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Pension Reform: Changes You Need to Know

In June 2009, at the depth of the financial crisis, the Ohio Retirement Study Council (ORSC) asked all five Ohio retirement systems to examine their financial condition. State law required that Ohio’s pension systems had enough money to pay off all pension promises within 30 years. While SERS was within the 30-year requirement, changes needed to be made to stay within that time frame in coming years.

To accomplish this, the SERS Board, with input from member and retiree stakeholder groups, developed and approved a pension reform plan that protected the benefits of current retirees, and focused on increased age and service requirements to address the longer life expectancy of members.

In February 2012, at the request of Senate leadership, SERS’ Board added a grandfather provision for longtime members and added a buy-up option that gives members outside of the grandfather period an opportunity to keep current age and service requirements.

In May 2012, S.B. 341 was introduced. All of SERS’ Board-approved pension reform changes were included along with Board-approved modifications that had been awaiting legislative action, some for several years. In most cases, these modifications modernize existing SERS statutes, and add language that clarifies interactions between SERS, Ohio Public Employees Retirement System (OPERS), and State Teachers Retirement System of Ohio (STRS).

On Sept. 12, 2012, SERS’ pension reform bill, S.B. 341, passed the House and Senate of the Ohio legislature. It was signed into law by the governor on Sept. 26, 2012.

The majority of the pension reform changes and modifications in S.B. 341 take effect on Jan. 7, 2013; however, the implementation dates of the changes vary.

Members who will have fewer than 25 years of service credit as of Aug. 1, 2017, can retire under current retirement eligibility requirements if they pay the actuarial difference between the benefit they would have received under the new requirements and the benefit they may receive under the current requirements.

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Members who want to buy-up must complete their one-time payment on or before Aug. 1, 2017. Once SERS receives payment from a member that wishes to buy-up, the purchase is final and the option cannot be changed at a later date.

Members interested in the buy-up may estimate their cost using the Buy-Up calculator, now available by logging in to their secure Member Account.

The calculation you make on this website is just an estimate. If the estimate you run on the website is something you might like to pursue, contact SERS toll-free at 800-878-5853 and ask the representative to schedule a final Buy-up calculation by SERS’ actuary. Once this final calculation is received, full payment of the amount is due in one lump-sum within six months. If payment is not received within six months, a new calculation must be performed using updated age, service credit, and salary information.

 

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The pension reform changes to age and service credit requirements are effective Jan. 7, 2013, but will be implemented on Aug. 1, 2017.

To protect the benefits of longtime members, SERS included a grandfather provision that allows members who reach 25 years of service on or before Aug. 1, 2017, to retire under the current age and service credit eligibility requirements.

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SERVICE RETIREMENT ELIGIBILITY REQUIREMENTS

 

Current Eligibility

Eligibility Changes

 

Applies to:

  • Members Who Retire Before Aug. 1, 2017
  • Members with 25 Years or More of Service On or Before Aug. 1, 2017 (Grandfathered)

Applies to:

  • Members with Less than 25 Years of Service on Aug. 1, 2017

Retire with Full Benefits

Age 65 with 5 years, or
Any age with 30 years 

Age 67 with 10 years, or
Age 57 with 30 years

Retire Early with Reduced Benefits

Age 60 with 5 years, or
Age 55 with 25 years

Age 62 with 10 years, or
Age 60 with 25 years

Please keep in mind that your pension will vary considerably depending on your age when you retire. It makes good sense to consider the difference in the retirement income available to you based on an early retirement date versus one a few years away.

SERS is unable to provide an estimate of your benefits under the new provisions until after Jan. 7, 2013. If you would like to receive an estimate for a retirement effective Aug. 1, 2017 or later, please submit a pension reform estimate request now and SERS will send an estimate to you once they are available.

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Current and future disability recipients who return to contributing service for two years after their disability ends will be limited to two years of free disability-period service credit. However, they will be allowed to purchase service credit for the remaining period of disability.

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Future disability applicants and recipients also may be affected by the following modifications:

  • Clarifying that a member is not eligible to apply for a SERS disability benefit if the person is receiving a disability benefit from another Ohio retirement system.
  • Not allowing application if a condition resulted from the commission of a felony or occurred after SERS-covered employment ended.
  • Requiring a disability recipient to apply for Social Security disability benefits if he or she is eligible.
  • Changing the effective date of disability from the later of the last day of compensation or the date the member was first unable to perform their job duties, to the date the most recent application was filed.
  • Suspending or ending a disability benefit if a member does not obtain vocational rehabilitation as recommended by the Board physician or other consultant.
  • Changing the standard for ending disability – after three or five years on SERS’ disability – disability recipients could be removed from disability if they are capable of performing the duties of a job other than their previous job with pay at or above 75% of the annual compensation of their previous school job that can reasonably be found and for which they are qualified.
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Beginning Feb. 1, 2013, future survivor benefits for children will be paid up to age 19 with no requirement that the child be attending school. This does not apply to children currently receiving a survivor benefit.

