COLA changes in the works

Temporary adjustment will provide reduction in pension liability

By Michael Pramik, Ohio Public Employees Retirement System

Oct. 3, 2019 – The OPERS Board of Trustees’ recent approval of a 2-year COLA freeze will have a positive impact on the long-term funding of our retirement system.

Freezing the cost-of-living adjustment for 2022 and 2023 will reduce OPERS’ unfunded liability of $24 billion by $3.44 billion. The liability reflects the difference between the actuarial cost of current and future retiree pension benefits and the actuarial value of the assets we’ve accumulated to pay the pensions.

As proposed, after the two-year freeze, the COLA will return to current conditions of a 3 percent COLA for those who retired before Jan. 7, 2013, and a CPI-based COLA for those who retired thereafter.

The package of changes the trustees voted for during the September board meeting has received positive stakeholder backing, and OPERS staff is beginning conversations with the Ohio legislature to codify the proposal into law. In addition to freezing the COLA for two years, the measure includes delaying COLAs for future retirees for two years after retirement, instead of one, and restoring 85 percent purchasing power to some retirees.

It’s essential that this action takes place now, as OPERS has nearly $3 billion in unrealized losses to account for in the next three years because of recent uneven market performance. Without the freeze and other changes, even if we were to achieve our 7.2 percent assumed investment rate of return annually over that time frame, our funding would suffer – the time in which we could pay off our unfunded liabilities would increase to 31 years, and our funded ratio of 78 percent would drop to 75.7 percent.

Several factors in addition to investment performance have added to OPERS’ current unfunded liability:

  • The large increases in retirees due to the baby boomer generation retiring. For instance, OPERS had about 172,000 retirees in 2009. This year, we have about 213,000 retirees, a 24 percent boost.
  • Longer life expectancies. Since 1970, overall life expectancies have increased from about 80 years to 85 years. While it’s great that we’re expected to live longer, OPERS does have to pay these pension benefits for a much longer period of time than in the past.
  • Changing investment expectations: OPERS has twice reduced its assumed investment rate of return in recent years, from 8 percent to 7.5 percent and then to 7.2 percent. These actions reflect the anticipated lower earnings the market is expected to provide going forward, but they do decrease our funding levels.
  • Benefit enhancements: These took place in the early part of the century, when the system was near full funding, and have added to the liability.

The changes would reduce the unfunded liability and would positively impact our amortization period, the time in which we expect to pay off those unfunded liabilities, reducing it from 27 years to 21 years.

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

  • The CPI-based COLA is horrible! I retired in 2014 so barely missed your cut off date. More changes you are making should have had already retired seniors grandfathered! We did our ‘time’. Make the changes for the current work force…

    • I am also retired in 2014 and could not be happier with our awesome team at OPERS. I have actually gotten larger increases in retirement than most of the years I worked! Jane, use common sense when you think about how this system works. The changes that OPERS are putting in place are for the long term health of the entire system to benefit everyone. I am pleased that we have an organization that is being mindful of the long term health of our system. Jane take a look at a few other states out there, Illinois is a prime example, their public system is nearly bankrupt due in large part to their poor choices and not being proactive. They are woefully underfunded and will have a difficult time paying their retirees in the future. I am a proponent for getting rid of the automatic 3% that folks who were grandfathered in prior to 2014 were offered. This guarantee was made a long time ago and honestly is not sustainable in the long term. Our retirement needs to last a lifetime and as life spans increase our benefits need to last too. Before you scream foul do your homework. I doubt your own investments would have done as well as the ones being provided by OPERS. As it stands now you will have a lifetime income with some very nice increases most years. Kudo’s to our team at OPERS for looking out for our long term best interest. Thank you for your hard work and thoughtful actions.

      • You don’t wait until thousands of folks have retired to make drastic changes to their healthcare (cutting all payment to spouses & retirement). Let the younger generation work and pay more for their future benefits instead of crushing the elderly that have counted on what they were promised when they retired. How are they supposed to make up for their cola to help pay for their spouses’ healthcare that they state abolished??? How could they possibly afford COLA??? I want answers to how our money is invested-the economy is booming and has been for almost 3 years, yet our pension is now in trouble? No way.

