State pension bill among issues we’re following
The Ohio Public Employees Retirement System External Relations staff has been busy on a number of issues that affect our members.
Here’s a roundup of some of those legislative issues that we are closely watching, both here in Columbus and in Washington:
State
Omnibus pension bill
Sponsored by Reps. Kirk Schuring (R-Canton) and Dan Ramos (D-Lorain), House Bill 520 contains various items from all five Ohio retirement systems. It received its first hearing in the House Health and Aging Committee on May 4.
OPERS is working with the other systems and Rep. Schuring to resolve concerns centered on the Alternative Retirement Plan mitigating rate and other issues affecting all systems. We are optimistic that the bill can be passed by the end of the year.
House Joint Resolution 6
This resolution would place a proposal on the November ballot to prohibit state pension systems and state agencies from investing in companies with business operations in countries designated as state sponsors of terrorism.
In addition, OPERS would be required to divest of all holdings in such companies by January 2018. We have a long history of opposing such initiatives, and this resolution is no different. While OPERS is clearly against terrorism, our role does not include influencing foreign policy.
Our current divestiture policy has proven to be successful, decreasing investments in companies with ties to Iran and Sudan from $659 million in 2007 to $19 million in 2014.
OPERS has collaborated on a letter with Ohio’s other four state public pension systems to key members of the legislature, asking to delay action until the Ohio Retirement Study Council provides input.
Federal
Social Security WEP bill
Many of our members are impacted by Social Security’s Windfall Elimination Provision, which can reduce Social Security benefits for public pension recipients who also worked in the private sector. OPERS has long supported reforming the current provision.
U.S. Rep. Kevin Brady of Texas has proposed a potential solution that helps most of our members. WEP reform received a significant boost in March when a U.S. House Committee on Ways and Means subcommittee held a hearing on Brady’s WEP bill (House Resolution 711), which has bipartisan support. It was a significant hearing on a bill that would restate the WEP calculation formula, but there has been little movement since.
OPERS will continue to assist in the effort to advocate for additional cosponsors for the bill. Moving forward, our Communications, External Relations and Actuarial staffs are developing a survey to better understand and describe our members’ experiences with the WEP and the related Government Pension Offset.
We’ll incorporate the results into our advocacy efforts as evidence of the need for WEP reform.
Mandatory Social Security coverage
No new mandatory coverage proposals have been introduced this year. However, given the serious consequences to OPERS of losing members and/or contributions to Social Security, we will continue to oppose any attempt to force Ohio’s public employees to participate in Social Security.
Safe Annuities for Employees Retirement Act
The bill creates a new, voluntary retirement plan based on the accrual of annual life insurance annuity contracts. Utah Sen. Orrin Hatch, the sponsor, has made several statements that public retirement systems are significantly underfunded and suggested that his plan could replace existing defined benefit plans.
We last encountered the SAFE act in last year’s Puerto Rico Assistance Act of 2015 (HR 2381). Staff worked with the Ohio congressional delegation, as well as our partners at the federal level, to oppose the inclusion of the SAFE language in legislation meant to help the people of Puerto Rico, which is close to insolvency.
We have sent two letters since December stating that if Congress wants to consider the SAFE Retirement Act, it should do so through the normal committee process, as opposed to amending this policy into any moving or must-pass legislation.
Cadillac tax
There’s been little legislative action regarding the so-called Cadillac tax provision of the Affordable Care Act since Congress decided in December to delay its implementation by two years. (See the April 20, 2015 issue for an explanation of the Cadillac tax issue).
In anticipation of a renewed repeal effort in 2017, we have been working closely with a group called the Alliance to Fight the 40 to educate members of Congress regarding the need to repeal the tax. Recent legislation has been introduced in the House and Senate to exempt certain health care arrangements (e.g., tax-exempt health savings accounts) from the tax. Although these types of bills are well-intentioned, they do not provide the relief that health care plan sponsors need.
