Study: DB plans benefit retired women

Women who participate in defined benefit pension plans have higher incomes in retirement and lower poverty rates than those who don’t, a study states.

In “Shortchanged in Retirement: The Continuing Challenges to Women’s Financial Future,” the National Institute on Retirement Security found that women working in the health care, education and public administration fields are likely to be better off in retirement than women working elsewhere. That’s because those fields are more likely to offer employees access to DB plans.

Fifty-seven percent of OPERS retirees are women.

The study also found that the typical retirement income for women age 65 and older is 25 percent lower than that of men. As men and women age, men’s income advantage widens to 44 percent by age 80 and older, the study found.

Other key findings:

  • Women were 80 percent more likely than men to be impoverished at age 65 and older, while women age 75 to 79 were three times more likely to fall below the poverty level as compared to their male counterparts.
  • Labor force participation among women aged 55 to 64 climbed from 53 percent in 2000, to 59 percent in 2015, with a peak of 61 percent in 2010.
  • While women were somewhat more likely than men to work for employers that offered retirement plans in 2012, there is a gap in eligibility that limits women’s participation in these plans.
  • Even though the median household incomes of individuals aged 65 and older has increased, women have 26 percent less income than men.
  • Social Security is an important source of income for older households with incomes less than $80,000.
  • Women in the health care, education, and public administration fields, where DB pension plans are more prevalent, have higher incomes in retirement and lower rates of poverty than in other industries.

Public policy options can help reduce women’s vulnerability to financial hardship as they age, NIRS said. These proposals to strengthen retirement security for women include:

  • Strengthening Social Security benefits for women
  • Increasing retirement plan coverage through auto enrollment in individual retirement accounts
  • Expanding utilization of the Saver’s Credit, an income tax credit of up to $1,000 for voluntary contributions to select retirement savings plans for low-income individuals.
  • Increased development of state-sponsored savings plans
  • Increasing defined contribution plan eligibility for part-time workers
  • Providing spousal protections in defined contribution accounts
  • Expanding defined benefit pension plans

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

33 thoughts on “Study: DB plans benefit retired women

  • March 18, 2016 at 7:30 pm
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    It would help if I did not lose my social security because I worked under OPERS. What happened to all those years I paid in to get nothing back.

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    • March 24, 2016 at 1:36 pm
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      Christine–This was my first thought when I read this topic also. This windfall elimination penalty has always been a mystery to me. I know that it has something to do with working in Ohio since it is a non-Social Security state, like some others. I realize, as a state employee, we do not pay into SS but I, like many others, have held jobs in which I did pay into the system, and we should receive the full amount back. A public employee pension should not factor into what we get from SS.
      But the most important consideration should be that if a worker contributed into SS in a private sector job and was not working as a public employee, that contribution should remain as a full benefit and not be reduced just because the worker also has been employed in the public sector during their working years and qualifies for a public pension. This reduction of SS benefits has a negative impact on actual retirement income: the amount which could be realized versus what one actually receives. Workers are not receiving the full amount of what they legitimately contributed.

      Reply
      • May 14, 2016 at 7:14 am
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        I have recently found this out. I had worked under social security also. Hence no money from them. Should get $1100 from them but for my own pers retirement. The women who are still working can draw their husbands social security. Until they retire. Then they lose it.

        Reply
        • May 16, 2016 at 9:16 am
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          Kathleen,

          If you are due to receive a Social Security benefit, the Windfall Elimination Provision reduces, but does not eliminate, that benefit. If you’d like to find out by how much, contact your local Social Security office. We want to see a new WEP formula put in place, but the rule does not nullify the benefit.

          –Ohio PERS

          Reply
  • March 21, 2016 at 10:55 am
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    Nice article; however, it did make me think about this: if there were more men who were OPERS retirees, I wonder if our health care and pension would have changed so drastically over the last few years. The media tells us that women lag behind in earnable income and in retirement savings / benefits — yes, I wonder if things would have been handled differently if more men, rather than women, were OPERS retirees.

