big disappointment in ohio public pension!

[kongmen]

With the new legislation l will be going from 41.25% of my final average salary for 25 years and 55 years old to 27.5% Unbelievable!! And no health care till 60 years old. I have just over 5 years to make up some ground. This is just your basic public service position not law enforcement it is ohio public employees retirement systems (OPERS) version of early retirement 25 years of service and 55 years old.

 

[youbet]

Are your already earned credits being reduced in value? Or just the credits you will earn between now and retirement?

That is, if you have ten years with OPERS, are those ten years still being credited with the old formula and only your remaining fifteen years will be worked under the new, reduced formula?

Or is this just a change in the rules for early retirees?

Have they done anything that would reduce the pensions of folks who are already retired?

I'm asking all the questions because Illinois is in the midst of "reforming" pensions and I'm curious as to whether any other state has already set precedent regarding reducing the value of already earned pension credits or reducing the pensions of already retired folks.

 

[nun]

MA reformed their public pensions last year, but only for new hires. The retirement age went from 55 to 60 and the COLA was reduced, but the pension amounts weren't changed.

They are now looking at retiree medical and suggested changing the vesting from 10 to 20 years and increasing the retiree premium payment from 25% to 50%. It would apply to most current employees. There was a lot of push back and the legislation is on hold and looks as if it will be significantly modified, maybe so that the changes only apply to new hires and aren't quite as drastic.

 

[youbet]

MA reformed their public pensions last year, but only for new hires. The retirement age went from 55 to 60 and the COLA was reduced, but the pension amounts weren't changed.

They are now looking at retiree medical and suggested changing the vesting from 10 to 20 years and increasing the retiree premium payment from 25% to 50%. It would apply to most current employees. There was a lot of push back and the legislation is on hold and looks as if it will be significantly modified, maybe so that the changes only apply to new hires and aren't quite as drastic.

Yeah..... It's tough. Here in Illinois, the gov and the speaker want to make some fairly serious cuts to the pensions of already retired folks. This is driven by the need to skip pension fund contributions for a few years close in. Just reducing pension benefits for new hires (which they have already done some of) doesn't allow them to skip contributions now, which they say they need to do and indeed have been doing.

I'm always looking for precedents where other states have or have not cut the pensions of already retired folks as a predictor of what might happen here.

 

[nun]

Yeah..... It's tough. Here in Illinois, the gov and the speaker want to make some fairly serious cuts to the pensions of already retired folks. This is driven by the need to skip pension fund contributions for a few years close in. Just reducing pension benefits for new hires (which they have already done some of) doesn't allow them to skip contributions now, which they say they need to do and indeed have been doing.

I'm always looking for precedents where other states have or have not cut the pensions of already retired folks as a predictor of what might happen here.

In MA there's been no mention of reducing benefits for already retired people.

 

[ripper1]

Yeah..... It's tough. Here in Illinois, the gov and the speaker want to make some fairly serious cuts to the pensions of already retired folks. This is driven by the need to skip pension fund contributions for a few years close in. Just reducing pension benefits for new hires (which they have already done some of) doesn't allow them to skip contributions now, which they say they need to do and indeed have been doing.

I'm always looking for precedents where other states have or have not cut the pensions of already retired folks as a predictor of what might happen here.

Well, the latest thing the so called gang of 10 have come up with is a new proposal from the universities which call for a 2% change in employee contributions for current workers. They want to do a COLA change for current retirees which would be 1/2 of CPI. This COLA change would be worse than the previous SB1 they came up with previously.

 

[youbet]

I think, but I'll have to go look as my morning memory isn't so hot, that it's 1/2 of cpi, capped at 3% and not compounded. So, it's a cola super-light. If somebody just retired and was counting on their pension more or less keeping up with inflation for 30 years, this would be a killer.

Now, all in all, it may still be a decent pension. But, if the retiree made his plans using FireCalc and checked the "cola'd" box, his 95% success rate will now drop significantly. Whether a pension is cola'd or not is a huge factor in your success rate.

 

[ripper1]

I know one thing I would not have ER'd had I known they were going to change the rules in the middle of the game. Whatever they come up with their will be a constitutional challenge that will go to court. My hope is that they execute a stay of the present benefits. This way I may get 1 or 2 more COLA increases.

 

[youbet]

I know one thing I would not have ER'd had I known they were going to change the rules in the middle of the game. Whatever they come up with their will be a constitutional challenge that will go to court. My hope is that they execute a stay of the present benefits. This way I may get 1 or 2 more COLA increases.

I'm thinking one more 3% hit is likely. After that, I don't think it's looking very good.

