Rules could change on joint retirement

The Ohio Public Employees Retirement System and other state public pension systems have agreed to pursue a series of modifications to Ohio law that will resolve inequities in the process of joint retirement.

One of the unique benefits of working as a public employee in Ohio is the ability to accumulate service time in more than one of the state’s pension systems. Current law allows OPERS members to include credit in the STRS, SERS, Ohio Police & Fire, and Highway Patrol systems when determining eligibility for service retirement and the resulting pension benefit.

When this happens, service credit and contributions are consolidated by transfers of assets among the retirement systems. After pension legislation occurred in 2012, however, issues arose relative to the fairness of the amount of funds being transferred to support these joint retirements.

These issues include the facts that the systems have different fiscal years and that there are substantial differences in the amount of time required for full-time status in each system.

Unfortunately for OPERS, the result is that we’re often paying much more for this liability when our members choose to retire under the other systems. In some cases we have had to transfer hundreds of thousands of dollars to these systems under the pension redesign calculation whereas it was in the tens of thousands under the old calculation. These transfers result in no increase to the member’s benefit.

Resolving the joint retirement benefit system so that no system is unduly harmed will require changes in Ohio law. Our next step will be to begin working with the Ohio legislature to make the changes as quickly as possible. We’re also planning to communicate the new joint retirement rules to our members and other stakeholders.

What’s new is that in the future we will use a retention percentage approach to joint retirements. After sending the appropriate member contributions to the paying system, each system will keep the same percentage of employer contributions and transfer the remaining amount to the paying system. The systems agreed to a 5 percent retention amount to reflect the unfunded actuarial accrued liability and other costs. We will review this amount every five years or if employer contribution rates change.

We also have discussed allowing independent retirement. We’ll work to modify current law to allow inactive members to refund their contributions from the inactive system without a reduction in service credit, as long as they’re not currently employed with the same public employer.

There’s also the question of how the systems will certify service credit. The paying system will continue to do so, but we want to make sure that public employees are not awarded service credit from more than one source for time worked concurrently. The transferring system won’t be able to certify more than one year for any “year” of service credit as determined by the transferring system.

The agreement also affects restored funds, in which our members may restore a refund by payroll deduction. Currently, funds paid to restore service time are held until retirement. We’d like to modify the law to require transfers of these funds annually.

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

  • Would these independent retirements be mandatory? If so, would there be some grandfathering if this goes into effect? If someone has worked 15+ years in one system and is transititioning or has transititioned into another system, wouldn’t this cause them to be eligible only for an extremely reduced retirement at the first, and suddenly be ineligible for another 15+ years to get a full retirement from the other system? This could have a huge affect on members in the middle/later part of their careers.

    • Dave,

      Joint retirement is not mandatory. Call us to set up a counseling session when you are nearing retirement, and we’ll help you sort out your options.

      –Ohio PERS

  • Hello. I was laid off from my OPERS job with 19.5 years. I am in my late 50’s and have not been able to find another OPERS job. I was caught in the recent OPERS changes which means I need 20 years to retire. So, I have been working SERS jobs and I have 1 year SERS credit. I plan to retire in 2016 with the OPERS and SERS credits. Are these new changes likely to effect me?

    • PH,

      They would, but without knowing exactly what kind of service credit you have accumulated, we couldn’t speculate on your total time. Call us at 800-222-7377 and request a benefit estimate.

      –Ohio PERS

  • So I am able to retire in June of 2015. I will be transferring 4 years from SERS to OPERS. If this all goes thru what effect will this have on my benefit and will there be a time frame if this effects folks negatively ?

    • James,

      There is no way of knowing, from the information you provided, whether the joint retirement changes will have an effect on you.

      Your best bet is to call us and set up a counseling session: 800-222-7377.

      –Ohio PERS

    • Just curious James, I am sort of in the same boat as you are as I also have some strs time but a lot more OPERS time. Did you get to talk to an OPERS rep and did it work out okay for you? I called but am still unclear as to how it will affect me. They are working on a statement to send to me. Thanks.

  • Just received printout of when I would be able to retire just last month. I have 4 years in SERS and the rest in OPERS . So now this could be inaccurate ?

    • James,

      Call us at 800-222-7377, and we can answer your questions. There is not enough information for us to comment in the blog.

      –Ohio PERS

  • I would like to know if I had 16years as Lorain City Council what would my pay for medical 68 years of age. And 17 years as Lorain City Council?

  • I have 10 yrs service with PERS and 15 yrs with SERS. Are the PERS yrs credited to my SERS yrs at time of retirement or can the yrs be transferred before retirement? How does this affect the new law of inactive PERS refund in which service credit is not lost?

    • Angie,

      You can transfer service only at retirement. If you’re also referring to time that is concurrent and which would not gain you any additional service credit upon a transfer, your option now is to refund this time.

      –Ohio PERS

      • My time is not concurrent. I don’t understand the new revisions under S.B. 42 indicating one can refund inactive PERS contributions WITHOUT losing service credit. How?

        • Angie,

          Sorry, we thought you were referring to time that was earned concurrently. Please give us a call at 800-222-7377, andn we can discuss your situation with you.

          –Ohio PERS

  • I’m trying to understand the rationale behind independent contractor status affecting pensions. It is my understanding I could go to work for another OPERS agency without my existing pension payments being affected. However, if I go back to the same OPERS agency that I retired from I get severely penalized – can’t continue to collect my existing pension at the same time. Why is this? I would no longer be a public employee. No further benefits would be accrued. I would pay my own health insurance. I would pay my share of both local, state and federal income taxes on those monies received for services rendered. So what difference does it matter if I do work for my former employer or another employer? Thanks.

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