1. OPERS Update Presented by: Bill McMillen & Bill Logie

2. OPERS Board On November 18, 2009, the OPERS Board recommended to the legislature a series of changes to benefits designed to strengthen the pension system and with the added goal of maintaining adequate funding for health care. Depending on legislative implementation, the recommended changes will build on past OPERS Board actions to prepare for longer life expectancies of retirees.

3. The goal is simple: Keep OPERS within the 30-year timeframe required for paying off pension liabilities as specified in Ohio law

4. Changes to Current Plan Design Age & Service Eligibility – add two years to the current plan – Currently 30 years of service, at any age or age 65 with 5 years of service for a reduced pension. For a reduced pension, retirement at age 55 with 25 years of service or age 60 with 5 years of service – Recommended change: 32 years of service, minimum age 55 or age 67 with 5 years of service for an unreduced pension. For a reduced pension, retirement at age 57 with 25 years of service or age 62 with 5 years of service.

5. Changes to Current Plan Design Benefit Formula – Maintain the current 2.2% x Final Average Salary but increase the time frame that the multiplier increases to 2.5% from 30 years of service to 35 years of service. Final Average Salary (FSA) – Change the calculation from the 3 highest calendar years of earnings to the highest 5 calendar years of earnings.

6. Changes to Current Plan Design Cost of Living Adjustment (COLA) – Replace the current 3% simple COLA with a simple COLA equal to the change in the Consumer Price Index up to 3%. (This change would not apply to current OPERS retirees.) Contribution Rate – No change in the current contribution rates Members 10% Employers 14%

7. Transition Period Group A – Must be eligible to retire within 5 years after the effective date of the legislation. Grandfathered except for COLA provision, current plan design applies. Group B – Must have 20 or more years of service credit by the effective date of the legislation or be eligible to retire within 10 years after the effective date of the legislation. Grandfathered except for COLA provision. Those seeking an early retirement will have their pension reduced to reflect longer life expectancies. Group C – All others. All elements of the new plan design apply.

9. Recommended Plan Implementation

10. Additional Pending Legislation H.B. 30 & H.B. 574 – Requires an analysis of each retirement incentive (ERI) plan proposed for OPERS members and prohibits a member who participates in a ERI plan from being reemployed with the same public employer.

11. Additional Pending Legislation S.B. 83 – Excludes from earnable salary any salary paid this is in excess of the Governor’s salary. Excludes from final average salary certain overtime service and certain percentage increases in earnable salary. H.B. 645 – Requires all new state retirement system members to participate in a defined contribution plan.

12. Additional Pending Legislation H.B. 240 – Requires a public employer that seeks to employ a retired “administrative employee” in the position held at the time of retirement to have the employment approved by the appropriate state retirement system board. Limits the annual compensation of the retirant to 60% of the retirant’s final average salary.

13. Additional Pending Legislation S.B. 191 – Exempts from the Ohio personal income tax local, state, and federal employees and military retirement benefits. H.C.R. 22 – Memorializes Congress to withdraw application of the new federal income tax withholding schedules to pensioners.