Package 5

PERI Board Adopts a Position on OPERS Health Care and Pension Challenges
August 23, 2019

Package 5

(August 29, 2019) Many members have asked for more information about the various packages that OPERS is considering that would affect health care and COLA.

To see the Health Care Packages, go to the OPERS website: www.opers.org

In the OPERS Information box, click OPERS Board of Trustees, then on the left side of the page, click Meetings.

Under 2019 Board Meeting dates, scroll to August 20-21 and click Agenda

Page 11 begins information on the new health care packages. The COLA discussion starts on page 60, with a lot of information in between.

 

20 Comments

  1. SL Bowers says:

    Grateful for the OPERS pension I have, but a question I have regarding COLAs.

    If retirees are going to have our COLAs frozen for two years, why aren’t new retirees in 2022 having their COLA’s frozen for three years? Current retirees already had no COLA increase until the start of our second year of retirement.

  2. Donna says:

    I would rather see cuts to health care than a COLA freeze. It sets a dangerous precedent. Once OPERS is allowed to cut or freeze our COLA, it will be easier for them to do it again. I hope PERI will stand with retirees to preserve our COLA.

    • James says:

      So, in the not too distant past, PERI championed for the preservation of the 3% COLA increases, reiterating the *settled law* involving the increases. Why should retirees be subjected to ANY type of freeze or adjustments to their deserved COLA? If Package 5 is enacted, and future returns on OPERS’ investment portfolio don’t meet benchmarks (a certainty – – – > hedge funds!) expect more hits to our pension and health care. Guess the law isn’t so settled after all. $AD.

  3. Dale Harmon says:

    As OPERS repeatedly has told retirees, Health Care is NOT guaranteed and can be cut by the OPERS board without legislative action. However, the COLA is guaranteed by Ohio Law (ORC 145.323). In the court case of John J. Mascio v. OPERS; 1998, the ruling was that “The retirement benefits of Ohio public employees vest, by statute, at the time when the retirement allowance or pension is granted by the public employees retirement board.” The effect is “to make the engagement of public authorities to pay a pension, upon conditions fulfilled, a contractual obligation founded upon a valid consideration, giving to the pensioner a vested right in his pension which cannot afterwards be impaired or revoked.”

    I see no reason to trade a vested contractual right (COLA) for the promise of health care.

  4. Don says:

    Urge the Ohio legislature to shoot this nonsense down.

  5. Lee Gerhardstein says:

    It’s official. The OPERS board has approved the two year COLA freeze and it now goes to the Legislature for approval. What is PERIs position on this and course of action?

    • Peri says:

      PERI’s position posted on (August 23, 2019) After multiple meetings over many months with OPERS senior staff and leadership, PERI has decided to take action designed to support the long term stability of the Pension and Health Care Funds. While health care is not a guaranteed benefit, retirees have overwhelmingly said that they see it as an important benefit and want it to continue. In order for the Health Care Fund to potentially receive sufficient contributions from OPERS employer contributions and investment returns to support long term solvency, there must be changes made to the Pension Fund to shore up its funded status and reduce its amortization period. Just one or two poor years of investment returns or a recession would almost certainly send the Pension Fund into a fiscal situation that would legally require OPERS to dramatically reduce its unfunded liabilities through severe plan design changes. These would include a long term suspension or permanent reduction of the COLA for retirees. Health Care would almost certainly be eliminated once the funds are depleted.

      While we do not support the concept of reducing or suspending a COLA for current retirees, we realize that retirees will likely lose much more if a modest concession is not made. After much discussion with PERI, OPERS staff agreed to a two year suspension of the COLA effective January 1st 2022 versus other options more costly to retirees. Additionally, we were able to secure an agreement that the COLA would return to all OPERS retirees after December 31, 2023 based on their current condition. For example, any pre-2013 retiree receiving a fixed 3% COLA would see that fixed 3% after the suspension. PERI believes our new position on pension provides the best opportunity for the preservation of health care benefits and a stronger pension fund. Without these changes and given the likelihood of a recession in the next two years and OPERS current Pension Fund amortization period at such a high level, there is virtually no chance of employer contributions being directed to health care now or in the future. We believe that doing nothing to support the Pension Fund will lead to the loss of all health care benefits.

