OPERS Board of Trustees continues to review COLA
You probably know by now that OPERS is exploring various benefit changes, including potential alternatives to future cost-of-living adjustments (COLA) for current and future retirees. We are considering these steps now, while our system is healthy, in order to retain our strong financial position, in advance of future challenges that could pose risk to the system.
OPERS started providing a COLA in 1970, and it has changed several times since then. The purpose of a COLA is to lessen, not offset, the effects of inflation on a pension benefit. We currently grant a fixed, 3 percent COLA to individuals who retired before Jan. 1, 2013. For those who retired after Jan. 1, 2013, the current COLA will remain 3 percent until 2019, and then the COLA will be equal to the Consumer Price Index (CPI) not to exceed 3 percent.
The CPI has exceeded 3 percent only five times during the past 25 years; thus, OPERS’ fixed COLA has resulted in a net benefit increase for most retirees when compared to the original purpose. In an effort to mitigate future occurrences of this phenomenon, we have started to evaluate options for COLA modifications and other benefit changes.
COLA changes under consideration
- Aligning future COLAs with CPI subject to a cap
- Extending the waiting period for new retirees
- Providing safeguards for future inflationary trends
The options considered could affect all current and future retirees.
Our communications plan includes meeting with stakeholders, targeted mailings and a survey to our retirees. To date more than 75,000 surveys have been returned.
At their September meeting the OPERS Board reviewed feedback from OPERS retirees and discussed the adequacy of the current CPI, demographic changes, benefit adjustments already implemented, and the sources of unfunded liability.
No decisions have been made to date; ultimately changes to the OPERS COLA must first be approved by the OPERS Board, and then by the Ohio Legislature.