COLUMBUS, Ohio — Ohio’s largest public-pension system might cut benefits for future employees, under a plan that’s under consideration.
The board for the Ohio Public Employees Retirement System is weighing raising the retirement age and cutting benefits for all employees hired in 2022 or later.
In a different proposal to save money on health-care costs, the OPERS board is considering shifting future retirees who haven’t yet qualified for Medicare into the Obamacare marketplaces, while giving them money to cover the premiums. The OPERS board this week also voted to freeze pensioners’ automatic cost-of-living increases for 2022 and 2023.
All the changes are meant to strengthen the pension system, which is short $24 billion of what it needs to fund its total obligations. The cost-of-living freeze, for example, would save OPERS an estimated $3.4 billion, officials said.
The non healthcare-related moves would require further approval by state legislators, who last took major action to cut state employee pension benefits in 2013.
Mike Pramik, an OPERS spokesman, said pension system leaders are preparing for what’s expected to be a tougher future investment climate.
“It’s a lot more uncertain over the next few years, or at least that’s what everyone’s telling us,” he said. “So we need to plan for that.”
OPERS, which represents more than 100,000 active and retired state employees, is Ohio’s largest public-employee pension system. Its investment holdings are worth $87.8 billion, making it one of the largest pension systems in the country.
Under the changes under consideration, a new, non law-enforcement hire would have to wait until they’re 62 and have 35 years of service credit before they could retire and receive their full pension benefits. That compares to an equivalent new hire now, who has to work until they’re 55 and have 32 years of service.
They also would have to set aside 11% of their salary to fund their retirement, compared to the current 10%.
The OPERS board was briefed on the potential changes this week. Pramik said they may vote to ask the state legislature to adopt the changes later this year.