(March 22, 2018) PERI has heard from multiple sources that HB 413 will not be moved in its present form and for all intents and purposes is dead. We believe the effort PERI members made to contact their elected representatives made the difference. Legislators have told us on many occasions over the past four months that they were not aware how much retirees would suffer under the proposal until they heard from us, the FOP, and our many members. Although we are very pleased with this outcome, we must all remain vigilant.
It is very likely that OPERS will simply wait for another opportunity to present their proposal at a future date. A new proposal could gain traction in the General Assembly if two conditions were to be realized in the coming year.
First, if OPERS investment returns fail to return at least 7.5% in 2018, a new unrealized actuarial loss will need to be factored in to their funded status and could lower it from its approximately 82% level. Any level of funded status that falls below 80% would give the General Assembly the rationale needed to force plan design changes including COLA reductions or freezes.
Second, it is possible that OPERS may ask its Board to approve a further reduction in the anticipated annual rate of return from the current 7.5% to a level of 7.25% or lower. This would make it easier for OPERS to realize their investment target but in doing so, would create another reduction in the funded status of the pension since it’s solvency was initially based on a higher investment target. As mentioned, either or both of these actions would likely trigger the authority needed to move a new bill reducing benefits.
PERI will continue to monitor OPERS activities this year and keep members informed of any action taken that could result in the COLA issue gaining new momentum.