778 Northwest Blvd., Columbus, OH 43212

What You Need to Know About Your OPERS Pension

After years of paying into OPERS, Ohio public employees are realizing that it soon will be their turn to collect. This century-old pension was designed to provide security for state, local, and city employees during and after their working careers.

This summary is designed to help you start thinking about your OPERS pension so you can obtain all the benefits you are entitled to and coordinate OPERS benefits with the rest of your retirement income plan.

1. What are the Benefits of OPERS Ohio?

Unlike other sources of retirement income, OPERS Ohio offers a unique combination of benefits.

A Predetermined Amount of Income

By the time you come to the end of a long career in the public sector, the amount of OPERS Ohio income you will be entitled to is well known. The benefit is based on your age, years of service credit, and your earnings history. While the amount will vary depending on when you choose to retire and the payment plan you choose, the relative accuracy of your retirement income estimate makes it easy for us to build the rest of your retirement income plan around it.

Survivor Benefits

OPERS offers members Survivor Benefits after 1.5 years of service credit. This benefit offers a monthly income to the family members of the deceased. Usually, this benefit is not taken into consideration when purchasing personal life insurance. We find public employees reduce their monthly cash flow by buying more life insurance than they need.

Steady Income

Once you have qualified for OPERS retirement, the amount of income you’ll receive is set. Some members worry that benefits may be cut in the future, but it is highly unlikely that benefits paid to current retirees will be significantly affected by future proposals.

Lifetime Income

OPERS is one of the few sources of income that can be assured of never running out. At retirement you also have the option to provide a monthly benefit in the event you pass away. There are currently more than 100 recipients over the age of 100 receiving their OPERS pension.

Disability Benefits

With five years of service credit, you are eligible for a disability benefit. This benefit offers OPERS members monthly income protection between 45-60% of their final average salary.

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2. How to Become Eligible for OPERS Benefits

You become eligible for OPERS benefits by working in an OPERS-covered job. Any Ohio public employee that works in a state, local or city position at a public institution is eligible for OPERS membership. These tend to be state, city and local workers, police officers, state hospital workers, and Ohio agencies.

3. How Your Benefit is Calculated

OPERS uses the 2.2% Salary Related Formula to determine your monthly income under the Traditional and Combined Plans. Group A & B receive 2.5% for each year over 30. Group C will receive 2.5% for each year over 35. Due to eligibility for full retirement benefits, you must understand the reduced and unreduced benefits.

Reduced Retirement Benefits

Knowing when to retire and which payment plan to choose is critical to optimizing your lifetime retirement income. This is one area where OPERS members regularly get it wrong.

Unreduced Retirement Benefits

If an OPERS member decides to retire before meeting one of the above requirements, they will receive less retirement income per month.

Let’s use Retiring Rick as an example

Rick is married to Sue, who are both OPERS members in Group A & B. Sue is slightly older than Rick, but both want to retire at the same time. They decide to retire in June of next year. Rick will be age 60 with 35 years of service. Sue will be age 62 with 26.50 years of credit.

Our retirement analysis of Rick and Sue’s plan is that they made TWO costly mistakes.

1. They chose the wrong payment plan. They have more money as survivors than they do while they’re alive. This irrevocable decision cost them $460,053 in lost income.

2. Sue started taking her pension too soon. She could have stopped working and waited to take her pension at 66. Age 62 = 38.22% of FAS. Age 66 = 55.33%.

4. Understanding the Partial Lump Option Plan (PLOP)

The PLOP offered by OPERS allows members to take between six and 36 times their Single Life Annuity amounts at retirement. Any PLOP amount taken will reduce the member’s monthly benefit. The PLOP amount is a pre-tax amount which is fully taxable unless a rollover to an IRA is completed. Understanding the impact of the reduction to you, your family, and your lifetime benefits is crucial before deciding to take the PLOP. This is the most misunderstood benefit. If not analyzed properly, it tends to be very costly. Don’t take a PLOP to buy an expensive annuity!

5. How Pension Income Affects Social Security

Your OPERS retirement benefit will impact your personal Social Security benefit. Other retirement income, such as distributions from 403(b), 401(k), 457(b) plans, and IRA’s, do not affect Social Security benefits.

Since Ohio is a non-Social Security state, members of the Ohio public pensions do not contribute to Social Security while working in a public covered position. There are two circumstances in which OPERS Ohio members could receive less Social Security.

The Windfall Elimination Provision (WEP) – passed by Congress in 1983, retirees who are eligible for both Social Security and an Ohio public pension may not receive their full Social Security benefit. The most common occurrence is when an OPERS member qualifies for Social Security with 10 years or 40 credits but has a career pension. The amount needed currently for one credit is approximately $1,500. You can earn a maximum of four credits per year.

