OPERS Board Votes to Reduce and Cap COLA’s

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October 13, 2017
PERI Board of Trustees Votes to Oppose OPERS COLA Proposal
October 25, 2017

OPERS Board Votes to Reduce and Cap COLA’s

(October 19, 2017)  Yesterday the OPERS Board of Trustees voted to adopt a number of changes to cost of living adjustments (COLA) that impact both actives and retirees.  We have included an article from OPERS announcing the changes.  PERI supported a more modest adjustment that would have capped COLA’s at 2.5%.  PERI’s position was cited during the debate but the trustees chose to approve a lower cap at 2.25%, a curious selection since no metrics were presented to inform the trustees of the potential savings to the system at this level.

PERI’s Board of Trustees will meet on October 24th to review OPERS actions and determine our association’s next steps.

 

Ohio Public Employees Retirement System

OPERS Board of Trustees approves COLA changes

The Ohio Public Employees Retirement System Board of Trustees is responsible for the administration and management of your pension plan. As the System’s governing body, the Board has been entrusted to act in the best interests of all OPERS members.

As fiduciaries to all members and retirees, one of the Board’s duties is to assure that the plan is well funded. OPERS must adapt to a
variety of issues as time passes, such as volatile financial markets and the changing demographics of members.

After much deliberation, which included seeking feedback of current retirees and stakeholders, the Board has endorsed a series of recommendations to adjust the cost-of-living allowance, or COLA, in order to help preserve the System for generations to come. These
changes, anticipated to take effect in 2019, would affect current and future retirees.

The recommendations, which require legislative approval by the Ohio General Assembly to implement, include:

1. Tying the COLA to the CPI: Beginning in 2019, all future COLAs will be based on the U.S. Consumer Price Index, capped at 2.25 percent. That means the maximum COLA to be granted will be 2.25 percent, even if inflation during the measurement period exceeds that amount.

2. Delaying implementation for some retirees: The new COLA formula will be delayed two years for OPERS members who retired from 2010 through 2012. This provision was included based upon feedback from our recent survey of OPERS retirees.

3. Delaying initial COLAs for future retirees: The first COLA will be delayed for future retirees until their second pension anniversary.

4. Restoring purchasing power: OPERS will provide a one-time pension adjustment to restore 85 percent purchasing power for those retirees whose purchasing power is less than 85 percent.

5. Including funding triggers: Should OPERS’ required time to pay off unfunded liabilities top 30 years, the COLA will be frozen for the next calendar year. In the event inflation exceeds 3 percent for an extended period of time, the Board could increase the COLA to 3 percent
if OPERS funding is strong.

OPERS would like to thank the thousands of retirees who responded to a survey on the COLA issue. More than 76,000 replies were received. Although we recognize members and retirees prefer no change, the feedback indicated most retirees preferred a cap on future COLAs rather than a freeze.

Making these adjustments to the COLA will reduce our unfunded liabilities by approximately $4 billion, helping to sustain the System. OPERS staff will continue to update you on the progress of this proposal as the process moves forward. Please visit opers.org/cola for the latest updates, videos and answers to Frequently Asked Questions.

Thank you for your understanding, and be assured that the OPERS Board of Trustees is devoted to providing a secure retirement for all members.

48 Comments

  1. Frank Zangara says:

    First l want to provide a sincere thank you for your support. As a 30yr us state retiree l am not pleased with OPERS board vote. Let me ask a question has anyone been provided any hard numbers that indicate future financial problems if a COLA adjustment is not made? When OPERS takes this to the statehouse will the legislators look at projections? Dont we as retirees have the right to demand numbets?

    • Ginny says:

      Did the OPERS Board listen to PERI at all, about anything related to the COLA? It seems as if this was a predetermined outcome by their members who voted yes. Very frustrating and demoralizing for retirees. The OPERS Board seems to have tunnel vision and disregards the opinions of retirees, active members and PERI. What will OPERS take away from members and retirees next?

  2. Rick says:

    I believe that OPERS has just lost the confidence and support of its members. Where is the compromise?
    All the money in OPERS is ours, taken from our paychecks, and the contributions of the entities we worked for, the same legal required contribution that would have gone to Social Security had we paid int that, therefore also our money. We should have at least a say, but they have gone with the most draconian cuts to our financial future possible. And right after the next big reduction in take home pay for our healthcare premium. I understood the Healthcare increases but this immediately after with no time to recover is just wrong. What next the haymakers just keep coming from this administration. Yep time for a real change.

