Review of COLA changes

Proposal has more effect on those close to retirement

By Kristen Dohrmann, Ohio Public Employees Retirement System

Dec. 20, 2019 — You may have read in a recent Board Report or PERSpective blog article, that in September the OPERS Board of Trustees approved changes to the cost-of-living adjustment and is now seeking legislative approval. If you are planning to retire in 2020 or 2021, these changes could impact when you receive your first cost-of-living adjustment.

Current rule: All retirees must wait 12 months from their retirement anniversary date to receive their first cost-of-living adjustment.

Board-approved changes: The Board approved a cost-of-living adjustment two-year suspension beginning in 2022. That means all retirees would not receive a cost-of-living adjustment in 2022 or 2023, and then the cost-of-living adjustment would be re-instated in 2024 on each retiree’s retirement anniversary date. Members who retire in 2022 and later would receive their first cost-of-living adjustment 24 months after their retirement date, on their second retirement anniversary.

These changes may impact you differently, depending on your retirement date. The biggest impact is to those retiring in 2021 because they’ll be under the current conditions (12-month wait) and the two-year suspension. They will go 36 months from their retirement date until their first cost-of-living adjustment.

If you’re planning to retire in 2020 or 2021, you are strongly encouraged to schedule a retirement counseling session with one of our counselors. They can help you determine exactly how this change could impact you.

    • I agree every year the medical, dental, and vision goes up which when the COLA comes around it can off set some of the costs. Now we get no cola increases for two years it will put us in the hole deeper. In the mean time your having trouble paying for our medical due to rising costs, I will bet our medical reimbursement that we get monthly will go down as well. Already it does not cover the costs I put out for my wife’s and I benefit. You have taken away reimbursement for my spouse. You have taken away reimbursement for my Medicare. It’s wonderful.

  • I am so glad they are making these changes way too late in the game. After they gave away healthcare for years to the retiree and their spouse and family and realized they didn’t have enough money to keep doing that. Great foresight. Too little too late. It should of ended years ago. This went on for decades and covered both retiree and spouse at 90%+.

    Totally ridiculous and should of never happened let alone continue for as long as it did. Thanks for finally realizing it too late.
    Now even the current retirees like me have to keep
    Working or move out of the country to retire.
    By the way if I renounce my citizenship does that stop Opers payments? 🙁

    All my coworkers are still getting 3% who retired a year before me.

  • It would be nice to have a COLA that covers rise in Medicare and insurance premiums, at least. Rent also goes up… Some of us on disability are holding our breath. Thank you and Merry Christmas.

  • I think a much better course of action would be a COLA freeze in 2022, skid a year and have a COLA freeze in 2024. This would help retirees who struggle with the ever increasing health insurance cost. Is it to late for that to be considered?

  • This idea is short sided. Inflation is low, now, but, as history shows, low in inflation soon increases. Any plan to have no COLA two year s rom now is does not take this uncertainly into account and can leave all members facing increased costs that many will not be able in handle.

    • The Social Security Administration uses a different timeframe than OPERS which can result in different cost-of-living amounts. For example, Social Security provided a 2.8% COLA in 2019, while OPERS’ COLA was 3% for all retirees.

      • 3% cola for pers retires. Remember, thats 3% of your gross when you retired. If that gross was $10,000, cola would be $300. After 10 years your cola totals $3,000 + your original $10,000 gross, this totals $13,000.
        Now, $300 is NOT 3% of $13,000. It is instead 2.3%. After 20 years your true cola is well under 2%.
        3% of $13,000 would be $390….not $300
        So, we who have been retired for a numbered of years, and make way less than 3%, are now gonna get even less?!

        • yes that is correct – just think of the poor individuals who COLA is based on CPI and have extended service time to get even that…………..

  • We retirees can only hope the legislature recongonizes the promise given to employees that took early retirement in order to save Opers money in return for annual 3% cola . For those coming into retirement in the future ,close or far. Don’t believe what Opers promises you in benefits. It is all a deck of cards that they renege on.