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.
The WEP bill would be beneficial to both me and my husband. As we are retirees from Ohio and our SS has been cut so much that it is almost nonexistent. Would really be nice if this would be reinstated.
Agree!!!!
I also agree. I came into OPERS when I was over 50 years old, and worked until I was 75 in order to be able to retire with a small OPERS pension. Almost all of my previous Social Security was seen as “double dipping.” It seemed unfair.
The WEP was enacted as part of the 1983 Social Security Refinancing Act, designed to shore up the financing of the Social Security Trust Fund. That Act was signed into law by President Ronald Reagan, after being adopted by the Democratic-controlled House where Rep. Dan Rostenkowski (D-IL) chaired the House Ways and Means Committee and the Republican-controlled Senate, where Sen. Robert Dole (R-KS) chaired the Senate Finance Committee.
The Democrat Congress, in charge of budgeting and finance, was trying to save SS from bankruptcy by cutting your SS earned benefits so they enacted the SS Refinancing Act, unfortunately for you President Reagan signed it into law.
WEP will NEVER be eliminated because the SS Trust Fund is STILL on the way to bankruptcy. More SS cuts are on the horizon unfortunately.
Please remind all WEP affected annuitants that our congress has “borrowed” more money from the social security fund than we currently owe to China. If congress would pay back that money there would be more than enough to have ss on firm financial ground. SS is NOT and never has been country’s part of the annual budget. SS was designed to be self supporting…or would be if congress would stop taking money for their budget short falls.
I believe the WEP is unconstitutional and should be challenged in court. Over the years, starting in high school, I worked in the private and public sectors, paying into SS or public pension, and sometimes both at the same time. I received statements annually from SS stating I had enough time in the system to be eligible for X amount of benefit. Upon retirement I was told by SS that my benefit would be reduced by about a third and the same would apply to my wife because I had an OPERS pension.
Why is this wrong? Because if someone who had the same amount of time in SS as I did, yet never worked in the public sector, they would receive the higher amount. So, as a punishment to me for serving the public I and my wife had to take a big hit for that service.
Now, back to the unconstitutionality of the the WEP. I believe it it violates the Equal Protection under the law clause of the Constitution. It is arbitrary in its application and discriminates against people who have the same amount of credits in SS as one who worked an equal amount of time under SS. One municipal law director I know said one time that if this were taken to court it had a good chance of winning. Perhaps OPERS could join with other states that have this problem and get a legal decision on this rather than leaving it to the politicos who will probably never repeal this unfair provision of SS law. How about it OPERS?
SS isn’t going bankrupt. It is a scare tactic. It is money we and our spouses paid into it and we deserve every penny we get from it
Thank you for all your work on these important issues to OPERS future and present retirees.
One issue that directly affects me and I’m sure other retirees is the WEP. As one who worked under Social Security for over 24 years prior to working under OPERS for about 21 years, the WEP was the most disconcerting power punch that impacted my retirement. I know several bills have been promoted through the years regarding the WEP and the GPO but this bill seems cost neutral if Congress will ever consider it.
I agree with Ginny, I also worked for YEARS in the private sector under Social Security. I also worked for the State of Ohio (OPERS) for almost 22 years, then retired. Upon my retirement, I am shocked at how little my Social Security retirement benefit is. Congress needs to work on the WEP bill!!
I qualified for both public and private benefits but was subject to WEP. If something happens to my disabled husband, I will be forced to live on about 1200 a month. Couldn’t even maintain my small cape on that.
Thank you for OPERS’s hard and continued work looking after our best interests. The WEP bill HR 711 is of the most important as I have worked for 31 years under Social Security before working for the State of Ohio. I have always wondered where all that money I paid and my employers paid to SS went. Should we write our Senator or others to let them know that we are concerned about the WEP Bill HR711?