  3. Jim Martin says:

    Things are going well so they raise our insurance premiums, cut coverage from 80% to 75%, and now want to cut COLAs to CPI and based on our initial pensions. When we have a downturn, they’ll be back for much more. At the same time, some of OPERS’ staff receive $100,000 annual pay raises.

    I can’t post this to the OPERS’ blog because my posts “Awaiting Moderation” are then deleted. I tried to call Micheal Pramik to ask why, but OPERS staff refused to connect me. They said they would try to get an email to him. But my question through email to him has not been answered. I presume if you disagree your post is automatically deleted.

    It seems that all groups must sacrifice, except for the employees of OPERS. They are to be safeguarding our pensions, not helping themselves first.

  4. Len says:

    When will the legislature vote on this “slam dunk” move and will PERI provide any letters of resistance on behalf of those of us who have been retired for many years and planned our retirements based on the benefits that we perceived we would receive or is this already a “rubber stamp” done deal?

  5. Dean says:

    Assume you are expected to live 30 years and your COLA is $1000 a year. The OPERS proposal will cut more than $100,000 from your lifetime benefit.

  6. Catherine says:

    No surprise that our fiduciary (opers) did what they wanted. Can someone help me to understand the “restoring purchasing power” item in which OPERS proposes to provide a one time PENSION adjustment to restore 85 percent purchasing power for those retirees whose purchasing power is less than 85 percent. Who does this affect? How is this calculated? It sounds like an adjustment to base pension amount, not cola.

    Thanks for any help to understand this….

    Also the pers item “Including funding triggers” states “Should OPERS required time to pay off unfunded liabilities top 30 years, the COLA will be frozen for the next calendar year. In the event inflation exceeds 3 percent for an extended period of time, the Board could increase the COLA to 3 percent if OPERS funding is strong. ”

    this is extremely dangerous. it removes any opportunity for members to discuss and removes any legislative opportunity for elected officials to vote. Gives OPERS ultimate ability to do what they want HUGE mistake, must be stopped.

    BTW, this all started because of a change in how the financials are presented as enacted by GASB (governmental accounting standards board). Smoke and mirrors with the numbers…. and we are feeling the consequences….

  7. Donna says:

    These changes must not happen. What is PERI doing to stop these cuts?

  8. Len says:

    When will the legislature vote on this and will PERI and retirees have opportunity to provide testimony and/or input?

  9. Larry says:

    Disappointed in this decision by OPERS board. Can PERI influence the Legislature? Our only hope?

  10. Jerry Shaveyco says:

    The PERI board of trustees will meet on October 24th to discuss OPERS plans and take a formal position on their recommendations. We will report our official position and on any action the board suggests PERI members may want to take on October 25th. (per news operi web page)

    Peri
    When did our Trustees come up with the 2.50%

    We are in good Shape-per Steve Toths remarks at the Trustees meeting–Tell our Executive Director to get back to the drawing board and come up with a creditable reason–and until then leave our Cola as is—PERIOD

  11. Frank Zangara says:

    Catherine…to the best of my knowledge those tbat lost 85% purchasing power are those that retired prior to 1990. I believe the numner is 3700 members. What will OPERS give them l have no idea probably a couple of expored Arbys coupons That said what formula they used l have no idea they did not share that. They also never shared numbers that indicate a COLA adjustment is even necessary and PERI advises that the trustees that voted for the COLA adjustments did so without evet being shown any “metrics” to back OPERS fiscal concerns. Will you and l get a lump sum when our purchading power is at 85% l would not count on it. We will be eatimg dry cat food if things continue as they have.

  12. Jim says:

    Wow! This gutting of our benefits will save 4 billion dollars for the system. That is a huge savings. It should produce significant bonuses for those who manage our hard earned funds.

  13. Jim says:

    Also, I see that OPERS still only posts supportive responses.

