Board continues to review COLA

No decision made; changes could affect all members


By Michael Pramik, Ohio Public Employees Retirement System

Sept. 21, 2017 — The Board of Trustees of the Ohio Public Employees Retirement System this week discussed several options for strengthening the fund by changing the cost-of-living adjustment provided annually to retirees.

Considerations included aligning future COLAs with the Consumer Price Index subject to a cap, extending the waiting period for the first COLA for new retirees, and providing safeguards for future inflationary trends. The options considered could affect all current and future retirees.

The Board reviewed feedback from OPERS retirees and also discussed the adequacy of the current CPI, demographic changes, benefit adjustments already implemented and the sources of unfunded liability. OPERS recently surveyed retirees about options to adjust the COLA, and more than 72,000 responses were returned.

“Our retirees asked to be part of this process, and we listened,” said OPERS Executive Director Karen Carraher. “I salute both the Trustees for their thoughtful consideration and OPERS retirees for being part of this important process to preserve our system for the future.”

No decisions have been made to date. Ultimately, changes to OPERS’ COLA must first be approved by the OPERS Board, and then by the Ohio Legislature.

Michael Pramik

Michael Pramik is communication strategist for the Ohio Public Employees Retirement System and editor of the PERSpective blog. As an experienced business journalist, he clarifies complex pension policies and helps members make smart choices to secure their retirement.

Michael Pramik

Communication Strategist

50 thoughts on “Board continues to review COLA

  • September 21, 2017 at 12:14 pm
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    Considering that you’ve not posted some members comments, I won’t be surprised if you don’t do this one.

    Just because you asked our opinion, so we can’t say you didn’t ask, it is highly doubtful it will effect your decision (s).

    Fact is, those who already had 30 years in at start of changes, or who are already retired, should be held harmless. We depended on what we were told on hire and on retirement to live.

    Thank you.

    Reply
  • September 21, 2017 at 12:37 pm
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    My single question is: how can the board review and consider options for COLA adjustment less thsn a week from the end date of retiree feedback? 72,000 responses and OPERS had the manpower to review, log, collate and add possible alternative options to the agenda for consideration within just days of the 9/15 deadline…

    Reply
    • September 22, 2017 at 2:42 pm
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      We’ve received more than 72,000 responses to the recent COLA survey, plus hundreds of calls, letters, emails and social media posts. While we understand members and retirees would prefer no change to the current structure, based on retiree survey feedback, 70 percent of respondents prefer a reduced cap instead of a freeze. Because of this feedback, the Board has focused on changes to the cap rather than a COLA freeze.

      Julie, OPERS

      Reply
      • September 22, 2017 at 3:58 pm
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        Your survey is biased. The questions are based on the premise that changes WILL be made. No option was given for “no change”. If OPERS were to change “X” which do you prefer? If you had to chose one? If OPERS truly wanted our opinion, I firmly believe the members would say “NO CHANGE!”

        Reply
        • September 25, 2017 at 4:06 pm
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          Mr. Moore,

          Experience tells us no one prefers changes to their benefits. We did not need a survey to tell us that information. We were trying to use the survey to help us understand preferences between changes being considered and evaluated.
          OPERS has a fiduciary duty, to all members and retirees, to maintain the long-term sustainability of our pension plan. If we make changes to the COLA to strengthen our System, we’d like to know which changes would be more acceptable to our retired members.

          Julie, OPERS

          Reply
      • September 22, 2017 at 4:21 pm
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        70% do not prefer a reduced cap instead of a freeze. They were not given the option to choose “no change”. The survey was skewed and OPERS knows it.

        Reply
        • September 25, 2017 at 4:06 pm
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          Donna,
          Experience tells us no one prefers changes to their benefits. We did not need a survey to tell us that information. We were trying to use the survey to help us understand preferences between changes being considered and evaluated. OPERS has a fiduciary duty, to all members and retirees, to maintain the long-term sustainability of our pension plan. If we make changes to the COLA to strengthen our System, we’d like to know which changes would be more acceptable to our retired members.

          Julie, OPERS

          Reply
          • September 30, 2017 at 10:51 am
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            No change. That is the only acceptable answer.

      • September 22, 2017 at 5:05 pm
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        “70% of responders…indicated they preferred a COLA reduction over a freeze”…. that’s because those were the only two options the survey offered.

        Reply
        • September 25, 2017 at 4:05 pm
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          Ms. Vaughan,

          Experience tells us no one prefers changes to their benefits. We did not need a survey to tell us that information. We were trying to use the survey to help us understand preferences between changes being considered and evaluated. OPERS has a fiduciary duty, to all members and retirees, to maintain the long-term sustainability of our pension plan. If we make changes to the COLA to strengthen our System, we’d like to know which changes would be more acceptable to our retired members.

          Julie, OPERS

          Reply
          • September 27, 2017 at 3:56 pm
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            Julie,
            Is this the only response you have.
            How about answering people’s question, without your canned response.