    • I remember when I retired in 2010 it was the largest number of retirees in one year. All of that had to do with the threat of losing the 3 percent cola. Now we are all losing it any way. I feel really bad for people who would have kept working to increase their retirement income, but decided to retire for the promised 3 percent cola.

  • I still think you should separate the two non cola years. pay us inbetween, and then again no pay the 3rd year, It wont be such a devastating loss like going 2 full years will. I’m just glad, in my case, going on medicare in february, because the raise usually just covered the raise in medical mutual each year. leaving a very small raise.

  • What else is new, first they ” REGROUP ” everyone into A,B, OR C . That was the first hit for myself
    after 23.5 years of service, falling into group B , because I wasn’t old enough by 4 months { no age discrimination ? }. So I have to work 31 years instead of 30 for an UN-REDUCED retirement. Next
    up is the HEALTH CARE IS NOT GUARANTEED statement, never saw that in 1989 when employment
    started. Not to mention the absurd premiums cast upon everyone. Now this ? Will be eligible for
    retirement in 2020, and now no COLA ? I don’t know how much more people will take ? AND BY THE WAY PLAN YOUR RETIREMENT !

    • The loss of benefits, rising healthcare costs, the reduction of the maximum allowance for insurance, and COLA are important issues that we retirees always seem to come out on the losing end of, but lack of communication when hired for OPERS positions is awful. When I was hired in 1986 there was no mention of the WEP and GPO, and over the years not much information was ever given to those of us still working about changes in COLA, benefits, funding, etc. I would never have retired when I did if I had known all of the aspects of my OPERS pension and benefits. My best advice to anyone considering working in an OPERS position is to stay educated on all aspects of retirement benefits from Day One. You have to be an advocate for yourself!

      The WEP and GPO need to be repealed ASAP. Keep contacting the Senators and Congressmen to support H.R. 141 and S. 521 that would repeal these horrible provisions.

      • The Government Pension Offset and Windfall Elimination Provision are policies administered by the Social Security Administration, not OPERS. If you have questions about GPO or WEP, contact your local Social Security office or access its website at ssa.gov.

        • I realize the WEP and GPO are federal provisions and any concerns we have need to be forwarded to the members of the House and Senate. I just think that when you are hired for an OPERS position, employers need to make you aware of the ramifications of an OPERS pension on any Social Security benefits you might be eligible for. It might not be OPERS’ direct responsibility to inform their future retirees about the WEP and GPO. It seems to me though it would be something that would benefit all OPERS members if there were more information regarding these laws in your literature or if OPERS could somehow “encourage” employers to be more explicit in their information about the issues between your OPERS pension and Social Security benefits.

    • Eric,

      The 2020 schedule will be in the upcoming retiree newsletter and next week’s blog. For your records, here is the 2020 payment schedule:

      Thurs. Jan 2
      Fri. Jan. 31
      Fri. Feb. 28
      Wed. April 1
      Fri. May 1
      Mon. June 1
      Wed. July 1
      Fri. July 31
      Tues. Sept. 1
      Thurs. Oct. 1
      Fri. Oct. 30
      Tues. Dec. 1

      Julie

  • The second sentence under “Board Approved Changes” is confusing by the use of the word “or” between 2002 and 2023 following by the statement that the COLA would be reinstated in 2024. What happens if the COLA is suspended in 2022? Will there be a two year suspension as a result or only a one year suspension? Please clarify exactly what the Board approved on this matter if you can.

    • Under the proposal, there would be no cost-of-living adjustments for any retirees in 2022 and 2023. In 2024, COLA would be reinstated — you would receive your COLA on your anniversary date.

      Julie, OPERS

      • Could you explain “on your anniversary date” in 2024? I retired December 2012. Does that mean I will not have my cola reinstated until December 2024 and only have one month of increase in 2024?

        • Alice,

          You will receive a cost-of-living adjustment on your Dec. 1, 2021 anniversary date. For 2022 and 2023, you will not receive a COLA. On your Dec. 1, 2024 anniversary date, your 3% COLA will resume.

          Julie

          • That seems to mean I will have almost a three year freeze. That does not seem fair. Maybe I am not thinking about it correctly? Is there another way to view this that would seem more fair?