      • Karen….you advocate doing away with the COLA for people who retired prior to 2014. While I appreciate taking steps to shore up our OPERS system, I fear you do not take into consideration how much the COLA means to some of us older retirees. Most, if not all of us were paid wages far below those working in the private sector. The main reason we stuck it out was because of the retirement system. We realized that in the short term we could make more per hour by leaving public employment, but in the long term our EARNED retirement benefits were worth it. Worker entering the system now have a clearer picture of how things work and can use that knowledge to make long term employment decisions. We were not given that option. We rely on promises made.

      • Karen, you are correct on one point. My investments have not done as well as OPERS, they have done BETTER!

  • When are you guys going to start standing up to these insurance companies? Now you want to take our cola. I no longer trust OPERS….

  • I seriously hope the O.P.E.R.S. Board will look at other insurance providers to confirm we are receiving the best insurance coverage for the cost? Maybe the threat of competition will help ease the outrageous cost increases we have been subjected to.

    • I agree with Tim Lamb, look to other companies for health care. I believe the premium would be lowered, with some competition. The cost is outrageous, and I’m paying single coverage.

  • For those of us that were penalized and stuck into Group B and our retirement cut from its original projections, cutting COLA is long overdue .

  • All of the factors you cited were completely predictable. I’m very concerned about your ability to manage my money, and about solvency going forward.

    I’m reconsidering my position with the state.

    • Totally agree and I wonder about that as well. Constantly reminding us of longer life expectancy now. This is what Opers has actuaries for! These things are entirely predictable. Completely dumbfounded as to how any of this could have come as a shock to Opers.
      And I am troubled by the remarks that they are currently talking to the legislature about the cola freeze……which they HAVE to do bc of the law. I am curious, which legislatures are they talking to? I think the membership would also like to start talking to the legislatures as well.

      • i think the members should talk to the legislature about freezing insurance premiums. the premiums go up every year. all of our co-pays and deductibles go up as well. the enrollment booklet i received states that my plan will go up 70.00 monthly. in addition, my co-pays are going up, out of pocket is going up
        as well. no way a 3% cola will cover those increases, much less everything else we have to buy to live
        goes up too.

  • I sure hope it’s for “ALL” retirees not just the chosen few before 2013. If not why target the ones after 2013……. not fair at all

    • A HUGE problem I have with this freeze is I’m not getting younger, 2 years is a long time for a retiree with no pay increase. I retired in 2016 so now penalized because I didn’t retire earlier to guarantee 3% cola. Now your telling me after the 2 year freeze I will receive maybe 1.5% depending on the market….really? Plus I have to work part time for board of election to compensate lost income, which I only work during an election. Because of this I’m penalized with the reimbursement on healthcare. I can’t win with PERS!
      I want a law past to to compensate our lost income!

  • I do not believe for one second that OPERS will restore the 3% COLA to pre-2013 retirees who are legally entitled to it. Therefore, we will fight it.

    It is a lie that stakeholders supported this.

        • I agree that freezing the COLA for those retired or ABOUT to retire is completely unfair. But,why would we expect anything more at this point? When I was still working OPERS raised our deductions taken from our pay checks. Few complained because we assumed(now incorrectly) that the higher deduction would assure us of what we were promised when we started working. My wife is going to retire in 2021 which means she will get no COLA until 2024. How is that fair?

    • Wow! Susan wake up! When did you ever receive an annual raise of 3% while you were actually working? I worked over 30 years for Ohio State University and maybe 2-3 times did I ever receive an increase over 1.5%. The fact that OPERS EVER guaranteed a lifetime annual increase of 3% is one of the worst decisions they ever made. OPERS has to serve everyone not just you! It needs to last a lifetime and if you read any of the material they are providing you will see most of us will live well into our late 80’s. If you dislike your OPERS retirement so much you know you had the right to take the lump sum and invest it yourself? I am so tired of people not using common sense when they review the information provided. Our OPERS system is one of the best in the country. If you don’t believe me look at Illinois and CALPERS.