      For the first time, OPERS proposed changes include driving cost efficiencies through plan design changes for future public sector hires as well a 1% increase in the employee contribution for this group. This was a major issue we communicated with legislators during the debate on HB 413 two years ago.

      PERI’s position also includes support for one of five changes to health care (Package 5) that in our opinion, would provide benefits albeit at a reduced level, for the greatest number of both Pre-Medicare and Medicare eligible retirees. These packages are available for review by the public on OPERS website.

      If OPERS Board of Trustees does not agree to the positions PERI has adopted, the PERI board reserves the right to rescind its support for these changes. OPERS is expected to take action in the next 30 to 60 days. Please read the following position paper to learn more about this topic.

  6. Jim says:

    I have tried posting this on the OPERS PERSpective site under comments for “Updates under consideration.” But as my comments have always awaited moderation until they disappear entirely, I will post my thoughts here. I hope that some of you feel the same way that I do. I further hope that PERI will reconsider acquiescing to this first of many to come attacks on our pensions.
    I will not genuflect my undying gratitude for my OPERS pension. It is not charity or welfare. It is the contracted benefits I signed up for and spent a career working to secure. Throughout the 1970s, 1980s, 1990s, 2000s, and 2010s I was told that every time I was paid, part of my wages and an additional payment from my employer would be paid to OPERS. Theses funds would then be invested by the OPERS investment team. Many years, these funds earned 10, 12, 15 percent and more. I was informed that these contribution would be used to fund a pension for me and health insurance for myself and my wife. I was told that when I retired these funds would become an annuity. This annuity structure is why, to this day, OPERS is able to say that they are 100% funded for current retirees. When I retired, I would be given a choice of a Single Life Annuity or a reduced Joint Life Annuity. Both included a fixed dollar amount increase for each year after I completed one year of retirement (COLA) and both included health insurance. Years later, I was informed that health insurance was not guaranteed after all and my premiums, deductibles and co-pays skyrocketed. Wives were removed from funding completely.
    Now, the OPERS Board has voted to discontinue the guaranteed COLA for two years—to start. This must be fought or it is just the beginning of many more reductions.
    We must look at what OPERS is telling us has precipitated these attacks on our pensions. For those hired or employed over the last 5 years, every time these employees were paid part of their wages and an additions payment from their employers were paid to OPERS. Unlike years past, however, these funds are paid to fund their pension plans with no payment made to fund their future health insurance. These funds are once again invested by the highly paid OPERS investment team and contractors. Unfortunately, this team has incurred $24 billion in unfunded liabilities including a loss of over $3 billion dollars last year alone. Those of us who are already retired are now asked to sacrifice our health insurance and pensions for those who are not paying for their future health insurance and to cover up for bad investments.
    OPERS tells us now that they have not contributed to the health insurance fund for 3 years and will not contribute for another 15 years. Yet, they say that this fund will be depleted in 11 years. Despite the obvious ending of health insurance, they wish us to sacrifice our COLAs with no end in sight and for no apparent gain.
    Before I am willing to sacrifice any more, I have to see sacrifice from the OPERS staff and investors. Their exorbitant wages and bonuses need to be clawed back. I will not hear about how OPERS staffers pay into the fund, too. We each brought wages into the system from our government entity employers (additional outside monies). OPERS employees are paid from our contributions. They bring in no outside monies. It is possible for an OPERS employee to be paid from our pensions for 30 year, retire and receive 30 more years from our pension funds. Talk about double dipping. Some employees are paid so much that their pensions exceed Internal Revenue System regulations. OPERS has had to create a special fund to circumvent this rule and continue paying these exorbitant pensions. There are many other ways to cut costs at OPERS. They should not be the ones held harmless.
    I plan to write to every legislator I can and I urge everyone to do the same. This must be stopped.

    • Donna says:

      Jim,

      So eloquently stated. When you write your letter, can you post it here? I would like to use it as an example when I write my own.

  7. Donna says:

    PERI – Thank you for your support, but what is to prevent OPERS from freezing our COLA again and again? Our 3% COLA for pre-2013 retirees was a settled law, but that didn’t prevent OPERS from coming after it.