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    • May 14, 2016 at 7:17 am
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      I received equal pay to men. Are you living in the dark ages

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      • May 16, 2016 at 12:32 pm
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        Ms. Reed,
        Good for you; I am glad that you have always received equal pay. Unfortunately, statistics prove that is not the case for the majority.
        Best regards.

        Reply
  • March 21, 2016 at 12:52 pm
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    With studies such as this one which shows that older women experience a much greater likelihood of living in poverty, I feel that it’s important for OPERS to address this issue “now” in a very real & meaningful way.

    I’m referring to the fact that when a male retiree dies, his wife’s OPERS retirement is reduced or rolled back to the original amount that the retiree received during his first year of retirement. All of the yearly cost-of-living increases received are taken away from the surviving wife.

    I don’t know what the rationale is for doing this? If it is mandated by Ohio State law, then OPERS should make changing this a priority. OPERS retirees choose the 100% survivor monthly retirement in order to ensure that their spouse does not live hand-to-mouth when left on their own.

    By rolling back the surviving wife’s monthly pension isn’t this pushing them toward poverty? If the retiree qualified & received these yearly cost-of-living increases, then why shouldn’t his wife also be entitled to receive at the very least all of the yearly increases the retiree received while he was living?

    I know it may be easier to provide some “Pat” answer to my inquiry, but rather than taking such an approach, why not highlite this topic to the OPERS Board so this issue will receive the attention & hopefully the action to help reduce poverty for OPERS retiree surviving wives. If OPERS can help lessen older women living in poverty why not make the changes? The solution is pretty straight forward!

    Thank you for your help in alleviating the likelihood of my wife living in poverty, as well as for countless other surviving wives.

    Greg Stevens

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    • March 24, 2016 at 12:45 pm
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      Greg,

      The scenario you described is just not true. We do not roll back survivor benefits to be based on the initial year of the member’s benefit. We agree that would make no sense, and we just don’t operate that way.

      When a retiree dies, the beneficiary’s benefit is based on the amount the retiree was receiving at the time of death, and it includes all of the increases/COLAs that have been accumulated. We do not start the beneficiary at the base benefit. A beneficiary designated on a 100 percent joint and survivor annuity would receive the same monthly benefit the retiree was getting at the time of death.

      It’s possible that the survivor would receive less if the member designated the survivor benefit as such, but there’s no “rolling back” to the original benefit.

      –Ohio PERS

      Reply
      • March 24, 2016 at 2:36 pm
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        Michael,

        It is a great relief to me to know that my wife’s survivor monthly pension will be the same amount that I will be receiving up to the time of my death. In my initial comment to Perspective I indicated that it was my understanding that my wife’s survivor pension would be reduced to the amount that I originally received in my first year of retirement. I could not understand why that would be the case and you have since corrected my mistaken interpretation on this topic.

        When I sign into my OPERS on-line account and scroll down to benefit calculation, it shows my wife only receiving the same amount per month that I received during my first year of retirement. It also shows that I have selected the 100% survivor benefit for my wife. I made the assumption that this amount was all my wife would receive after my death. Apparently this amount is not updated each year to reflect any cost of living increases that I have received?

        I am very glad that I took the time to inquire and to learn that OPERS does not reduce the retiree’s surviving wife’s monthly pension. This information provides both myself & my wife with peace of mind.

        Sincerely,

        Greg Stevens

        Reply
        • March 25, 2016 at 2:12 pm
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          Greg,

          Yes, that information can be a bit confusing, in part because the member doesn’t always choose the formula benefit. And we do not update the joint life benefit amount with annual COLAs.

          The best way to describe it is that under the joint life plan, the retiree’s survivor will receive the designated percentage of the member’s beginning gross monthly benefit plus annual COLAs. Just keep in mind that a spouse with the 100 percent designation may not receive the exact amount of the last pension check before the member dies. The member’s amount might have been impacted one way or another by Medicare reimbursements, health care premiums, etc.

