The $94.1 billion Ohio Public Employees Retirement System (OPERS) has approved a proposal for a new tier of benefits for future employees that wouldn’t offer benefits as generous as those now provided to current and retired employees.
At its October meeting, the OPERS board of trustees gave the green light for a proposal for the new “Group D” tier, which would consist of OPERS-contributing members hired in 2022 and later. OPERS currently divides its non-retired membership into Groups A, B, or C depending on age and service.
Although details of Group D are still being hammered out, it will have its own eligibility standards, benefit structure, and member features. It is intended to address expected investment market volatility and to adjust to the lack of available funding for healthcare. A final plan will be presented to the board before seeking legislation.
“We still have some work to do on it,” OPERS Executive Director Karen Carraher told the Dayton Daily News. “We presented it to our board so we can get them to sort of bless it so we can continue to do work on it.” Carraher said the proposal wouldn’t be introduced to the state legislature until late 2020 or 2021 but added that “it’s generating some energy right now.”
State-and-local members in the Group D tier will contribute 11% of their salaries, up from 10% for current employees and retirees. Of that sum, 1% will be deposited into a pension plus account and will accumulate throughout the member’s career. It will be invested separately from the defined benefit fund. Cost of living adjustments will be tied to the consumer price index and capped at 2% from the current 3%. Members will have to work longer before being eligible for full retirement benefits.
Group D members won’t be allowed to participate in traditional OPERS healthcare coverage. Instead, a portion of their employers’ contributions will be dedicated to fund a retiree medical account to be used to reimburse members for future medical expenses.
Group D members, however, will be able to direct the investment of money they roll into the plan from other eligible retirement plans. They’ll also be eligible to purchase a maximum of five years of service credit, with no associated public employment, at the full actuarial cost. After employment is ended, funds can be rolled to another eligible retirement plan.
OPERS also is considering a proposed protective services division for Group D members, an occupational classification based on public safety job duties not currently covered in OPERS’ Law Enforcement and Public Safety divisions.
“The plan will morph between now and when we finally introduce it,” Carraher said.
As of year-end 2018, OPERS served approximately 1,145,000 members, including almost 213,000 retirees and beneficiaries.