Regards
Jeanette,
Thanks for the note. You certainly can write your representatives in Congress about this bill if you so choose. We are following the progress closely and will keep our members updated.
–Ohio PERS
The changes made to our OPERS healthcare coverage d/t the anticipation of the cadillac tax has greatly decreased my health care coverage. deductibles are higher and percentage is now 75/25% instead of 80/20%. Now that the implementation has been delayed, are you considering re-instating the same level of health care we had before the reduction in coverages?
Barbara,
We will be doing a blog on that topic in mid-June. Because the Cadillac tax was not repealed but merely delayed, plans are to keep deductibles and co-pays the same in 2017. We will be talking about some new plan enhancements in June.
–Ohio PERS
It would help me considerably to have the WEP bill reinstated. I worked under SS for a number of years before working my state job and part-time during the time I had my state job from which I retired.
Regarding the WEP bill, this bill is supposedly revenue neutral. Although I know what revenue neutral means, I do not understand how this bill would work. Does that mean that if they increase social security benefits for some public pension retirees, they will reduce benefits for others?
Diana,
It would recalculate the formula for limiting the Social Security benefit for those who also have a public pension. In doing so some people who are not affected by WEP would now be, but those who currently are would have less held back.
Regardless, only time will tell whether the bill moves ahead this year.
–Ohio PERS
Thanks.
I hope OPERS is monitoring One Exchange. They still have not their act together. Will we be able to select another company to administer our health care reimbursements?
Anthony,
We are always monitoring the Connector. I’m not sure what you mean by selecting another company to administer reimbursements. We have a contract with OneExchange, and that includes the reimbursement process.
–Ohio PERS
The charts on the drug coverage are from 2013. The figures for are drugs on the list we chose from triple on the First of Jan 2016. I called One Exchange and they said I had to deal with the Drug Insurance Company. I called UHC and file a complaint. I Have yet to get answer. my Insurance Agent found better Pals than the trash One Exchange was offering.
Would the proposed changes to the WEP formula change the SS amount for those already receiving benefits in addition to an OPERS pension; or does it only affect new recipients in the event the bill is signed into law???
Jim,
It would apply to current recipients as well as new recipients.
–Ohio PERS
My SS benefit was also reduced by WEP. As I worked most of my career for the county, my monthly benefit is less than my Medicare Part B premium. Despite my being on Medicare in 2015, I am told my premium for Part,B of $104.90 has INCREASED to $121.80 for 2016 solely because my benefit doesn’t cover the cost of my Medicare Part B. This is so unfair and makes no sense to me. I have not found anyone or any agency that can assist in correcting this unfairness.
Marlene,
Medicare raised the Med B premium this year to $121.80 for everybody, with a few exceptions. There is an explanation on the Medicare website.
–Ohio PERS
I worked in the private sector the majority of my life and continue to do so with a part time job. I had 13 years under state employment. I was shocked when my SS benefits were cut almost in half when I was forced to retire in 2014 due to the changes implemented by the state. Any assistance on fixing this SS injustice would be greatly appreciated!
Wanda,
Are you saying that while you were working in an OPERS-covered position you were drawing Social Security, then when you retired from that OPERS position and began drawing our pension Social Security cut its benefit in half? It’s difficult to find out exactly how the WEP works, but that appears to be a good example. Thanks for sharing that information.
We do not know how this bill is going to turn out. We are hoping for the best for all involved.
–Ohio PERS
I don’t like the idea of profiting off of countries that sponsor Muslim terrorism groups like ISIS that results in American military and innocent American citizen deaths. House Joint Resolution 6 should go forward. Our national security is more important than profits.
Tom,
The resolution would potentially lead to lawmakers attempting to influence other investments made on behalf of citizens. That’s not their job. If you read our PERSpective blog dated Feb. 19, you would know that we already have voluntarily divested 97 percent of our investments in Iran and Sudan since 2007. At least for OPERS, the resolution is unnecessary.
