Same state.
Same city.
Different pension systems.
And different approaches to cost-of-living adjustments.
For the Ohio State Teachers' Retirement Systems, Columbus, the pension board's decision in May to offer a 1% cost-of-living adjustment for the fiscal year that started July 1 was criticized by members as too little in the face of high inflation.
For the Ohio Public Employees Retirement System, Columbus, the system's request in 2021 for COLA freeze for 2022 and 2023 was rejected by the state Legislature.
That means participants who retired before 2013 will continue receiving a 3% COLA and people who retired in 2013 and later will continue receiving a COLA tied to the CPI-W, the consumer price index for urban wage earners and clerical workers, and capped at 3%.
Having failed to secure enough votes in 2021, "we currently are not pursuing a freeze or any other COLA change," Michael Pramik, a spokesman for the $92.5 billion fund, whose funding ratio is 84%, wrote in an email. The pension system cannot act unilaterally to change the COLA.
When OPERS asked legislators for a two-year COLA-freeze, it told participants and retirees that the action would reduce its unfunded liability by about $3 billion from $19.4 billion at that time.
"The temporary COLA freeze is important because COLAs account for 25% of the total annual pension payments we pay to our members," OPERS said in a July 2021 message to members.
"Like others public pension funds, OPERS has experienced increasing unfunded liabilities in part because of inconsistent financial investment markets that date back to the Great Recession," OPERS said. "Investment market volatility has a significant impact on our funding."
Unlike OPERS, which needs legislators' OK, the $88.2 billion teachers' pension fund's board of trustees governs COLAs.
From the 2012 to 2107 fiscal years, it cut the annual automatic COLA to 2% from 3%, then eliminated the COLA between 2017 and 2022 fiscal years.
The COLA went up to 3% for the next fiscal year, then down to 1% for the fiscal year that started July 1 for certain retirees.
Retirees who started receiving benefits on or before June 1, 2019, will receive the 1% COLA in the current fiscal year.
"The increase will be added to the base benefit on the retirement date anniversary," the board said. "Members who retired July 1, 2019, or later are not eligible for a COLA at this time (because) retirees must have received benefits for 60 months to be eligible for a COLA."
The COLA reduction triggered complaints by some members, most notably the Ohio Retirement for Teachers Association advocacy group, which said the adjustment was too small to address inflation.
A pension system spokesman told Pensions & Investments in May that a series of reforms enacted in 2012 were necessary due to the impact of the Great Recession of 2008-2009. Those reforms including giving the teachers' pension system board the ability to make annual COLA changes.
As a result of the reforms, the funding ratio reached 78.9% as of June 30, the spokesman said. Without the changes, it would have been 49.6%, he said.
