More changes meant to strengthen Ohio’s largest public pension system should not be rushed into – not after its board voted 9-2 just over a week ago to cut health-care benefits
What happens next is in the hands of the state legislature.
It’s been four months since the 11-member board of the Ohio Public Employees Retirement System handed the legislators a recommendation that would shave $3.44 billion off the $24 billion it needs to pay its future benefits.
What’s being proposed for one of the premier pension plans in the nation is a two-year freeze on cost-of-living adjustments for retirees, plus a two-year delay of annual increases for all new retirees. No action has yet to come forward on the freeze. Given the health-care cuts, legislators need to take a deep look into the issue before making any decision.
The impact on retirees who were depending on these benefits is significant.
Putting it in dollars and cents, it would mean a pension that pays $1,000 per month would see a $732 reduction at the end of 2023 and $850 cut in 2027, according to a report in the Columbus Dispatch.
Legislators need a complete understanding of what happened, why it happened and how it can be avoided in the future before they take any action on a freeze. Anything less would be irresponsible to the 304,000 current workers and 213,000 retirees from municipal, county and state offices across Ohio that OPERS represents.
The cuts in health benefits made by its board already has its members feeling more than a pinch in the pocket book.
For retirees who are Medicare eligible, their monthly allowance for health benefits will drop from between $225 and $405 per month to a range of $178 to $315 per month. People who worked fewer than 20 years (the current number required to retire with health benefits) will see their monthly payments decline by $108 on average.
Another major change eliminates the health care plan for retirees who aren’t Medicare eligible. Instead of paying 51% to 90% of their premiums, OPERS plans to give these retirees money to go buy insurance on the individual market.
While the OPERS board has the power to make changes in the health plan, it does not have the authority to increase member contributions or lower cost-of-living adjustments. Only the legislature is empowered to do so.
Some legislators are quietly questioning if all the cuts go far enough — which is scary for retirees. Others are more boisterous in debating how much more are necessary.
As legislators tackle the difficult decisions ahead, it is important members of OPERS are not kept in the dark.