–Ohio PERS
Good to hear, thanks.
I see that President Obama ordered, last November, Federal employees taking part in their 401k plan that they must invest a portion of their earnings in green energy. Oh well, they got what they voted for and I hope they don’t lose too much money with those risky, green energy companies.
I would not want anyone in the state legislature or congress deciding where my retirement funds are invested. What would the process be for determining “companies with business operations in countries designated as state sponsors of terrorism?” (rhetorical question) If the legislature got control of our retirement funds under guise of “fighting terrorism” it would be a short journey for them to start making other decisions for political gain and against the best interests of OPERS retirees. The people at OPERS and contracted investment companies have a fiduciary duty to act solely in the best interest of the retiree. Politicians do not have that duty and responsibility. Anyone remember Coingate at the Bureau of Workers Comp.
OPERI has an extensive position statement on the independence of retirement funds in this quarter’s newsletter. Read the Legislative Report at http://operi.org/pdf/PERI2016-2.pdf.
I find it abhorrent that OPERS would beg the Republicans in Congress to stop the ObamaCare Cadillac Tax from taking effect this year. I would estimate that 90% of PERS union members and retirees voted for ObamaCare in 2008 and 2012. And now that the ObamaCare Cadillac Tax that they voted for come dues these same ObamaCare voters decided that did not want to pay the piper, so to speak. You voted for it so PERS should have to pay the tax to help pay for healthcare insurance for low income families as per the ObamaCare Law. If this results in reduced medical benefits for all OPERS members then so be it. This is what you voted for.
Tom,
OPERS cannot afford to pay the Cadillac tax and continue to provide health care to retirees. We will alter the health care plan as necessary if it is not repealed. So it is in the best interest of our members that the tax is repealed.
–Ohio PERS
Mr. Pramik. The ObamaCare LAW says you can afford to pay the Cadillac tax as approved by and voted for by an extreme majority of union, OPERS members. These OPERS members wanted ObamaCare and they want the ObamaCare Cadillac tax and many other taxes that go with it. And if OPERS cannot afford it then OPERS must cut the health insurance benefits of all OPERS members and retirees.
OPERS members demanded that the ObamaCare Law be passed and it was. OPERS has a duty to cut healthcare benefits or pay the tax, it is the right thing to do for its members who demanded this law.
The ONLY solution to this abusive tax is to repeal ObamaCare. Repealing ObamaCare and all of its many tax increases is in the BEST INTEREST OF OPERS MEMBERS.
I am an OPERS retiree, and I was not in a union. It is not correct to say that the vast majority of OPERS members were in a union. I voted for Obama, although I am sure there are many members of OPERS who did not. Although I voted for Obama, I did not vote for Obamacare. Obamacare was never up for a vote. I guess you could argue that a vote for Obama amounts to a vote for Obamacare, but it is not correct to say that the vast majorityof OPERS members voted for Obamacare because they (we) never got the opportunity to vote for or against Obamacare since it was never up for a vote. I do not like the Cadillac tax. It is based on the premise that rising health care costs can be controlled by having people pay more of their own health care costs, like high co-pays, deductibles, etc. That is why organizations that provide group health insurance will be subject to increased to taxes if they offer health insurance that is deemed to be too generous by the powers that be. I don’t agree with that premise. I don’t believe that most people seek out health care unless they need it, co-pays or not. Who likes to go the doctor anyway? Therefore, I am opposed to the Cadillac tax. That does not mean that I am opposed to all of Obamacare. I like parts of it. We are allowed to like parts of it but not all of it. Further, I do not think it is productive or accurate to blame Obamacare for all of our ills.
Mr. Smeal, I don’t know where you get your information from. I neither voted for Obama or Obamacare and I am in a union. I was started 19 years ago and was promised many things with health care when I began my career. Most of which have been taken and I don’t know at this rate if I will ever have the ability to retire the way these politicians are attacking our benefits. You are totally and utterly incorrect sir.