          • Alice,

            Of the four years you’re looking at — 2021, 2022, 2023 and 2024 — you will receive a COLA in two of those years, 2021 and 2024. All COLAs will be frozen in 2022 and 2023. As proposed, you will have to wait until your anniversary date on Dec. 1, 2024, but you will also receive a COLA right before the freeze, also on your Dec. 1 anniversary date.

            Hope that clears things up. Please remember that the COLA proposal hasn’t been finalized and could change.

            Julie

  • The above statement indicates “These changes may impact you differently, depending on your retirement date”…
    I retired in April, 2009 so I assume my COLA would be frozen in 2022 and 2023 but would resume at the 3% in 2024?

    • Under the current proposal, the retiree cost-of-living adjustment would be suspended in 2022 and 2023, then return to current conditions after the two-year freeze. Under that scenario, you would receive a COLA in 2021 if you retired in 2020. You would receive another COLA in 2024.

      Julie

  • If I retire in 2020, I would be eligible for a COLA 12 months later in 2021 but another COLA would not occur until 2024 under the proposed plan, correct?

    • Under the current proposal, if you retire in 2021, you’ll receive your first cost-of-living adjustment in 2024.

      Julie

  • Seems unfair that current and future retirees have to bear the brunt of all of these onerous changes while we subsidized everyone else that got their full benefits and now ours are going to be cut. For example prior retirees getting 3% COLA while mine going forward is more than likely less just because OPERS arbitrarily says so? Where’s the fairness in that? And o top of that I won’t be getting any COLA for two or three years? I’d appreciate a reply.

  • I just went to an OPERS update seminar for less than 2 years. They did not discuss this in that meeting. Probably a good idea…may have been a riot. The staff were very helpful and encouraged us to retire when we are eligible. Now I question what “eligible” means. What I have earned or what I am willing to give up. Maybe keep working until the next bad news??

    • The COLA proposal has not been finalized — it must be approved by the Ohio Legislature. Since your husband retired on Dec. 31, 2019, he will receive his first cost-of-living adjustment on Jan. 1, 2021.

      Julie

  • This cola reduction is too drastic and looks like an attempt to reverse the wrong course late in the day. Please go after reforming or eliminati g the WEP penalty, which affects so many of us.

  • I agree with comments above regarding the COLA freeze for 2022 and 2023. It would be a much easier pill to swallow if they would freeze COLA for 2022, give us increase in 2023, and then freeze it again in 2024. This would alleviate a lot of the stress it’s going to put on retirees, such as myself, with medical costs and medicare payments going up. Wish they would freeze these items! I only hope the General Assembly thinks of how this will affect the retirees more than the OPERS Board does.

    • Brian,

      If you retire on Dec. 31, 2021, your effective retirement date will be Jan. 1, 2022, and you will receive your first cost-of-living adjustment on Jan. 1, 2024.

      If you retire on Jan. 2, your effective retirement date will be Feb. 1, 2022, and you will receive your first COLA on Feb. 1, 2024. This assumes our proposal goes through the legislative process without any changes.

      Julie

  • In an earlier post you say “The OPERS cost-of-living proposal is pending in the Ohio General Assembly.”
    Does that mean that the proposal has already been submitted?
    Do we have the names of any legislative sponsors yet?

    • The cost-of-living allowance proposal is in its early stages. Stay tuned for more information as it moves through the legislative process.

      Julie

  • I retired on December 30, 2012. So, my understanding is that after January 2021, I will not receive another COLA increase until December 2024 (retirement anniversary date), literally 3 years later!
    Is this correct?

    • Under the current proposal, you will receive a cost-of-living adjustment in 2021. COLAs will be frozen in 2022 and 2023, and you will receive a COLA again in 2024.

    • I think this should be stated more clearly, that for many of us that retired ahead of the Cola changes in December, 2012 that the freeze is for almost 3 years not 2 (35 months not 24). If it is being put forth as a two year freeze, it should be two years (24 months), not almost 3 years ( 35 months). That misrepresents what is being done. I think we deserve this to be more transparent in the proposal being rolled out.