  • Why is OPERS seeking to recoup much more money ($3.44 billion dollars) than it claims it lost (“nearly 3 billion”)?
    How did OPERS lose nearly $3 billion dollars during a bull stock market?
    It seems to me the real problem that OPERS has is how to get better returns on its investments.

    • Arnold,

      Last year was a down market, which you can easily research. OPERS’ defined benefit fund was down 2.99 percent, when we’re trying to earn 7.2 percent. Those losses are realized over a period of years, thus the statement that we have nearly $3 billion due in unrealized losses in future years.

      –Ohio PERS

      • What about the turn aroun this year, positive for this year? And if the market we’re talking about is the Dow as an indication, 2017 was +25.8%. yes down because of a poor end of year 2018, but a clear recovery…so what will happen if the pessimistic market outlook fails to materialize, no cuts?

        • Jim,

          OPERS doesn’t make changes every year to benefits based on market performance. For instance, the Great Recession didn’t impact the pensions of those who were retired at the time.

          –Ohio PERS

  • So after the two year freeze do we then get the cola increase for the current year as well as the two years that were frozen?

    • You have to multiply the 2 years of lost COLA bump by the number of years you’ll be drawing the pension afterwards (i.e. number of years of life left). For some, that can be 10’s of thousands of dollars.

  • I was told at a seminar this week that you are basing information on 2013 life expectancy rates and prior rates were based on 1950 tables! Last year we saw a drop of the life expectancy in the US. Ask any funeral director. They will refute your figures! I believe it is 79. Why do you continue to inflate these numbers?

    • Susan,

      Our actuarial information is that in 2018 U.S. life expectancies topped 80 years. Compare that with 1978, when it was between 69 and 74 years, and 1938, three years after we began operations, when it was between 55 and 63 years.

      –Ohio PERS

  • I would like you to consider, the 2 year freeze of COLA, to be 2021 and 2023,, with a raise in the Inbetween year of 2022. This would not be as hard to take for those of us that depend on that raise to be vital to us. As a past union president, that negotiated many contracts for the city of Youngstown. 3 year contracts with something in-between, meant the world to us. Please consider this.

  • Need my pension and to continue to receive it, the freezing of cost of living increase is fine.

  • I am hoping the legislature has more regard for us retirees than OPERS board of directors do. You all know that our health care costs are going to go no where but up and you are cutting off the only income most of us have. I will be cancelling my health care in 2022 – 23 barring any catastrophic illness I may have, just to offset the income I’ll be missing in those years. I pray that OPERS finds some other way (like get investment strategist that know what they are doing) to manage the OPERS funds instead of making the members life miserable. Thanks for nothing.

    • TLJ,

      If you voluntarily cancel OPERS health care coverage, you can re-enroll, but you must provide proof of creditable coverage in another health care plan, including documentation from your plan administrator or employer confirming your cancellation. More information is available in the health care section on our website.

      –Ohio PERS

    • I wonder if the board members are gone to take a cut in there pay I bet not just wondering how much each board member makes a year and how much they pay for there insurance.

  • What is the anticipated effective date for implementation of these changes? Please provide a timeline for codification of the proposal into law.

    Thank you

    • AP,

      Now that the Board of Trustees has approved the package, we are just beginning the implementation process.

      –Ohio PERS

      • Can individuals contemplating retirement in calendar year 2020 (on or before 11/30/2020) anticipate COLA eligibility in 2021? Will 2020 retirees be subject to the two(2) COLA waiting period component of the proposed 2022/2023 COLA freeze … thus effectively resulting in a three(3) year COLA freeze for 2020 retirees ?

        Thank you,

  • Cost of living THAT’S A JOKE 3% barely cuts it food ,tires, UTILITIES, property TAXES.
    You that live in the wealthy world can scheme and invest.
    We in the real world have to plan how to budget what we have. Thank God I got out when I did!

  • Instead of going 2 consecutive years without a COLA increase as now proposed, how ’bout something like for the next 3 to 5 years have a COLA increase every-other year. That way you can still get to your desired funding level; but no one is but 1 year away from an increase. Just a thought.