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Click here for more information on Survivor Benefits.

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An employee must be age 57 to participate in an early retirement incentive.

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Click here for more information about ERIs.

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An employee is required to pay both the employee and employer contributions plus interest to purchase Leave of Absence service credit. Service credit may be purchased for multiple leaves of absence. The total years purchased cannot exceed five years, and the maximum amount of service that may be purchased for a period of leave is two years.

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Additional information on leave of absence service credit is available on the Purchased Service Credit page.

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The Board has authority to determine the amount of Medicare Part B reimbursement with the current $45.50 monthly reimbursement rate as the base.

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Health care eligibility restrictions were removed from state law. This allows the SERS Board to make adjustments to keep the SERS health care fund in solid financial condition.

SERS Board has the authority adjust future age and service changes based on the results of the required five-year actuarial experience study. This amendment will be delayed for 180 days after Jan. 7, 2013 in order to give the ORSC time to review all five retirement systems’ board-authority provisions and make recommendations.

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Four employer penalties for failure to submit required paperwork and contributions by established deadlines were included in the modifications. These penalties go into effect Jan. 7, 2012.

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The penalties are:

  • Employers will be penalized $100 per day for each business day they do not transmit employee contributions on time, which is by the 15th of the following month.
  • Employers will be penalized $100 per day for each business day they do not transmit to the employers’ trust fund on time, which is by the 15th of the following month. This penalty will accrue until the contribution has been received.
  • Employers will be penalized $100 per business day if they do not submit, complete, or correct payroll reporting information on time, which is by the 15th of the following month. This penalty cannot exceed $1,500 per report.
  • Employers also must submit a membership record within a month of the member’s first date of service or they will be penalized $50 per record for each month the record is not filed. This penalty cannot exceed $300 per record.
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Pension reform did NOT change the following:

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Employer or employee contributions – employee contributions remain at 10%; employer contributions remain at 14%

Cost-of-Living Adjustment (COLA) – the COLA remains at 3%

Final Average Salary (FAS) – the FAS remains the average of the three highest years of salary

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Register for a Pension Reform: Changes You Need to Know webinar.

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Join us for one of our Pension Reform: Changes You Need to Know webinars. A webinar is an online seminar where information is presented to an audience via computer. As a participant in the SERS webinar, you will be able listen to the pension reform webinar through your computer speakers and ask questions by typing them on your keyboard.

Advance registration is required, and each webinar is limited to 100 participants. Complete your registration by clicking the links below. Once you open the registration window, click either the Register link located in the Event Status field, or the Register button located at the bottom of the page.

After completing your registration, you will receive a confirmation email that provides instructions on how to connect to the webinar on the day of the event.

System Requirements: Your computer must have sound capabilities in order for you to participate in the webinar. Please note that you may be prompted to install software from WebEx or upgrade your Java capability. This software is required to view our webinar.

Please contact SERS at pensionreform@ohsers.org with questions.

Check back soon for an updated schedule.

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EXECUTIVE DIRECTOR LISA MORRIS DISCUSSES PENSION REFORM

EXECUTIVE DIRECTOR LISA MORRIS DISCUSSES PENSION REFORM

PENSION REFORM FOR MEMBERS: CHANGES YOU NEED TO KNOW [Part One]

PENSION REFORM FOR MEMBERS: CHANGES YOU NEED TO KNOW [Part One]

SERS staff details the effects of Senate Bill 341, also known as the pension reform bill. Topics discussed: changes to retirement eligibility requirements and a new buy-up option
PENSION REFORM FOR MEMBERS: CHANGES YOU NEED TO KNOW [PART TWO]

PENSION REFORM FOR MEMBERS: CHANGES YOU NEED TO KNOW [PART TWO]

SERS staff discusses modifications to: purchasing leave of absence service credit, applying for disability, and survivor benefits for dependent children.
PENSION REFORM FOR EMPLOYERS: CHANGES YOU NEED TO KNOW [PART ONE]

PENSION REFORM FOR EMPLOYERS: CHANGES YOU NEED TO KNOW [PART ONE]

The information presented provides employers with a better understanding of how they are affected by pension reform.
PENSION REFORM FOR EMPLOYERS: CHANGES YOU NEED TO KNOW [PART TWO]

PENSION REFORM FOR EMPLOYERS: CHANGES YOU NEED TO KNOW [PART TWO]

Modifications to disability and survivor benefits, as well as employer penalties for submission of late or incorrect payroll records.
Questions about Pension Reform?

Click here to read the Pension Reform: Changes You Need to Know handout. You can also register for one of our Pension Reform: Changes You Need to Know Webinars. Click here for more information.

Pension Reform Estimates

Click here to request an estimate.