Changes are under way at the Ohio Police & Fire Pension Fund (OP&F) so it can comply with the 30-year solvency requirement law.
The latest and greatest idea for the fund to save money is adjusting the annual three percent cost of living allowance (COLA) for future retirees. Going forward the COLA will either be three percent or tied to the consumer price index – whichever one is lower. The second piece of yesterday’s agreement reshuffles money from health care into the pension fund because the health care account is not required to have its 30-year liabilities funded. Fundamentally, this does nothing to save the taxpayers money.
These “reforms,” coupled with prior agreed upon changes (raising retirement age from 48 to 52, delaying COLA adjustments until age 55, increasing employee contribution rate from 10 percent to 12.25 percent, and calculating retirement benefits based on five highest years of pay), return OP&F to a state of solvency, but they are only a band-aid and provide little cost savings to taxpayers.
As the Buckeye Institute’s report Dipped in Gold: Upper-Management Police and Fire Retirees become Public-Service Millionaires suggests, a great start to true pension reform would be eliminating the costly Deferred Retirement Option Plan (DROP), which allows double dipping.
An even better solution is moving everyone in the state’s five pensions to defined contribution plans as Illinois recently did.
While OP&F may legally pass muster, the pension fund is certainly no friend to the taxpayer.
For more information, read the full article in today’s Columbus Dispatch.