  • My concern is that when the two year freeze is up, OPERS will find some other excuse to go to the General Assembly to extend it.

    Our COLAs were passed into law in 2012, but that didn’t stop OPERS from trying to change it.

  • OPERS has a well-respected reputation for prudent decisions projecting 30-year pension payments costs. That is a fact. My decision to retire (pre-2013) was based on projections of my annual PENSION over time. Health insurance coverage was not promised.

  • I think OPERS is doing a great job at informing us on changes. I’m for the 2-year freeze. For those who are against it, just be thankful it isn’t permanent.

    • I understand the need for this, but I do not understand how OPERS can justify violation the trust of those who were given a choice between an indexed COLA and a 3% COLA. It was a risk to take either…we who took the 3% may not be so lucky in the future if inflation (and the correlating) index ramp up. I don’t hear OPERS promising that we will get the greater of 3% or the indexed COLA if we are willing to give up the 3% now.

  • The OPERS board has been a good steward up until now. I trust that they are trying to keep ALL stakeholders in mind as they try to steer their way to the future. You can’t kill the goose that lays the golden egg. Health care costs everywhere are increasing and those companies DO NOT CARE whether they are contracted to OPERS or Microsoft, they will charge and get what they want. The reason we have one of the best, most solvent retirement systems is that they were fiscally prudent and continue to be. Crying about a COLA that will create an unsustainable fiscal future is shortsighted and selfish. What about those folks still working with 10,15 or 20 years to go? They deserve a future too. I guarantee you that your benefits will always be better than those folks that have to wait another 15 years. So, be fiscally realistic and be grateful you have a pension system that few people are fortunate to have. You can’t spend more than you earn, period.

    • Hi Mr. Schellinger,
      Perhaps we should think about what OPERS promised us when we were hired. I’m not certain that using the terms shortsighted and selfish, are correct. Perhaps we did plan to live within our budget, and perhaps we saved for several years, but I believe most of us depended on what OPERS said to us when we were hired as new employees. Maybe describing us as naïve or foolish would be better. I don’t think shortsighted and selfish are correct. And yes, our pensions are guaranteed, but is the amount of our pension guaranteed? Can pension amounts be changed just like the COLA guarantee was changed?? Please, we shouldn’t be shortsighted about that question! Fingers crossed that this passes the moderator’s judgement and is posted.

    • First I understand the need for changes. Second, Ohio is about 20th in pension system funding. We are not one of the best or most solvent according to the tax foundation. Third, health care benefits should not be confused with pension benefits; health benefits were never guaranteed. Finally those of us who opted for a 3% cola were given a choice. While we have lucked out so far, we may have benefited more from the standard indexed cola in the past and into the future (based of course on inflation).

    • Jeffrey, Thank you I have been saying the same thing. This is a great retirement system. So impressed with their ability to be proactive and good stewards of our funds.

    • Vince,

      According to the COLA changes, someone retiring in 2020 would receive a COLA in 2021, then again in 2024. The person retiring in 2021 would receive the first COLA in 2024. Those retiring beyond that would receive the first COLA 24 months after retiring.

      –Ohio PERS

      • Hi Vince, This is my interpretation: Someone retiring in 2020 will still receive a measly, little COLA based on the CPI, and then, they won’t receive that measly, little CPI based COLA for the next two years!

  • The COLA freeze is just the first shoe to drop…..Health Care is next….OPERS is far from finished with cost cutting measures.

    I recall, when working , that 8% was the withdrawal % of income taken out for OPERS; then a year later it increased to 8.5%; then a year later it increased to 9.0%; then a year later it increased to 9.5%; then finally a year later it topped off at 10.0%. This is where it is now. Those measures took place back in the 1980s. Obviously those working then paid forward for many to maintain their existing benefits during that period of time for numerous decades.

    Why is there no consideration for the same or other withdrawal increases now?

      • I agree. I was working at the time and affected by all those changes and never had a problem with it. I knew they were being made to strengthen the system for my future retirement and never once did I think it wasn’t fair or that those currently retired should make any concessions just because I had to.

  • I must be missing something. Why would anyone believe the freeze will end in two years and/or not be repeated whenever OPERS want. I don’t understand how anyone would believe anything OPERS says.

