Ohio Public Employees Retirement System, Columbus, plans to freeze the cost-of-living adjustments for defined benefit plan participants in 2022 and 2023, spokesman Michael Pramik said.
The board of the $100.2 billion retirement system, which includes $87.8 billion in defined benefit plan assets, approved not giving the COLA for the two calendar years in part because OPERS is using its full 14% employer contribution rate to fund the DB plan "and therefore no additional employer contribution is available to redirect" to the COLA, according to a memo to the board from Executive Director Karen Carraher and Director of Benefits Allen Foster.
The memo also notes that OPERS has $2.9 billion "in unrecognized losses that will be recognized over the next three years" and even if the pension plan earns its 7.2% assumed rate of return over that period, it will cause its amortization period to exceed the required 30 years.
The board's vote will require legislative approval.
OPERS' funding ratio as of Dec. 31 was 78% with an amortization period of 27 years.
The COLA for 2020 was announced in August as 1.4% for retirees whose retirement began after Jan. 7, 2013. The COLA for that population is tied to the consumer price index and capped at 3%. The COLA for those who retired before Jan. 7, 2013, remains at 3%.
Following the freeze, the COLA formula for both populations will revert back to their current ones.