within nine years.
Health care for retired public workers is not a guaranteed benefit under Ohio law but the five systems have provided it for decades. In recent years, though, retirees have shouldered more of the cost.
Related: Rising costs squeezing pension funds
Ohio Public Employees Retirement System, the largest in Ohio and the 12th biggest pension system in the country, voted earlier this week to reduce the cost of living allowances given to retirees to 2.25 percent or inflation, whichever is lower, down from a flat 3 percent. The COLA is not compounded.
Related: Public pension board votes to lower cost of living allowances
And in May, the State Teachers Retirement System of Ohio voted to indefinitely suspend the COLA give to its 490,000 members.
Related: Retired Ohio teachers to lose cost of living increase
Like in other states, Ohio’s public pensions are defined benefits systems. The pension benefit is based on age, years of service and final average salary and it’s guaranteed. Defined contribution plans, such as 401(k) funds, are more common in the private sector. Public employees in Ohio do not participate in Social Security.