Ohio School Employees Retirement System, Columbus, is suspending the cost-of-living adjustment for retirees for three years beginning Jan. 1, said Tim Barbour, pension fund spokesman.
The $13.8 billion pension fund's board voted for the suspension at a special meeting on Monday as part of a process to get the pension fund's funding ratio up to 70% by 2018 and 90% funded by 2032. As of June 30, 2016, the funding ratio was 67.6%, Mr. Barbour said.
The current COLA is a fixed 3% rate. State legislation earlier this year changed the COLA to a formula indexed to the consumer price index with a cap of 2.5%. Now, that new COLA formula will be effective Jan. 1, 2021. Mr. Barbour said state legislation is needed in order to implement the three-year suspension for participants who will start receiving benefits after Jan. 1, 2018, who would then only receive a COLA on the fourth anniversary date after they begin receiving benefits.