          –Ohio PERS

          Reply
  • March 25, 2016 at 7:58 am
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    I wish I could have the remainder of my Social Security restored, too. I earned the worst of both worlds. Lost about 2/3 of my Social Security (which no matter how SS and OPERS spokespersons/officials sugar-coat it, makes no sense to me nor to others who are also affected) and didn’t work in OPERS long enough to get 30 years.

    You are never going to sell us on how this is fair.

    I retired before many of your health benefit changes went into effect.

    Worst of both worlds. I am sure I am not alone. JA

    Reply
    • March 25, 2016 at 10:13 am
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      JA,

      We’re not trying to “sell” you on anything. This is Social Security’s rule, not ours. We’re trying to change it.

      –Ohio PERS

      Reply
      • March 25, 2016 at 2:14 pm
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        Glad to know OPERS is trying to get it changed but when did this effort start? Also, if by some miracle it ever does get changed, will retirees who lost SS benefits as a result of either windfall elimination or government offset measures get lost benefits restored?

        Reply
        • March 30, 2016 at 2:22 pm
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          For some additional background, last year we created three videos that review the history of OPERS and Social Security. The videos examine how mandatory Social Security coverage is a threat to our members, and they also delve into the WEP and GPO. The videos include Tom Lussier, a lobbyist with the Coalition to Preserve Retirement Security, and Jim Miller, OPERS’ long-time government relations consultant in Washington. You can view the videos on YouTube if you’d like more information about the issue. (https://www.youtube.com/watch?v=pc2dsR_CVmE&feature=youtu.be)

          – Ohio PERS

          Reply
          • March 31, 2016 at 10:49 am
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            I’m confused! Mr. Pramik states in his post that OPERS is trying to change the SS WEP rule; you state in your post that mandatory SS is a threat to OPERS members. Not sure if the two are connected or not, but are we or are we not trying to change the WEP rule?

          • March 31, 2016 at 2:18 pm
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            OPERS supports changing the WEP rule.

            The OPERS Board voted to support H.R. 711, a bi-partisan bill that has the support of many of our Ohio delegation members. Under the legislation, current retirees would have their Social Security benefits recalculated using a new WEP formula with the result being that many of them will receive a larger percentage of the SS benefits they funded throughout their SS-covered careers. Future retirees would be subject to a new WEP formula that takes their non-covered employment into account when calculating their Social Security benefits.

          • April 13, 2016 at 1:24 pm
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            The first video on OPERS and Social Security was very informative. I could not find the other two on YouTube re OPERS and Social Security. Could you give the link for those videos?

            I am one of many OPERS retirees that is affected by the WEP. I worked in OPERS for 20.5 years and under Social Security for 24 years. When I retired, I had a significant reduction in SS benefits. I have written my congressmen several times over the years to encourage changes and/or elimination of the WEP and GPO. Replies were that elimination would be cost prohibitive. And on topic, I’m sure a large number of women are affected by the WEP and GPO. Decades ago in the 1980’s the reasons for passing these bills seemed justified…now not so much.

            The new WEP bill which appears to be financially feasible might pass. Even if the bill does not completely eliminate the WEP, it would be of great help to many who can use more of the benefits that they rightfully earned.

            Does OPERS have a way for retirees to write collectively to reps to encourage them to pass this bill that affect many state employees.

          • April 18, 2016 at 12:20 pm
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            Ginny,

            You certainly can contact your representatives on your own. We are still working behind the scenes on this, but we will let all of our members know how they can help if that need should arise.

            –Ohio PERS

      • March 28, 2016 at 1:27 pm
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        How can we help you change Social Security’s rule re. Windfall elimination? Unfortunate for many, OPERS has changed / decreased our benefits (no more 3% COLA / year, change in years of service until retirement, etc), and on top of these changes, we still have to cope with Windfall elimination.