  14. Greg says:

    Grousing on a blog isn’t going to stop OPERS’ proposal to reduce our COLA. PERI must work with other stakeholders such as AFSME to organize demonstrations at the statehouse and at OPERS HQ. That is what will get the attention of the legislators. Tens of thousands of retirees and public employees should be mobilized to demonstrate. Of course PERI should continue to lobby the board and legislators as well.

  15. Charles says:

    I am shocked at the number of positive posts on the Pers Facebook page. I engaged some of them and my posts were deleted. The voting processes for the Trustees confuses me. We as a group need to be more active in who represents us. I am of the belief that this was long in the making and predetermined regardless of our returned surveys. We have no option now but press for the elimination of the Windfall provision on Social Security.

  16. Dean says:

    So someone at PERI implied to OPERS that a COLA based on CPI with a cap of 2.5% was prefered before the OPERI Board meets this week to establish an official position?

    • Jim says:

      I hope that OPERI will stand with their members and oppose this attack on our pensions. Retroactive laws need to be stopped. This is not what we were promised when we bypassed wage increases because we had such “good pension benefits.” Why aren’t OPERS employee’s wages tied to CPI with the same cap? I didn’t pay into the system to make them rich.

  17. Retiree says:

    Comment from Dale Harmon, October 3, 2017 3:46 pm makes good sense to me. In 2012, to assist persons in making the decision whether or not to retire prior to the 01-07-13 deadline, OPERS had a chart that compared a person’s financial position over 20 years if he either: 1) continued to work and received annual work place cost of living adjustments of 2% per year, or 2) retired and received a 3% annual COLA payment over the same 20 years. The clear implicit message was that those who were active retirees anytime before 01-07-13 would continue to receive a guaranteed 3% COLA and those after would be based on the CPI.
    What support does PERI need from its members to proactively address this injustice in a systematic, effective manner? I am sure many retires would be happy to pay a one-time membetship surcharge to pay for PERI to obtain legal counsel to maintain the 3% COLA. Non-PERI member retirees may see this as an impetus to join PERI at this time. Person’s retiring after the 01-07-13 deadline wiill benefit from this precedent in that the principle of not making retroactive changes will be set for them.

  18. Donna says:

    Yes, OPERS is only publishing positive comments. They sure didn’t publish mine.

    Again I ask, what is PERI doing about this? This has to be stopped. A handful of highly paid executives are making decisions for a whole lot of retirees. But there are more of us than there are of them. PERI, how can we help stop this?

  19. jackie says:

    which legislator is going to sponser this bill? OPERS has blocked me on facebook

  20. Jerry says:

    It seems that during the talks for the 2012 changes Opers wanted to do this then. A verbal agreement was made to keep the c.o.l.a. at 3% for people who retired 2012 and prior years. Opers knew then they would be breaking that verbal agreement in the near future during those discussions for the 2012 changes. That is why it is always key to get an agreement included in print form, Something binding. But even if that were the case, Opers would have reneged on that that also. It seems that was Opers goal all the way back then. The goal being to reduce the c.o.l.a. and phase out the 3%. Everyone has been played by Opers. It is unfortunate. Let’s keep the heat on Opers! Keep contacting members of the general assembly! Thanks.

  21. Rick says:

    I wonder how the state legislature would like to meet 20,000 senior citizens. Certainly we should have the right to be there,Meeting dates need to be published.

  22. Susan Giga says:

    The Legislature ‘a session schedule is on line. Someone would need to pick a date or dates. Would OPERI distribute the information to their members?

  23. Jaime says:

    It doesn’t really matter what the cap is because what we get will be whatever the CPI says.
    The CPI doesn’t use the items that are really going up to figure the CPI. They use whatever items they choose to make the government look good, not healthcare, prescriptions and other items that Seniors need to purchase.

  24. Michael Roberts says:

    SERS already marched with 400 people to the Statehouse in June of this year with signs not to cut their COLA. http://oapse.org/uncategorized/400-march-on-statehouse-and-sers-for-pension-security/ No we must make a lasting impression. We must hit them where most of these money grabbers live, in the double dipping world. Most states have cut it, delayed it or make double dippers pay in. All these high paying positions retire one day and return the next causing a paying member not to be working. Most states are smart enough to realize this is draining their systems. Next make them stop QEBA, they are paying a higher pension to people whose salaries where over 215,000 per year thru QEBA contrary to IRS rules and the money is coming from health benefits, that is how they sneak it out. Put a cap on salaries like other states, no matter how much you make the highest the pension can be figured on would be like 150,000. And perhaps like other states cap the COLA say at 3 percent up to the average wage in Ohio, like 53,000. You get 3 percent up to that and nothing or like anther State . 1/2 percent COLA for anything over the average wage. Finally call for a total audit by Dave Yost, auditor of State.