      • It is 24 months, December 2022 to 2023, 12 months and December 2023 to 2024, 12 months for a total of 24 months. Then you would get the cola in December 2024. Write it down on paper to better understand. Hope this helps.

  • The COLA freeze for 2 years is unnecessary. Seriously, have the legislature change everyone to CPI-W for the next 10 years or more. Just do it, Stop running to the legislature for these ongoing modifications and stressing out retirees. I’d much rather receive some percentage of a COLA than ZIP,ZERO,ZiLCH.

    • Robert,

      If your last day at work is Dec. 31, 2020, your effective retirement date would be Jan. 1, 2021 and your first cost-of-living adjustment would be Jan. 1, 2024. If your last day is Nov. 30, 2020, your effective retirement date would be Dec. 1, 2020 and your first cost-of-living adjustment would be Dec. 1, 2021.

      Julie

    • Mary Kay,

      Under the current proposal, which must be approved by the Ohio Legislature, the cost-of-living adjustment will be frozen in 2022 and 2023 and will begin again in 2024.

      Julie

  • Since my COLA is applied to my original base benefit, which was calculated as of December 2017, and since each year the COLA for that year applies to that same 2017 base, wouldn’t it make sense to adjust for a true COLA, which would be the rate of actual change between 2017 and 2019?

  • “Members who retire in 2022 and later would receive their first cost-of-living adjustment 24 months after their retirement date, on their second retirement anniversary.”

    Please clarify the statement above which I copied from the article. Does this mean that anyone who retires once the proposed changes go into effect will have a 24 month waiting period before receiving their first COLA?

    I am confused. In your response to one of the questions above you say……”Under the current proposal, the retiree cost-of-living adjustment would be suspended in 2022 and 2023, then return to current conditions after the two-year freeze. ”

    So if I retire 1/1/23 do I receive the first COLA 1/1/24 or 1/1/25?

    • Under the current proposal, if you retire in 2023, you’ll receive your first cost-of-living adjustment in 2025.

  • Why not use a Government indicator on inflation for the previous year and have the COLA be that.
    If inflation was 5% last year than that is the COLA given, if it is 1% than that would be the COLA given.
    That way a person’s retirement stays consistent from the day you retire, and is fair to both sides.

    • OPERS uses the Consumer Price Index from the Bureau of Labor Statistics, CPI-W, capped at 3%, to measure the cost-of-living adjustment for those who retired after 2013. Those who retired before 2013 receive a fixed 3% COLA.

      • Thank you for the quick reply.
        I guess I am trying to say that it is important and fair to people that retire, that they want to keep their pay consistent.
        Regardless of what Index is used what happens if Inflation is over 3% per year?
        If Inflation is 10% for the year and you only get a 3% raise you just lost 7% of your pay.

        With the OPER COLA cap plan at 3% it would be fair to say that any year that Inflation is over 3% the value of your pension will decline.
        It would seem to me the only fair way it to use a good Index and use that inflation number for the year to determine the COLA for that year whether it is below or above 3%.

        Thank You

    • Your husband will receive his first cost-of-living adjustment on the one year anniversary of his effective retirement date, which in his case will be Jan. 1, 2021. The 2021 COLA amount has not been set for those who retired after 2013.

    • Under the current proposal, the cost-of-living freeze will affect all retirees and survivors. It is pending in the Ohio legislature.

      Julie, OPERS

  • When planning for retirement; one plans when to leave employment after eligible for retirement (one factors in how COLA effects future income), how much % to leave a spouse (if one passes away) effects base pension, one must decide if to take PLOP money and that too effects base pension, do I take insurance or not, etc. That is what I did back in 2012 when placed in “GROUP A” being told by OPERS that I would get 3% increase a year on my base pension. So yes, these decisions were vital of how I planned for retirement when meeting with OPERS. All changes dealing with pensions should be toward future hires. TIme to add a new “GROUP” and not place burden on those who already paid into the system and are now on a fixed income.

  • Thank you for all the hard work OPERS continues to do in behalf of it’s members. I have friends who have retired from private sector employers thinking they would have a company pension only to discover shortly before a planned retirement that they have little or nothing. I am grateful that OPERS works hard to keep our pensions solvent.