        Reply
        • March 31, 2016 at 2:10 pm
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          Cheryl,

          We appreciate the Ohio Congressional members who are co-sponsors of the bill, and we are encouraging the members of the Ohio congressional delegation who are not already cosponsors to consider supporting this effort.
          You could do the same. Contact your member of Congress and let them know you support WEP reform (HR 711) and that you appreciate their work on behalf of Ohio’s public servants.
          You can find your U.S. House and Senate members through the following websites:
          http://www.house.gov/representatives/find/
          http://www.senate.gov/senators/contact/
          – Ohio PERS

          Reply
        • May 14, 2016 at 7:35 am
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          When did this cola change? I wasn’t informed?

          Reply
      • March 29, 2016 at 8:41 am
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        Forgive me for misjudging you, Michael. We had an e-mail exchange (on this blog) several years ago and I must have formed a wrong opinion.

        If you have changed your stance, I thank you for doing so.

        If I am incorrect in my earlier statement, I apologize.

        Can you share with me what is being done to help us and how might we help you help us?

        JA

        Reply
          • April 7, 2016 at 11:18 pm
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            Thanks! Can and will contact Steve Chabot. Any other western Cincinnatians he is: 513 684 2723. His workers are always congenial and will discuss your reasons for wanting the bill passed. JA

  • March 27, 2016 at 8:20 am
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    I received a letter from OneExchange stating that I would be charged to my HRA in the amount of $2.33 for HRA administrative cost per month. The letter also said I should have been charged this fee for jan,feb, and march but they would not be collecting for those months. No where in the paper work I received from Opers or OneExchange states money from my HRA would be for administrative fees. When Opers hired OneExchange were not the fees figured into the contract?

    Reply
  • March 28, 2016 at 10:31 am
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    I found my answer no reply needed. thank you steve lee

    Reply
  • March 30, 2016 at 10:55 am
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    Thanks in advance for any advice you may give me.
    I am new to PERS and have spent all of my life working for non-state or government sector so I have 20+ years of working qualifications for SS benefits in the private sector.
    Now as of 03-16 that I am employed as PERS , what will/could happen to my SS by my retirement age. I have heard it will be reduced but I will not have any meaningful time in with the PERS system.
    Please inform me of the rules etc. as this stands now.

    Thanks
    TJ

    Reply
  • April 2, 2016 at 8:39 am
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    the connector gave us several items of false and untrue info when we were trying to sign up. coverage info false and prescription info false among other things. it goes on and on. thanks pers. this is a terrible program for members. the fee we knoew 0 about. you may have mentioned it, but your sure did not high light it. seems the norm now. amazing.

    Reply
    • May 14, 2016 at 7:33 am
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      Thais I feel the same way. Every drug my doctor prescribes that works. Is not covered by this “new” prescription drug plan (even though they told me it was when I signed up. I no have to pay$500 out of my own pocket for one drug and $250 for another that was covered under express scripts last year for $75 a month!

      Reply
  • April 4, 2016 at 7:18 pm
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    I agree with and understand many of the previous comments regarding the administration of this new OPERS coverage. I have had to make numerous phone calls since January to try to get answers to questions and concerns between One Exchange, Medicare, and Silver Script, with frustrating results. I have been given misinformation numerous times, and the attitudes of the reps have bordered on rudeness. One of my concerns is the turnaround time of reimbursements. The reimbursement period for my healthcare premium was three days for January and February, which I thought was as it should be and I felt positive about the experience and appreciative. Well, when March came around, I waited and waited and finally received the money after about two weeks. With my reimbursement for my prescription premiums, it’s about a six week wait. For seniors on limited incomes anyway, I think that a wait of more than two weeks is terrible. People need their money returned asap for food and living expenses. Those who deduct our money make sure they get it on time from us, but then we worry and wait wondering how long before we get it back. This is one of my concerns as well as the long wait time on the phone to reach anyone, and my extreme dissatisfaction with the apparent lack of adequate training on the part of reps I’ve encountered.

    Reply

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