    • Dean says:

      Michael,

      I spoke with a PERI Board member Sunday. I think they already surrendered. Tomorrow will tell.

      • Michael Roberts says:

        You know Dean, they wanted to build a new jail in Lucas County. I and many thought it should be downtown Toledo like the old one. Anyways we fought, had meeting and got all the dirt we could get on everyone, the people selling the property and everyone At the first meeting the county commissioners said we were having a new jail and that was it they already had purchase agreements. We had so much dirt they ended up saying they don’t know where they are going to build and they canceled the tax levy for November. I spent every night digging dirt. We must have had enough, look up and see the mess that these hedge funds have cost us. http://www.thenews-messenger.com/story/opinion/2016/08/24/column-opers-hedge-funds-grew-zero-billion-years/89209436/ Kasich also worked as an investment banker, serving as managing director of the Lehman Brothers office in Columbus, Ohio. That is why we need an independent audit. At first I thought Dave Yost our auditor of State, now I think it needs to be totally independent.

  25. Jim says:

    Thank you for that article, Micheal.

    • Dean says:

      I agree with you, but to date the PERI Board hasn’t demonstrated a willingness to fight the COLA cut. We will see later today what they decide.

  26. Ron Martin says:

    OPERS is also reneging on promised inflation protection for purchasers of their Additional Annuity. Is an annuity not a legally binding contract?
    My wife and I invested heavily in this annuity…in large part because of the “guaranteed” 3% cola.
    …the following from the OPERS OPERtunity newsletter…summer 2005
    As you will see, putting
    some money away while
    you are working can help
    you enjoy a comfortable
    retirement. The numbers
    on the chart represent
    what a monthly payment
    will be per $1,000 in an
    additional annuity account
    at the time of retirement.
    Remember, annuity
    payments will increase by
    3 percent annually

  27. Pat says:

    I was promised the 3% until I died. Most of us here were. We need to fight this. Call our elected officials. Find out who is going to sponsor this bill. Bombard them with calls and emails.

  28. Jim says:

    We must become very politically active. We must work to defeat any legislator who signs up as a sponsor for this legislation to retroactively attack our contracted pensions.

  29. Ron Martin says:

    Who are the Ohio legislators we should be contacting?

  30. Jim says:

    Ron, contact your State Senator and Representative. Also, contact the legislative representatives on the retirement council.

    http://www.orsc.org/about/members-and-staff

    I know I and others have sent letters and plan to send more.

  31. VINCE says:

    It’s time for the retirees to take some of the hit. The groups B and C are now paying for everything. Retirees need to get on their politicians and start saving jobs that fund OPERS pension or it will eventually be broke, especially if the markets don’t cooperate that’s another story I’m sure.
    People all the Group C Civil Servants are going to start wising up when they figure out there the suckers in the pyramid scam.
    Remember when the State of Ohio jails were sold off to private companies. Those jobs were Civil Servant jobs in those jails, gone never to see the light of day again. It’s really simple math groups B,and C can’t fund group A retirees when there are way more retirees then Civil Servant workers.
    Ok maybe I’m a little hard on our older members. So listen it’s not the retirees fault the pension is weakening, its politician’s greed.
    We need retirees to start fighting in tandem with current Civil Servants workers to save our jobs. See the big picture yet. we need to protect our assets that in turn will save Civil Servant jobs. Our jobs fund retirees’ pensions. Now since these politicians can’t just go and withdrawal money out of our 80 billion billion OPERS bank account, they must find loop holes. So what do they do start selling assets that fund the pension and there you have it instant cash for the state.
    This sell off is common knowledge from Mayor Jackson’s city of Cleveland City address a year ago.
    Now back to the loop hole. some political favor was just paid off along with some more money for some politician to spend and get kicked backed. Someone call the FBI because this is called racketeering. “Gangsters”.
    As the work gets privatized behind (Greed stricken politicians,) Civil servant employees that are funding Retiree pensions suffers….So I say to Retirees stop at once saying in so many words let the groups C or B brothers and sisters that are presently working to foot the bill. Rather look at the big picture open up your eyes get involved in the pension including all the politics that go along with it.
    We have been getting robbed the whole time but are too naive to know it. The pension isn’t broke were just getting replaced by contractors that pay 0 in our pension. Greed my friends WE ARE ALL VICTIMS OF GREED AND ITS TIME TO STOP THE MADNESS .