The only thing that will change health care in the future is to go to a free market system . Any time the gov’t gets their hands on anything there is abuse and miss use of the function and funds. The only people who benefit are those who live off the gov’t and those elite in gov’t.
Saying that if you voted for President Obama (and since the ACA was passed during his administration) you must have your healthcare benefits cut, is like saying if you voted for President Bush (and since his Administration invaded Iraq) you must have to join the invasion.
WHAT IS THE STATUS OF HOUSE BILL 711
Kevin,
There has been little movement on the bill since the House Ways and Means subcommittee hearing in March. We are continuing to seek cosponsors for the bill and advocating for the bill’s passage.
–Ohio PERS
WEP should be done away with.I paid into social security for years and earn the 40 credits they require to get social security.But because I got a job with the state after the factory where i worked at closed.I was penalised and lost over two hundred dollars .I worked and paid into it just like the people who didnt get a job with the state and they get full benefits from social security.Not fair at all and not right.
How do I contact the OPERS External Relations staff? I started on Medicare last year but because my SS check is less than the cost for the Medicare part B premium, my part B premium increased to $121.80! Seems unfair to me.
Marlene,
The 2016 Medicare Part B premium increase was part of the budget debate last fall in Washington. There was potential that for some Medicare participants, like any of our retirees who don’t receive Social Security, the premium amount could have gone up 52 percent. However, Congress struck a deal for a lower increase to $121.80 that affected more people.
We covered the details of that compromise on page 2 of our December OPERSource newsletter. The full explanation of the Medicare Part B premium calculation for 2016 is available on the Medicare website.
–Ohio PERS
WEP do not understand why I paid into social security for years and earn the 40 credits before working for county penalized over $300.00 with people on SSI that have never paid into social security that receive more a month then me or other people I know you would think that this problem would be corrected . Not fair at all and not right.
I worked for the State of Ohio for 52 years, my husband who is deceased worked under social security for over 20 years. When he died I received nothing from social security saying that I would be cut 2/3 of my state pension. HB711 would not help me would it.
I just watched the recent OPERS video regarding health care changes for 2017 & was dismayed to hear that you will be discontinuing the financial incentive programs in the future. The financial incentive is the only thing that that makes it worth my while to find time in a busy schedule to participate in the programs and the Lifestyle Coaching thru MedMutual is excellent. I have many friends who also participate due to the financial incentive. I wish OPERS would re-consider the elimination of financial incentive programs. It just seems like one more good thing you are eliminating from our health care plan.
I am a divorced female, who would be elligible for ex’s SS, but I had a Ohio State Pension. I have no SS income. Would repeal of WEP allow me SS benefits from Ex’s account?
Anita,
The customer service number for Social Security is 800-772-1213.
–Ohio PERS
HB711 has been referred to committee. (That’s code talk for the ‘trash’). I have followed the WEP for several years through numerous House Bills and they all end up in ‘committee’. I have come to the conclusion that WEP will never be eliminated or modified by just contacting your so call ‘representative’ A more aggressive approach will be necessary, enlisting action by all effected retirees.
I had worked for a steel mill for 28 1/2 years.pbgc took over failing pension plan,now I only receive about $800.00 a month.After now working for city water dept for additional 14 years I’m told my social security will be cut also,when will this nonsense end? Senators and congressmen,where are you? Please help, over 40 years of hard work,and we are becoming the working poor!
“Senators and congressmen” crafted the law, WEP 1983, to cut SS benefits to prevent the federal government run SS from going bankrupt. Your steelworkers union pension fund failed because it would not cut benefits to save the union pension fund. So do you really think legislators are going to increase your benefits? The federal government run SS trust fund paltry investment rate of return has been so small that it will NEVER keep up with inflation so the federal government run SS is on the road to bankruptcy. We are fortunate that Ohio, state run PERS investments in Wall Street are so strong and relatively safe.