Public pensions allow portability of benefits
Public employees who wish to change jobs throughout their careers are well-served by defined benefit pension plans, a new study states.
In a report titled, “Preserving Retirement Income for Public Sector Employees,” the National Institute on Retirement Security found that nearly all public retirement systems allow for the accumulation of pension benefits for members who job-hop during their careers. In addition to allowing time to add up in multiple plans, most public employees can purchase service credits or redeposit withdrawn contributions if they leave public employment and later return.
“One pervasive misconception about public DB pensions relates to the benefits when an employee leaves a job before retirement,” says Diane Oakley, NIRS executive director. “Our research finds that most public pensions have adopted retirement plan features that allow employees who change jobs to not only retain benefits, but also to increase retirement benefits.”
OPERS has about 3,700 employers that contribute to our system on behalf of their employees, so job switching among them can continue a member’s service time in OPERS.
OPERS also offers a variety of ways that members can purchase or transfer service. They include redepositing refunded benefits, buying time after taking military leave and purchasing credit earned in other states.
The NIRS report surveyed 89 public pension plans for how they allow service credit purchases, how they refund members’ contributions and other relevant practices. The conclusion was that, in part because of these added features, DB plans continue to offer reliable income to public workers in retirement.
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.
OPERS allows you to move around from job to job under opers retirement and gives you income for retirement but if you purchase time and it adds up to 30 years and you retire they will not give you medical benefits but you can get vision and dental so they need to let people know this.
Sherry,
Actually, there are five types of service credit purchases that do count toward health care eligibility. They have an employer contribution component. That’s important because by law only employer contributions can help fund health care.
These five types of service credit purchases are listed on page 2 of our Service Credit and Contributing Months leaflet.
–Ohio PERS
..members who job-hop….that just doesn’t sound quite right. Perhaps “members who change jobs or members who advance their careers or members who change careers” would be a better description?? Also, I have a question about COLA which will be based on Consumer Price Index: Will OPERS base COLA on CPI less energy and food, or is it based on CPI of all goods?
Thank you!
CHolly,
The COLA will be based on the CPI-W. Remember that it does not go into effect until 2019.
–Ohio PERS
Since you raised the cost of health care for 2016 for those of us still under the age of 65 because of this tax, are you now going to lower the health care costs because it will not go into effect until 2020, and even then you very well know its doubtful it will ever go into effect.
I understand your frustrations. If you have not received it already, the Fall health care news bulletin has more information regarding the non-Medicare premium increase. Some of those reasons include health care costs rising across the country, continuing adjustments from the 2012 changes made to preserve health care and the increase in overall cost for OPERS to provide a medical plan to this population. Upon turning 65, you will be able to select a plan on the open market through the Connector, administered by OneExchange. Having this ability may allow you to pick a plan that more closely meets your budgetary needs. Materials will be sent 3-6 months in advance of the birth month with more instructions. If you have further questions about this process, give us a call at 1-800-222-7377.
-Ohio PERS
how can I borrow against my retirement?
Bobbi,
Ohio state law does not permit OPERS members to borrow against their retirement account.
–Ohio PERS
When OPERS compares the cola to cpi, you are not comparing apples to apples. The CPI would be compounded over 30 years while OPERS is not, but is currently 3% of the members initial amount added on each year. Example: $1000 using cpi over 30 years since 1987 would be $2145 today per online cpi inflation calculator. The same $1000 using the OPERS 3% cola method over 30 years yields only $1900! To state in your survey cover letter that OPERS COLA has outpaced inflation is a falsehood. If you factor in the increases in health cost out of pocket cost over the last 5 years, retirees have lost net income.
Your recent article stated 2015 funding for pensions well was ahead of the mandated requirements. 2016 and 2017 investment markets have had over 10% gains SO FAR.
NOTE:
A 10th year 3% OPERS COLA increase yields only a 2.4% increase over the 9th year gross earnings.
THERE DOES NOT SEEM TO BE A CASE AT THIS TO REDUCE THE COLA AND BEING PROACTIVE.
How would one go about transferring service time from OPERS to another retirement system, say OP&F? Are there any specific limitations on each of the OPERS retirement plans?
Mike, Members in the Traditional Pension Plan may transfer service to OP&F at anytime, however the member should contact OP&F to verify if the service credit will be accepted. All contributions/service credit is not guaranteed to be accepted. OP&F will determine the amount/type of credit that can be transferred to them. They also may not accept OPERS service that is part time. A member must submit a signed, written request to OPERS to initiate the transfer to the other system. Members must be inactive with OPERS to begin the process of transferring the funds to OP&F. If the members account appears to be active with OPERS, we will contact the employer to obtain certification of the members final day of service.
Can you verify if the combination plan has restrictions on transferring to OP&F? Several individuals at my prior employer have transferred service time to OPF in recent years without restriction. I am curious as to why the sudden restriction on transfer and why that has come to fruition.
Mike, Per Ohio law, service in the Combined Plan or Member-Directed Plan cannot be transferred to OP&F/HPRS. Only the Traditional Plan can be transferred. You may view this information in our Service Credit and Contributing Months Leaflet by copying and pasting the following link into your browser: https://www.opers.org/pubs-archive/leaflets/ISL-F-Service-Credit-and-Contributing-Months.pdf