    • Not saying I do not trust OPERS and its leadership, but simply saying ” it will be written into the legislation” really is meaningless. Legislation can be rewritten or changed as need be. As I am assuming it was in this case.

      I still like the suggestion of skipping a year between “freeze” years.

    • There is no way a retiree can keep up with inflation at 3%. how much more will we lose when insurance premiums sky rocket in those 2 years. We will never get that back. It should also be written into LEGISLATION that insurance premiums will be FROZEN during those 2 years as well. I am quickly finding out how true it is when i hear that seniors are having to choose between medicine and food.

    • Dear Opers:
      Im a bit concerned about your comment that the dates “will be written into legislation”.
      Opers lost this very same battle with the legislature on your last attempt.
      Doesn’t your latest proposal have to go to the legislature for approval? I did not think you had the legal authority to do this without legislature approval?

    • Sue,

      The Board’s proposal must be passed by the Ohio General Assembly and therefore the two-year freeze, and returning to current COLA conditions, will be written in to state law.


      Julie, OPERS

      • Hi Julie – Laws are changed all the time, The law will need to changed for this current proposal. So the many times you have replied that “will be written in to state law” in the recent articles does not mean much.

      • Sure, and then OPERS will go back to the legislature after the freeze and propose new legislation making the freeze permanent.

      • Sure. And then OPERS will go back to the General Assembly again with a proposal to make the freeze permanent. I fully expect this comment to be censored as several of mine have been already.

  • Not sure as to why we who retired after 2013 have to penalized. The lower cola should be on those who retire now going forward, the 2 year freeze affects everyone and I can take that but to lower cola while increasing healthcare premiums is quite disheartening as I went into this career for the end game and that was the retirement

  • Really confusing…No longer can i afford health care. Can i cancel without having another plan in place? When opers does away with healthcare, will we be given a monthly subsidy to go buy somewhere else like police and fire pension? COLA always offset the monthly healthcare rise and that will sting especially on disability.

    • Andrew,

      Our proposed plan changes your health care coverage, it doesn’t eliminate it. Under the current proposal, beginning in 2022, you will be given a monthly allowance that you can use to purchase health insurance or save for future health costs. You can cancel your OPERS health care coverage at any point during the year, but you must have proof of coverage in another plan to re-enroll. For more information about withdrawing from OPERS coverage, go to

      Julie, OPERS

  • Please describe Healthcare Package 5 and COLA Package 3 right here in detail or provide a direct link where the information on these 2 Packages that were voted on by your Board appears immediately for viewing. Thank you and please stop censoring comments that are adverse to your position. The Ohio General Assembly needs to see all member input and questions/concerns.

  • Notice it’s always us who takes the hit on this stuff. From cola to healthcare. No one ever stands up for us and asks why is our health insurance goining up? The insurance companies and hospitals are all in bed with each other. How come one is standing up to them? Just easer to roll over a play dead. No one cares. It’s all about money and how much they can make. This is so old.

  • I would like to know if the Board Members would agree to pass on a raise for themselves for 2022 and 2023 just like we have to.

  • Hi. I understand that board members are not paid but will Opers staff go without raises while the freeze is on COLA as a show of solidarity with retirees affected by the freeze?

  • Which legislative committee will hear the COLA change proposals, when, and who are the committee members. Didn’t the house reject similat changes just last year?

    • Thomas,

      The legislation to change the OPERS cost-of-living adjustment has not been introduced yet.

      Julie, OPERS

      • make sure that you have included freezing insurance premiums increases for those 2 years as well. no way we will ever stay up with the costs unless you freeze premium increases.

        • That is only fair, as i know most of my cola raise each year was always eaten up by the insurance When I retired in 2011, the monthly premium was $26.00 and odd cents, Now almost 9 years later, it is over 300.00 a month.

  • I see no change in status on the Ohio Legislature site about the COLA Freeze proposal and haven’t seen any updates from PERS recently. I’m wondering if PERS can share what they believe is the potential of this being taken up by the legislature this year and when it would need to be passed in order to take effect for 2022?