 

[ripper1]

Well, I had to wait 3 years for my first which was this year. One more I guess would be nice. Plan B will probably start soon.

 

[ripper1]

Yep, seeing that retired City of Chicago employees will be transitioned into Obamacare in 2017 Plan B is definitely going to come into effect.

 

[TuborgP]

Maryland has had no changes for current retiree's. This years COLA is slightly over 2 percent

 

[pb4uski]

I know one thing I would not have ER'd had I known they were going to change the rules in the middle of the game. Whatever they come up with their will be a constitutional challenge that will go to court. My hope is that they execute a stay of the present benefits. This way I may get 1 or 2 more COLA increases.

Constitutional challenge? Good luck with that.

 

[ripper1]

Maryland has had no changes for current retiree's. This years COLA is slightly over 2 percent

Is that compounded or simple interest?

 

[FANOFJESUS]

With the new legislation l will be going from 41.25% of my final average salary for 25 years and 55 years old to 27.5% Unbelievable!! And no health care till 60 years old. I have just over 5 years to make up some ground. This is just your basic public service position not law enforcement it is ohio public employees retirement systems (OPERS) version of early retirement 25 years of service and 55 years old.

Will you also get Social Security?

 

[Chuckanut]

Yeah..... It's tough. Here in Illinois, the gov and the speaker want to make some fairly serious cuts to the pensions of already retired folks. This is driven by the need to skip pension fund contributions for a few years close in. Just reducing pension benefits for new hires (which they have already done some of) doesn't allow them to skip contributions now, which they say they need to do and indeed have been doing.

In other words, they want the current pensioners to make the pension contributions the state should be making.

 

[Chuckanut]

I know one thing I would not have ER'd had I known they were going to change the rules in the middle of the game.

You can handle this. Just get into your time machine and go back and redo about 25 years of our life.

 

[haha]

In other words, they want the current pensioners to make the pension contributions the state should be making.

The "state" cannot make them. They must be made by taxpayers or pension plan members or by expanding debt.

Ha

 

[Sue J]

With the new legislation l will be going from 41.25% of my final average salary for 25 years and 55 years old to 27.5% Unbelievable!! And no health care till 60 years old. I have just over 5 years to make up some ground. This is just your basic public service position not law enforcement it is ohio public employees retirement systems (OPERS) version of early retirement 25 years of service and 55 years old.

My DH is retired in the OPERS pension system. For current retirees nothing changed except the health care (never promised, never guaranteed....) subsidy changes coming in 2016. Since he's already retired he keeps his 3% COLA. There's that transition group that starts with the 3% COLA and then the COLA changes to an adjustable % based on an index. Are you in the transition group?

I followed closely the changes for current retirees and also the changes affecting workers beyond 5 years from retirement because our 29 year old son is in the same system. I think he will need 32 years for full retirement and it will be based on highest 5 years FAS instead of highest 3 FAS like DH had.

As for the health care changes, the new rules are based on age at enrollment with a minimum of 20 years of service, where it used to be a minimum of 10 years of service.

www.opers.org has a lot of info on the new changes and their calculators are helpful.

 

[Mulligan]

My DH is retired in the OPERS pension system. For current retirees nothing changed except the health care (never promised, never guaranteed....) subsidy changes coming in 2016. Since he's already retired he keeps his 3% COLA. There's that transition group that starts with the 3% COLA and then the COLA changes to an adjustable % based on an index. Are you in the transition group?

I followed closely the changes for current retirees and also the changes affecting workers beyond 5 years from retirement because our 29 year old son is in the same system. I think he will need 32 years for full retirement and it will be based on highest 5 years FAS instead of highest 3 FAS like DH had.

As for the health care changes, the new rules are based on age at enrollment with a minimum of 20 years of service, where it used to be a minimum of 10 years of service. Are you sure you can't enroll before age 60 if you have 20 years of service?

www.opers.org has a lot of info on the new changes and their calculators are helpful.

Being a pensioner from another state, I was curious to why the apparent big drop in payout for OP. looking at your link provided, I assume it is the current funding status of the system? In 2007 it was almost 100% funded, and now it has been mired in the upper 70% range since then. I am surprised there hasn't been a bigger "bounce back" in funding status of the system.

 

[oldphd]

Being a pensioner from another state, I was curious to why the apparent big drop in payout for OP. looking at your link provided, I assume it is the current funding status of the system? In 2007 it was almost 100% funded, and now it has been mired in the upper 70% range since then. I am surprised there hasn't been a bigger "bounce back" in funding status of the system.