Let’s review Retiring Rick’s Social Security. He qualifies with the minimum of 40 credits. His Social Security statement shows that he would receive $349 per month at age 67 (Full Retirement Age, FRA). Rick’s reduction will be 40-50%. His Social Security payment after the WEP will be approximately $175 per month.

However, Sue is not eligible with 38 credits. She will need two more credits to qualify for a monthly benefit. Since Sue will wait to draw her pension at age 66, she decided to work eight hours per week at a bookstore. Sue earned approximately $4,160 for the year. She qualified for 2 additional credits. She now meets the minimum 40 credits.

The Government Pension Offset (GPO)

If your spouse will receive a Social Security benefit, you are eligible for a spousal benefit. The GPO does not impact your spouse’s personal benefit. If two-thirds of your monthly OPERS Ohio benefit is greater than one-half of your spousal Social Security benefit, your spousal benefit is offset.

6. How Benefits are Taxed

You will pay federal and state income tax on your retirement benefit. You may also owe a school district income tax depending on where you live. No city or local tax is due.

Talk with an Ohio-Based Financial Advisor
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7. How to Apply for OPERS Retirement Benefits

Online at www.OPERS.org – for retirement benefits only (not survivor or disability).

In person at 277 E. Town St., Columbus, OH 43215

Required Information & Documents

Have the following information ready when you make your application:

  • Social Security number

  • Last day of employment

  • Retirement Date – always 1st of the month following your last day of paid service

  • Spouse’s name, date of birth, and Social Security number

  • Checking account for monthly income

  • Whether or not you want health care, dental, and vision to start when you retire (this is NOT the only time you can get health care)

  • *A Notary is required IF you leave a spouse less than a 50% Joint and Survivor Annuity. This form will need to be mailed to OPERS Ohio.

8. Becoming Reemployed in Retirement

OPERS members are required to wait two calendar months from their retirement date to return to public work. Retired members can return to work in the private sector the next day without impacting their benefit. If you return to a public position within the two-month waiting period, members will forfeit their retirement check (current month only).

Reemployed retirees have a second account with the retirement system in which the position is required to pay into. The second account will accumulate the member's contributions and interest. This account is available when the member stops working.

Glossary of Terms
Disability Benefits
Members who are unable to perform his or her most recent job duties. The condition must be expected to last at least 12 months
Retirement Income (unreduced)
Your benefit is determined by your OPERS GROUP (A, B or C). Please refer to page 3 “Unreduced Retirement Benefits” chart.
Plan of Payment
You will have the option to receive a Single life or Joint Life annuity at retirement. This is an irrevocable decision and should be taken seriously. You can protect a beneficiary for your full monthly payment, half your payment or any percentage you would like.
Service Credit
Earned during employment as a teacher or administrator in Ohio public schools, colleges, and universities. It is one factor that determines eligibility for benefits.
Reemployed Retiree
After you retire you are eligible to return to public employment after two calendar months. You will receive your full pension and your earnings from reemployment.
Social Security Government Pension Offset (GPO)
This impacts an OPERS Ohio member who is married to a Social Security recipient. As a spouse you are eligible for half of your spouse’s Social Security benefit. If 2/3 of your OPERS benefit is greater than the one-half of your spouse’s Social Security benefit you will not receive the one-half.
Retirement Date
First of the month following your last day of paid service.
Social Security Windfall Elimination Provision (WEP)
This impacts an OPERS Ohio member who is eligible for Social Security. If you receive an OPERS Ohio monthly benefit and Social Security, your S.S. benefits will be reduced based on your “years of substantial earnings” with S.S. Typically a member has their S.S. benefit reduced by 30-50%.
Retirement Formula
2.2% formula. Years X 2.2% = percentage before any reduction for early retirement.
Survivor Benefits
Survivors receive a monthly benefit if the member were to die before retirement. The benefit is based on the amount of service credit themember has accrued.
Retirement Income (reduced)
Your benefit is determined by your OPERS GROUP (A, B or C). Please refer to page 3 “Reduced Retirement Benefits” chart.
Thinking about taking the max PLOP? Not so fast!

PLOP stands for “Partial Lump Sum Option.” We will advise you on the tips and tricks when making your PLOP decisions. Should you take a PLOP and how much? If you've been advised to take a max PLOP, call us for a second opinion before you take action.

Plan of Payment (aka J&SA) is a critical part of financial planning for Ohio PERS members. We’ve seen people lose $100k of retirement income by making incorrect decisions. The OPERS guide outlines the plight of folks who have faced the devastating impact of choosing the wrong plan or taking the pension too soon. 

OPERS pension decisions can be difficult to navigate on your own. If you are facing this decision, let’s set up a time to talk.

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