Here's what the Ohio Police and Fire Retirement System will send to the Ohio Retirement Study Council:

August 28, 2009
http://www.op-f.org/news/default.asp?id=08282009

Funding recommendations approved, will be presented to O.R.S. on Sept. 9

During its August meeting the OP&F Board of Trustees approved a plan to dramatically improve the system’s long-term funding status. The plan will be presented to the Ohio Retirement Study Council (ORSC) on Sept. 9 and includes a wide range of contribution and benefit recommendations.

Most of the recommendations require legislative action before they can be implemented. As part of the Board’s approval, a stipulation was included stating that OP&F would implement the discretionary items in the plan only after legislation is passed enacting the statutory recommendations.

The Board unanimously supports the recommendations and will present the plan to the ORSC with the anticipation that legislation will be introduced and passed to implement the changes.

Ohio requires each public retirement system to be able to pay off all its obligations within a 30-year period. Each system will be presenting funding recommendations to the ORSC on how to improve its funding status or comply with the requirement. Investment losses from 2008 have limited or prevented the ability of systems to meet this requirement.

In December 2008, the ORSC asked OP&F to begin a comprehensive review of all elements of the retirement system and present a proposal to reach the state’s mandated 30-year funding requirement.
It is important to realize that despite the actions by the Board, OP&F remains financially sound and is fully able to pay all of its obligations for many years to come. These recommendations are being made to correct OP&F’s long-term funding expectations.
The following recommendations are included in the plan to be presented to the ORSC on Sept. 9:
Items requiring legislation by the Ohio General Assembly:

• Increase the active member contribution rate from 10% to 12%
• Increase the police employer contribution rate from 19.5% to 24% (so police and fire employer rates are equal)
• Increase the normal service retirement age to age 52 for new hires
• Delay the Cost-of-Living Adjustment (COLA) until age 55 (with the exception of beneficiaries)
• Increase the police and fire employer contribution rate an additional 1%(to 25%).
• Change the minimum period for participating in the Deferred Retirement Option Plan (DROP) to 5 years (from the current 3 years) for all new participants

Items to be implemented following legislation enacting all items above

• Redefine “average annual salary” to mean the highest average annual salary for a member during any 5 years of contributions (from the current 3 years)
• Reduce the DROP interest credit rate from 5% to 3%.
• Reallocate 1.5% of the 6.75% of the employer contribution rate currently allocated to fund OP&F’s retiree health care plan.
• For new retirees, the subsidy for the health care plan premiums will be tied to years of service