  • I think that if the cola will reinstate on anniversary date it should similarly cease on anniversary date, turning it into a two year freeze equally for all, rather than inequity based upon month one retired.

    • This is exactly how it will work. You will receive your cost-of-living adjustment on your anniversary date in 2021, and again in 2024. All COLAs will be frozen in 2022 and 2023.

      • Thank you!! I finally get it. It was like blasting through concrete!! I think the problem was that I thought everyone got their cola increase January 1, since basically I do. I finally see that we do all actually go without increase 24 months. Another person had voiced a similar concern, so you have helped to clear this up for me and perhaps a few others. You persevered and now I get it!! Thanks

    • As we have noted for more than a year, OPERS is not immune to the high cost of health care. Our objective is to continue offering access to health care, in some form, to all eligible retirees. To accomplish this, we need to implement changes that will extend the solvency of the Health Care Fund. Without the changes, the Health Care Fund would run out of money in 11 years and no one would have an allowance.

  • I have several concerns about OPERS decisions on our HRA and COLA. I believe the OPERS should have always been for individuals who paid into the retirement plan. It made no sense why payee spouses were allowed to use the money of PERS employees. I retired over twenty years ago, I am single and now I am told that we are running out of money. It took years for OPERS to realize that paying non members insurance was not profitable. Unfortunately, I am the one that will suffer. The new HRA allowances benefits older retirees instead of those who worked longer and paid more into the pension plan. I worked 32 years but since I was under 60 when I retired, HRA will offer me 73% allowance, whereas somebody working 25 years at the age of 65 will receive 76% allowance. The selling point of State employment was always “30 years and you can retire”. I realize thing change, but the seniors are getting hurt the most. Medicare and Supplement insurance increases as we age. OPERS insurance will pay me less although I worked over 30 years. And now OPERS wants to freeze my COLA. Financially my pension is taking a beating.

    • The allowance percentage is based on your years of service at retirement and age when you first access OPERS health care. The allowance table is structured to reward career public employees taking both age and years of service into consideration.

      Julie, OPERS

  • I was planning to retire in September, 2021. Which means my first COLA would be October 1, 2024, but if I delay retiring until December 2021, then my retirement anniversary date would be Jan 1, 2022 and my first COLA would be Jan 1, 2024? So essentially in the first scenario I go 3 years before my first COLA, but in the second scenario only 2 years?

  • It doesn’t appear that the legislature will be taking up the cost-of-living proposal before the election this year. Any insights you can share as to whether this might be taken up next year, and if it is and is defeated, whether the OPERS Board has a “Plan B” and what that is? I’m concerned that if this isn’t approved then what other actions the Board may be considering in order to maintain the health of our pension fund.

    Thanks

    • Scott,

      As you note, no bill has been introduced in the legislature related to the proposal. There is no further update at this time.

  • Greetings! Just checking for an update on this…is the COLA proposal still pending in the State legislature, or has some action been taking by that body? Getting close to decision time for folks who may need to retire by end of year for 2021 COLA purposes. Thanks for any info you can provide!

    • Brian,

      The COLA proposal would have no effect on 2021 adjustments. We’ll post a blog about that topic on Friday.

      –Ohio PERS

        • Brian,

          The OPERS Board of Trustees approved a proposal last year to suspend the COLA for 2022 and 2023, then return the adjustment to current levels. The proposal requires passage by the Ohio General Assembly. As of this date, no related bill has been introduced in the legislature.

  • Just checking for an update as of 8/31/2020–is the COLA proposal still pending in the Ohio General Assembly, or has some action now been taken on it? Thanks!

    • Brian,

      The OPERS Board of Trustees approved a proposal last year to suspend the COLA for 2022 and 2023, then return the adjustment to current levels. The proposal requires passage by the Ohio General Assembly. As of this date, no related bill has been introduced in the legislature.

  • If I’ve done my math correctly ALL who have retired or will retire prior to 2022 will go three years (total) with no COLA while those who retire in ‘22 or after will go only two years with no COLA. Please address.

    • Teresa,

      Yes, that is correct. It’s one element an eligible member might consider if a retirement decision is imminent.

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