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.
The OP&F board of trustees voted this week in favor of the major change as a means to preserving the health care fund for the next 15 years. It will impact 58,000 current and retired police and firefighters.
Currently, OP&F covers 75 percent of premium costs for its retirees and 25 percent of the costs for their spouses. That deal will end and be replaced with the yet-to-be-determined stipend amounts.
“No dollar amounts have even been discussed,” said OP&F spokesman David Graham. “Really, no details are available on it right now.”
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OP&F leaders are making no promises that even stipends will be available after 2032.
Though it is not mandated by state law, the retirement system has provided retiree health care coverage since 1974. Starting in 2003, retirees started shouldering more costs as the health care plan became more expensive for OP&F and its members.
If OP&F does nothing, its $900 million health care fund will be drained within nine years, consultants told the system. In 2016, OP&F health care costs hit $223 million.
“Even with these significant changes, current trends in health care and prescription drug costs, health care support beyond a 15-year projection may not be possible without a new income stream,” said OP&F Executive Director John Gallagher in a written release. “The OP&F Board, staff and our outside partners are all dedicated to searching for that funding source to assist future generations of retirees with their health care needs.”
Gary Monto, president of Police & Fire Retirees of Ohio, said he is reserving comment on the matter until more details are released.
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OP&F has $14.8 billion invested for the benefit of 58,000 police, firefighters, retirees and beneficiaries.
Among the system’s assumptions is an expected annual rate of return of 8.25 percent — the highest of the five public pension systems in Ohio. That rate will be reviewed this fall. The other four systems recently reviewed and lowered their expected rate of returns to between 7.45- and 7.75-percent, based on recommendations from consultants and actuaries.
A big drop in the expected rate of return can mean unfunded liabilities balloon, which force pension fund trustees to consider cuts in benefits or other changes.
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