(May 5, 2021) At its Board meeting on April 27th, Trustees voted unanimously to change the association’s position on the two-year COLA freeze, first proposed in 2019. At that time, OPERS said the freeze was necessary to help lower the unfunded liability of $24 billion. Part of their plan to achieve this was to make plan design changes primarily for retirees and future hires (those not already employed and a member of OPERS). Central among the proposed changes was a freeze on all retirees’ COLAs for two years, beginning in January 2022 and running through December 2023. This was estimated to save OPERS approximately $3.4 billion over the two-year period.
While PERI supported OPERS plan in 2019, circumstances have changed since then causing PERI to alter its position. OPERS has enjoyed two excellent years of investments helping to reduce the amortization period to its current 18 years through the end of 2020. Any figure below 30 years is considered good. Additionally, the funded status of the Defined Benefit Fund is at 83% which is also very good. There are several other important considerations that PERI’s trustees took into account before making the change. You can view them in the letter that was sent to OPERS Board of Trustees yesterday. https://operi.org/wp-content/uploads/2021/05/PERI-Official-Position-on-COLA-Freeze-as-of-May-2020.pdf
PERI expects there will be some updates on the status of the issue and will keep you informed through the PERI website, PERI Perspectives newsletter, and email when appropriate.