    Also, what about the issue of double dipping? Has that been addressed? Anyone who is working full time but still collecting a pension is not retired.

  8. Richard Bartley says:

    Class action law suit to preserve our vested COLA rights.

    • ja says:

      Would it work to have legislation passed prohibiting OPERS to keep going back and trying to freeze, reduce, manipulate in whatever way — our COLA? Didn’t they lose a move to reduce it last year? Cheeky of them to try to force a freeze down our throats now. We need to be able to rely on something. It isn’t going to be healthcare. They control healthcare. Haven’t we been seeing the writing on the wall since — was it 2012? BTW — my muni bonds and stock positions are doing fine. Why aren’t those OPERS invests in?

  9. Dale Harmon says:

    If the legislature actually amends ORC 145.323 to suspend the COLA for two years for those retirees who retired prior to 2013, I predict a class action lawsuit against OPERS and the state of Ohio. Think about the money involved. Assuming an annual COLA increase of $1,000 per year, (hypothetical, not mine), each retiree would be out $2,000 every year after the suspension. Each retiree who lives an additional 15 years would be out $30,000. Multiply that times the number of retirees affected. The OPERS COLA move “saves” OPERS 3.4 billion dollars only by stealing 3.4 billion dollars from retirees. Billions of dollars on the line will make one heck of a lawsuit.

    Money is money. Whether retirees pay more for healthcare or get a smaller pension (COLA cut) the result is the same. The difference is that the COLA is guaranteed by law. In the case of those who retired prior to 2013, the COLA is probably a vested contractual right.

    Maybe I’m wrong, but I believe that OPERS spends about $600 million a year on “expert” investment services, yet the investments don’t seem to have beaten the market by much if any. Perhaps OPERS could cut that back to say $300 million a year which over 15 years would really save 4.5 billion dollars.

    • Donna says:

      How do we file a class action lawsuit? What are our chances of success if PERI does not back us? Where will the money come from?

      We will get zero support from the public. They already think we’re overpaid and over compensated.

      • Dale Harmon says:

        Don’t worry about how to file. If the Ohio Legislature changes amends ORC 145.323 to suspend the COLA for two years for those retirees who retired prior to 2013, lawyers will contact the affected retirees.

        Most retires in this group have transitioned to Medicare which is much less expensive than the pre-Medicare health insurance. Depending on circumstances, Medicare Part A premiums are $0, $240, or $437. The Part B premium is $135.50. OPERS pays well over $1,000 a month for health insurance for under 65 year old retirees.

      • ja says:

        Find your rep.

        https://www.legislature.ohio.gov/legislators/district-maps

        Write your rep. The portal doesn’t work that well.
        A rep didn’t get info I sent through it and admitted it had “issues.” Also, it looks to me like what you put through the portal might become public info?

        So find your rep. Write your rep. Google him or her to get a better, more direct e-mail.

        Pro-Seniors pension lawyer said we had very little hope in “securing” or taking back “health care benefits.” My words, not hers — but sounded to me like she was saying OPERS is in complete control of whatever they want to “give” us with health care. And she said, too, that our only hope with keeping COLA is through state legislature — so find, write, ask him or her your very good class action lawsuit question. No law degree here — but that is a great question. My degree in 1981 was in — humanities (-: I am writing to my reps and trying to encourage others to do the same. A class action lawsuit seems to me too good to be true, but then I did study Sarte, Camus and Kerouac!! LOL!! Thank you. JA

  10. Ron Eckel says:

    Ok. Proposed 1% increase in Employee Pension Contribution would take effect on Jan. 1st, 2022 for employees hired AFTER that date. Why aren’t CURRENT OPERS employees effected by this 1-percentage point increase? Effective rate is a 10% realized increase in pension contribution. Conversations I have with current OPERS employees are asking the same question..”we want an increase to help/preserve our future pension AND health care benefits also. Please let us have a voice in this decision.” Instead- we current retirees have to forego our contractual 3% annual (fixed-dollar amount forever) COLA. We sacrificed when contributions were increased from 8% to 10%. A 25% realized increase in pension contribution. We understood and did not complain. OPERS..you can do better for us current retirees.

  11. Daniel says:

    Does anyone have any information on how the healthcare changes will affect retire – rehire retiree’s

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