DC, hybrid plans changing for future members

As of 2022, OPERS will offer two retirement options for new participants

By Michael Pramik, Ohio Public Employees Retirement System

Oct. 10, 2019 – OPERS offers three pension plans, but that will be changing for future members.

The OPERS Board of Trustees approved a plan at its September meeting that will modify the Member-Directed (defined contribution) and Combined (hybrid) pension plans for those hired in 2022 and beyond. The goal is to align future benefits in the Member-Directed Plan with those of the Traditional Pension Plan, to which a large majority of OPERS members belong.

As a result, OPERS will merge the Combined plan into the Traditional Pension Plan and close off the Combined Plan for those who are hired after 2022. It will not affect the plan design for those who are enrolled in it as of that date. Merging the Combined Plan was recommended in concert with a proposal to create a retirement group for new Traditional Plan members as of 2022.

The proposal also would change the Member-Directed Plan’s vesting schedule, mitigating rate, annuitization, Retiree Medical Account and cost-of-living adjustments. It will not affect the plan design for those who are enrolled in it as of Jan. 1, 2022.

Members hired after Jan. 1, 2022, will have a choice of two plans – Traditional and Member-Directed. About 94 percent of active and inactive OPERS members are enrolled in the Traditional plan.

Here’s a snapshot of some of the changes to the Member-Directed Plan for future members:

OptionCurrent MD planFuture MD plan
Vesting schedule100% at 5 years100% at 10 years
Mitigating rate2.44%*4-10%
Eligibility to annuitizeAge 55Age 62
COLA on lifetime annuityYesNo
Retiree Medical Account4%2%
Plan changesOne during careerOne within first 5 years
*Increasing to 3.5% in 2020

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

7 thoughts on “DC, hybrid plans changing for future members

  • October 10, 2019 at 12:29 pm
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    Here is what I think – when these employees eventually retire – they won’t have anything to retire on. Their funds will have been mismanaged and reduced and those that are in control of the funds will find something to blame it on other than themselves. Very sad.

    Reply
  • October 10, 2019 at 1:59 pm
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    PLEASE TELL ME IN PLAIN ENGLISH WHAT MY CHANGES WILL BE , I’m 68YRS. OLD AND RETIRED AFTER 30 YRS IN 2007 !!!!!!

    Reply
    • October 10, 2019 at 2:17 pm
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      Kenneth,

      These changes do not apply to current retirees, only to those hired in 2022 and beyond who select the Member-Directed Plan.

      –Ohio PERS

      Reply
  • October 11, 2019 at 10:48 am
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    I’m unclear on exactly what the ‘Mitigating rate’ is. Would you mind explaining in more detail? Thank you.

    Reply
    • October 21, 2019 at 11:14 am
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      Kerry,

      The mitigating rate is paid only by members in the Member Directed and Combined Plans. The purpose of the mitigating rate is to reduce the financial impact of the loss of members participating in the Traditional Pension Plan.

      Julie, OPERS

      Reply
  • October 11, 2019 at 12:57 pm
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    The mitigating rate should have been raised years ago. Then, maybe folks would have chosen the defined pension plan instead of the other plans, and maybe we wouldn’t be in the trouble we’re in today.
    CherylH

    Reply
  • October 16, 2019 at 9:28 am
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    Will the ‘Mitigating rate *Increasing to 3.5% in 2020’ affect members currently enrolled in the member directed plan or will that increase only affect members enrolling in 2020 and beyond?

    Reply

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