  32. Vince i am already taking a big hit next year 1159.00 dollars a month for spouse healthcare that use to be 90 dollars a month. You should try living with that much taking off the top of a pension check. I worked 35 years under Opers. My fixed cola is all me and my fellow retirees have to look forward to. And no i don’t think us older retirees are greedy. If anything we are the ones that they want to shoulder the loss of the 3%fixed cola.

  33. Dean says:

    Vince, how many people do you think would buy CDs from a bank that announced they arbitrarily reduced the rate paid to their current CD holders so the future CD holders can be secure?

  34. Vince says:

    Malcolm
    I do feel for you brother but do remember it’s across the board . we worked as hard as you did. I guess Retirees should be grateful cuts just started now, you reaped benefits I’ll never see.
    Groups B and C lost these benefits forever we don’t even get a taste, how about group B and C family’s
    Group C will have to work until there 70. I feel bad for group C members
    Question how long have retirees been getting the COLA I won’t see a raise for 24 months, when I retire I’m guessing my raises will average 1 percent a year for the first ten especially if market corrects itself.
    It all goes back to saving jobs that fund the pension. More PERS jobs equal more revenue.
    Slash government jobs no revenue. Wait till the State sells off the turn Pike more PERS JOBS GONE = less revenue

    • Jim says:

      Vince,. Don’t be surprised when they come back around for you. There will be no reason for retirees to stand with you because we list COLAs.

      Divide and conquer.

  35. Ron Martin says:

    the real kicker in the list of changes at the top , is in the last sentence of #1. For every year in which the CPI exceeds 2.25%, pensions will fall behind in purchasing power and will never catch up !!

  36. Jerry says:

    All retirees should be contacting all members of the general assembly! We must keep the heat on Opers! We must to fight this! Contact the speaker of the Ohio house of reps. and the Ohio senate majority leader.

  37. vince says:

    Well Jim they already got me I’m got
    If I had to do it all over again maybe I wouldn’t start a career as a Civic servant,
    I would take a more lucrative path for the good of my family and myself
    Again I wills say we must save jobs!!!!! That funds the pension that’s how you keep the pension strong Debt and credit real simple
    It’s going to turn into a pyramid scam if we keep losing jobs
    Look at the Big Picture call your representative concerning selling off assets that employees civil servant that’s how you protect your pension.
    Stop trying to pass the buck to group C or B or fellow brother and sisters that retired between 2010 AND 2012 get off your butts and start electing people that believe in civil servants working for the good of the people, not money grubbing contractors that keep all the money for themselves and take extravagant vacations on the tax payers bank.

  38. Jim says:

    Vince,. I knew this was coming when they came up with that Group B and C stuff. I was against it then because this writing was on the wall. Having people work difficult jobs for extra years was ridiculous. But my understanding is that is those still working are paying into their own retirements, not supporting people already retired. That is how Social Security is structured.

    OPERS members payments are combined with the employer’s and cumulated interest and then function as any annuity.

    Also, we have all been hit. Premiums skyrocketed from being 100% paid to “surprise” no more than 75% paid. And it’s not like we were offered our jobs back. We are just stuck. That is why we must all fight to keep our pensions.

    We must also make certain that they don’t use the billions in savings from gutting our pensions for bonuses for themselves.

  39. Jim says:

    Vince,. I also agree that public service is not a respected profession any more. It’s not where I would go if I was starting out today.

  40. Jim says:

    Please post the dates the hearings will be held, we all need to march on the statehouse. They will wait until it is too cold for “old people ” to show up. We haven’t a choice but to put on all of our winter gear and drive to the statehouse. It needs to be a HUGE turnout! Getting old ain’t for sissies. The revolution will be televised.

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