  • September 21, 2017 at 3:01 pm
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    I suspect the COLA decision has already been made … Has it?

    Reply
      • September 22, 2017 at 4:13 pm
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        Where’s the minutes of the August board meeting?

        Reply
        • September 25, 2017 at 3:51 pm
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          Mr. Golden,

          The August board minutes will be approved this week.

          Julie, OPERS

          Reply
    • September 22, 2017 at 7:10 pm
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      Stephen Sturm,

      Senate Bill 151 changes the Cola for the OAPSE retirement system. This may be the plan used to modify ours.

      Mike.

      Reply
  • September 21, 2017 at 6:13 pm
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    A way to strengthen the fund is not to waste money on paper ballot surveys. You could have saved money with an online survey and gotten a reasonable sample. If you think that a limited choice survey makes the members feel like they have a say in this decision, you are wrong. This feels more jammed down our throats than if the board had made a decision in the dead of night.

    Reply
  • September 21, 2017 at 7:41 pm
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    Where did the COLA tied to the CPI capped lower than 3% come from? My original understanding was that one consideration was COLA tied to CPI and capped at 3% (not lower)?

    Reply
    • September 25, 2017 at 2:08 pm
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      Mr. Zangara,

      The Board is considering several options.

      Julie, OPERS

      Reply
  • September 21, 2017 at 10:23 pm
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    I think it is wrong for retirees to take a hit. With all things increasing in cost,Meds,Groceries,GAS,insurance premiums(home and medical its crazy. Canot even go on vacation, fix a car,or dream to the future anymore. I would vote for the increase in payments. thank you

    Reply
  • September 22, 2017 at 8:12 am
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    Although members were surveyed about potential changes to the COLA, there didn’t appear to be an explanation regarding how changing the COLA could strengthen the fund—

    Reply
    • September 25, 2017 at 2:14 pm
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      Ms. Meszaros,

      OPERS regularly reviews its plan design, and we don’t wait for a financial crisis to arise to make adjustments. Prudent planning can avert a crisis. Changes to the COLA will help adjust for longer retiree lives, preserve the long-term financial strength of the System, and serve the COLA’s intended purpose – mitigating inflation for retirees.

      Julie, OPERS

      Reply
  • September 22, 2017 at 8:29 am
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    At this time I`d like and love the COLA to be left alone with no changes. I`d say ok to review it again 2020 but not until then..

    Reply
  • September 22, 2017 at 11:06 am
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    As a retire receiving OPERS pension benefits I strongly disagree with the 3 options under consideration for the changes to the COLA calculation. Under these 3 options I am being asked to correct past mistakes made by OPERS to calculate the COLA. A better solution going forward is OPTION 1(a) with NO cap of 3%. If the consumer price index is over 3% we should not be forced into poverty by an attempt to correct mistakes made by OPERS over the last 30 years!

    Kevin Connolly
    Past Director of Finance, University of Toledo Medical Center

    Reply
  • September 22, 2017 at 12:07 pm
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    I appreciate you keeping us in the loop! I understand the pressures to stay “healthy”……I am one who has lost 2/3 of the Social Security I earned by working in both the OPERS and SS systems…….I fail to see how I could be accused of “double dipping” on my meager retirement income. Please keep those of us
    in this situation in mind. Thank you, Joan Rotaru

    Reply
  • September 22, 2017 at 12:41 pm
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    We may be the only citizens who haven’t had a raise in quite along time!!!!!

    Reply
  • September 22, 2017 at 3:25 pm
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    OPERS can you please explain this quote. How was COLA formula different years ago? ” In addition, the plans contemplate increasing base pension amounts for about 3,700 long- time retirees who were paid lower COLAs when the formula was different than it is today”.

    Reply
    • September 26, 2017 at 12:30 pm
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      Steve,

      OPERS started providing a COLA in 1970, and it has changed several times since then. While most retirees have a benefit that has exceeded inflation, there is a smaller group who have not kept up with inflation. Some who retired prior to 1990 have seen inflation reduce their purchasing power. For them, we could provide a one-time benefit increase.

      Julie, OPERS

      Reply
  • September 22, 2017 at 3:38 pm
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    Do not have a lot of confidence in those supposed to work for the members.
    UHC is a horrible plan, high rates/low to no coverage, Tiers for meds standard in any other plan, goes up a ridiculous amount each year.

    Reply
  • September 22, 2017 at 10:35 pm
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    Would members of the board get same cuts as Joe the plumber once a decision has been made ?

    Reply
    • September 25, 2017 at 3:50 pm
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      Mr. Osbourne,

      OPERS Board members receive no compensation.

      Julie, OPERS

      Reply
  • September 22, 2017 at 10:48 pm
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    All I have heard from OPERS following retirement is “We don’t have to provide medical benefits. It isn’t mandated by law”. Now, you are coming after our COLA. There appears to be no end this.