    Further, if the COLA proposal isn’t passed then what else if anything is being considered that you can share?

    With inflation likely on the rise these next few years it would be much appreciated if the retirees had an informative update on this topic very soon.


    • Scott,

      OPERS is poised to continue our efforts to strengthen the long-term sustainability of the system by continuing our pursuit of the cost-of-living adjustment legislative change, which the OPERS Board of Trustees approved in 2019 and which PERI’s board of trustees formally endorsed. The rationale for why it is necessary has not changed — the dynamics of a shrinking active member-to-retiree ratio, compounded with lower investment market expectations against the backdrop of increased pension benefits in the past.

      • The Columbus Dispatch, January 20, 2021 reported that 2020 was a good year for OPERS. The main retirement fund returned 11.35% when the target rate was 7.2%, according to the preliminary 2020 numbers. The health care fund’s rate of return was 10.91% when it needed 6%. The number of pre 2013 retirees (3% simple interest COLA) continues to decline as retirees die. There is also the contract issue in that the COLA for this group is part of the “benefit”. All of this group should be on Medicare. Why not cut the pre 2013 retiree group’s health care benefit (legal) versus continuing to cut the COLA (maybe not legal)?

      • Thanks Michael for the reply but respectfully that doesn’t really answer my questions. I can assume and appreciate that OPERS is still pursuing this COLA proposal and trust that some sort of change is necessary for long-term sustainability. I guess I’m looking for a bit more insight into the current state assessment and process.

        From my readings there didn’t appear to be much support for the proposal in the legislature and further that they wouldn’t likely take this up in an election year anyway. Given the election is behind us is there a sense they will take it up now, and by when this year will that need to occur in order to set the COLAs for 2022?

        Also, and I think more importantly, if this isn’t approved by the legislature then what is the BOT prepared to do, and when will they begin to share it? I know it’s only January but I know this all takes time, especially if a Plan B needs to be refined and communicated.

        Thanks again,

        • Scott,

          You’re correct that legislative changes take time. The major pension legislation that became effective in 2013, impacting OPERS members but not retirees, took four years to complete. As stated, OPERS continues to pursue the Board-approved, temporary COLA freeze that would be effective in 2022 and 2023, and we can’t speculate on timing or other options at this time. As a reminder, that package also will impact current members by delaying their initial adjustment by one year.

          • Thanks for the clarification Michael and I appreciate the challenge and efforts of the OPERS Board and staff to keep our pension strong for everyone.

  • In response to Mr. Pramik’s recent reply comment: The rationale for these COLA changes has been altered, the stock market dynamics have greatly changed over the last several years, and the number of retirees has most likely decreased.

    • Cheryl,

      OPERS invests in more than the stock market, and no pension fund bases benefit decisions on one or two years’ worth of returns. At the January board meeting, the board’s consultant forecasted a 6.04 percent annual return for the Defined Benefit Fund over the next 10 years.

  • i put in my time and earned the COLA. any changes MUST be for the unretired currently working members, not for the ones who have already put in their time. our expenses continue to rise at an alarming rate. if we lose 2 years of COLAS, we would never ever even come close to getting back all those 2 years worth of price increases. time to explore other ways to trim and leave the seniors be.

    • Nancy,

      The proposed COLA freeze, which the Board of Trustees has approved, also would affect current workers by delaying their initial COLA for an additional year.

  • I see some comments stating that the COLA freeze should only apply to those already retired not to those Still working. Say what?! What makes your cost of living any different than mine? I put in
    my time. Get real!

    • Mike,

      The proposal also would impact those not yet retired by delaying their initial COLA by one additional year.

  • Hey all…..times are tough ya know. A lot of people have nothing right now. I’m thankful for what I have. And if this is what opers needs to do to keep our pensions solvent, then I can live with that. Just sayin…….

  • Hello, OPERS Board and retirees might want to start considering CPI-E, which President Biden is in favor of — thank goodness! Elderly needs and purchases are entirely different than those who are currently employed. OPERS Board has caused so much mental angst for so many of its members over COLA, health care HRA, etc, all while in the middle of a pandemic.

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