(WKBN) – A bill has been pushed forward by the Ohio House Pensions Committee that would put a cap on how much retirement benefit school employees can receive.
Right now, the School Employees Retirement System (SERS) benefit formula multiplies 2.2% of a member’s Final Average Salary (FAS) by years of service to determine a pension amount. The member’s FAS is the best 3-year average of compensation.
But the issue being raised by the bill is “pension spiking.” That’s when there are substantial increases to the final average salary beyond what is expected from normal salary increases.
In the end, the retirement system is subsidizing the inflated pension and that works to underfund the system, said the bill’s sponsor Adam C. Bird, R-63d District.
Bird says to fight the “spiking” there would be a Contribution Based Benefit Cap like the one other state employees have with the OPERS system.
The difference would be that the plan would take the employee’s contributions to the system and then multiply that amount by a factor determined by the Retirement Board. A member’s pension is capped at the lower of the formula benefit.
If passed, the bill would not take effect until August 2024.
House Bill 146 has been approved by The House Pensions Committee and now goes to the House floor for consideration.