    I understand the economy and many things financial are changing on a lot of fronts in this country. But you should take examples from other companies. For example: While UPS will make changes to how employees pensions plan will be set up starting in 2023, at least they left current retirees alone. Why can’t you do the same? My comment is simple….If you need to make changes, make it on the new members coming on board. At least “they” will know up front what they can expect.

    Reply
  • September 23, 2017 at 8:17 am
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    Why do you keep adjusting CURRENT retirees benefits? We CANNOT make adjustments like those working!

    Reply
    • September 25, 2017 at 4:01 pm
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      Alexander,
      The COLA is a very expensive benefit. We modified it for the active members when we passed pension legislation in 2012. The pension changes included requiring members to work longer, reducing the formula benefit, increasing the years included in their final average salary, increasing the cost of service purchase, increasing the minimum level of salary to be eligible for a benefit, adjusting early retirement factors, reducing the impact of spiking, modifying the disability program, and other changes. These modifications reduced the active members’ share of our unfunded liabilities by more than $4 billion. At some point, further reductions in benefits for active members could result in members not electing to participate in the defined benefit plan, which would be detrimental to the plan.

      Julie, OPERS

      Reply
      • September 27, 2017 at 12:52 pm
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        Julie,

        Who does OPERS consider to be a stakeholder? This question refers to the executive board directors comments on her checking with stakeholders.

        Thanks,

        Mike C.

        Reply
        • September 29, 2017 at 1:27 pm
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          Michael,

          When we say ‘stakeholders, we are referring to organizations that represent members, retirees and employers.

          Julie, OPERS

          Reply
  • September 25, 2017 at 3:13 pm
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    It seems to be a forgone conclusion that some reduction in retirees’ COLA is coming. My question is about how the board is going to deal with Additional Annuities. AAs include the same COLA as pensions. The primary difference however is that AAs are 100% funded by past employee contributions. I made a sizable AA purchase based on a guaranteed monthly payout that includes an annual 3% COLA. Seems like this would be a more difficult change for OPERS to justify since no public dollars were involved in the purchase.

    Reply
    • September 26, 2017 at 11:06 am
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      Cal,

      Changes to the COLA would include all benefit types including the Additional Annuity. OPERS staff and the Board will continue to evaluate all changes to the COLA including Additional Annuity accounts.

      Julie, OPERS

      Reply
  • September 25, 2017 at 4:10 pm
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    in response to Donna:
    70% do not prefer a reduced cap instead of a freeze. They were not given the option to choose “no change”. The survey was skewed and OPERS knows it.

    Right ON! The survey was skewed and misleading. If you wanted to know what we thought you should of listed all choices!

    Reply
    • September 27, 2017 at 11:53 am
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      Derek,

      OPERS has a fiduciary duty to all members and retirees, and to maintain the long-term sustainability of our pension plan. If we make changes to the COLA to strengthen our System, we’d like to know which changes would be more acceptable to our retired members. Experience tells us no one prefers changes to their benefits. We did not need a survey to tell us that information. We were trying to use the survey to help us understand preferences between changes being considered and evaluated.

      Julie, OPERS

      Reply
    • September 28, 2017 at 6:49 pm
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      It was a survey, not a vote. Not all choices need to be listed for a survey. OPERS is not taking a vote.

      Reply
  • September 27, 2017 at 2:56 pm
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    Completely inappropriate that you would delay future retirees’ start date for their COLA (12 months to 24 months) when you are not freezing current retirees’ COLAs for the exact same amount of time (miss one COLA). When will you ask active members to respond to a survey?

    Reply
  • September 28, 2017 at 5:04 pm
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    What puzzles me is since OPERS will no longer cover spousal health insurance one would think that the system is or should be financially sound. Thereby, COLA should not even be an issue. Your comments would be greatly appreciated. Thank You…

    Paul

    Reply
    • October 3, 2017 at 2:13 pm
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      Mr. Trapasso,

      Those are really two separate issues. The COLA was to provide an offset against inflation. OPERS has been fortunate enough to be able to provide health care coverage and some subsidy to offset health costs for eligible participants. Health care costs continue to increase and are a challenge for everyone. That is why OPERS health care has changed over the years. Our goal is to provide a health care subsidy for as long as it is financially feasible.

      Julie, OPERS

      Reply
  • September 29, 2017 at 12:40 pm
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    Why can’t you give 3% COLA with a maximum cap of say 1,500.00. This way everyone gets something and you save by capping high earners. Everybody wins some. I would like to see this option considered.

    Reply
    • October 3, 2017 at 2:27 pm
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      I like Dan’s idea. Give everyone the 3% COLA wits a maximum cap. Yes, that’s thinking outside the box — great idea.

      Reply
    • October 3, 2017 at 8:51 pm
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      Dan makes a good point on another option for board to review.

      Reply
  • October 17, 2017 at 2:51 pm
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    I urge all retirees to contact your Ohio representative and insure they vote no on these changes.

    Reply

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