Public Sector Workers Risk Losing Retirement Benefits
The largest pension funds in Ohio for public-sector employees have been found to be badly underfunded, casting a shadow of doubt over their futures.
A study released last December on four of the largest public-sector pension funds in Ohio has found that all of these programs are underfunded, when using a traditional scale of solvency measurements. The study also found that if no additional taxpayer contributions are made to these funds, they will hold barely enough resources to pay the pension obligations for the next decade, after which they’ll run out of money.
These pension programs have come under immense pressure, due to the soaring costs of healthcare and prescription drug benefits. At the same time, retirees are living longer. As a result, the funds have been forced to make adjustments to their rules, in order to reduce payouts.
Some of these funds are planning to decrease or completely eliminate cost-of-living adjustments (COLA). Others are increasing the healthcare premiums that retirees pay into the program.
These initiatives are creating an air of uncertainty among Ohio public employees, who fear they may receive less-than-expected pension benefits. In response, unionized workers have been protesting these changes.
The largest pension fund in Ohio, the Ohio Public Employees Retirement System (OPERS), will now be requiring new retirees to pay nearly $219.33 in monthly health premiums, which is more than six times the monthly premiums that retirees paid last year.
Likewise, administrators of the School Employees Retirement System (SERS) are proposing to eliminate the three percent COLA during the next three-year period, from 2018 to 2020. After that period, the proposal is to cap the COLA at 2.5%.
The five largest public employee pension funds in Ohio include the OPERS, for public workers; the SERS, for school-bus drivers, cafeteria workers, janitors, and secretaries; the State Teachers Retirement System, for teachers; the Highway Patrol Retirement System, for state troopers; and the Ohio Police & Fire Pension Fund, for firefighters and municipal police officers.
These five pension funds jointly hold assets in excess of $192.0 billion. Last year, the funds collectively paid out $15.0 billion in pension benefits and $1.1 billion in healthcare.
“Ohio’s public-worker pensions face cuts,” Record-Courier, June 13, 2017.