Not the OP, but am in OPERS as well. I believe the situation is this person is not eligible to retire within 5 years and is in a transition group. In my case, I am in Group B (eligible to retire between 5 and 10 years from now). Retiring at 55 with 25 years is a reduced benefit. Under the old system early retirement benefit was reduced by 3%/year. Now it is supposed to an actuarial reduction. I've gone into my account and run the online estimator, and this reduction is now almost 8%/year for my situation. Note that I don't have as many years in, so my full benefit is available at age 66, with reduced benefit available at 60. Before the changes I figured I'd start my benefit at 60, now I'll most likely delay.

Old rules = 85% of full benefit at 60, full benefit at 65.
New rules = about 53% of full benefit at 60, full benefit at 66.

Note that I'm referring to % of benefit, not FAS... The health care change is also significant for me... old rules I would be eligible in a couple of years... new rules adds 10 more, puts me over 65... These changes are very significant for some, (me!), and the only folks grandfathered are those already retired, there can be folks like the OP who had a lot of years, maybe done working, but a substantial reduction is in the works.

Missed being in group A by 2.25 years...

 

[Sue J]

Not the OP, but am in OPERS as well. I believe the situation is this person is not eligible to retire within 5 years and is in a transition group. In my case, I am in Group B (eligible to retire between 5 and 10 years from now). Retiring at 55 with 25 years is a reduced benefit. Under the old system early retirement benefit was reduced by 3%/year. Now it is supposed to an actuarial reduction. I've gone into my account and run the online estimator, and this reduction is now almost 8%/year for my situation. Note that I don't have as many years in, so my full benefit is available at age 66, with reduced benefit available at 60. Before the changes I figured I'd start my benefit at 60, now I'll most likely delay.

Old rules = 85% of full benefit at 60, full benefit at 65.
New rules = about 53% of full benefit at 60, full benefit at 66.

Note that I'm referring to % of benefit, not FAS... The health care change is also significant for me... old rules I would be eligible in a couple of years... new rules adds 10 more, puts me over 65... These changes are very significant for some, (me!), and the only folks grandfathered are those already retired, there can be folks like the OP who had a lot of years, maybe done working, but a substantial reduction is in the works.

Missed being in group A by 2.25 years...

Ouch!

If DH hadn't lost his job in 2010 he would have been coming up on 30 years in October 2013. It would have added quite a bit of money to have made it to 30. No reductions in the formula, larger subsidies for the health care insurance. But as it worked out I'm glad he's already retired. In a few years his health care allowance will drop to 75% of the cost and my subsidy will be eliminated and my coverage dropped altogether but looking at what's changing for everyone in health care, I'm ok with that.

DH's formula was FAS x 2.2% x Years of service = single benefit. Since he only had 26 years that was reduced to 80% and then taking the 100% to survivor option was another reduction to 88% of that. After all that was calculated his annual pension was 41% of FAS.

As for our son, he's 29 and has 7 or 8 years of service. He's not sure if he will stay long enough in his job to retire with the pension. If he does, who knows what other changes will be implemented by then!

 

[kongmen]

I will not be getting social security. The old plan provides for a multiplier of 2.2 per year with

a 25% reduction for early retirement example 2.2×25yr=55% of final salary -13.75=41 25% of

final salary. What they have done is doubled the reduction % for early retirement. Now it's

2.2×25yr=55% of final salary -27.5= 27.5% I of final salary. I was thinking with the changes

maybe 2 to 4 bases points

but 25 From an already reduced benefit! This is nothing less then legal thievery.

 

[Mulligan]

I will not be getting social security. The old plan provides for a multiplier of 2.2 per year with

a 25% reduction for early retirement example 2.2×25yr=55% of final salary -13.75=41 25% of

final salary. What they have done is doubled the reduction % for early retirement. Now it's

2.2×25yr=55% of final salary -27.5= 27.5% I of final salary. I was thinking with the changes

maybe 2 to 4 bases points

but 25 From an already reduced benefit! This is nothing less then legal thievery.

Wow, I certainly cannot complain about my plan. I would have been creamed under your scenario. I went 24 and bought 4 to get to 28 years with a 2.35 multiplier at 45 years old. No social security either, or health benefits, but no age actuarial deduction either.

 

[FANOFJESUS]

I will not be getting social security. The old plan provides for a multiplier of 2.2 per year with

a 25% reduction for early retirement example 2.2×25yr=55% of final salary -13.75=41 25% of

final salary. What they have done is doubled the reduction % for early retirement. Now it's

2.2×25yr=55% of final salary -27.5= 27.5% I of final salary. I was thinking with the changes

maybe 2 to 4 bases points

but 25 From an already reduced benefit! This is nothing less then legal thievery.

Will you get social security at 62?