SB 148 SERS Eligibility (Faber) To revise retirement eligibility requirements for members of the School Employees Retirement System was the focus of an Ohio House Committee hearing in the Financial Institutions, Real Estate & Securities Committee on December 5, 2007. It was noted by Sen. Faber, the bill's sponsor, that all retirement systems must change and adapt to new medical and fiscal trends to secure their financial stability. Some 50 years have passed since SERS retirement eligibility standards have been adjusted. The bill is designed to help the system stabilize by increasing age and service requirements for retirement eligibility. Only new hires after the effective date of the bill would be affected.

James Winfree, executive director of SERS made the following statements: "As a pension fund, we live and breathe the numbers. These numbers include investment returns, the cost of health care and the ratio of contributing members to benefit recipients. Not that there is anything wrong with that. Forty-three people over the age of 100 were receiving a monthly pension from SERS with reasonable estimates indicating that they have been receiving a pension and perhaps health care benefits from the system for more than 30 years. As a defined benefit pension system, our actuary and our board believe strongly that we must pay attention to this important demographic shift and make adjustments just as Social Security has cone.

Changes embodied in the bill are similar to policy recommendations made over the years by the Ohio Retirement Study Council in light of shifting demographics affecting all retirement systems. The proposed changes would protect the strength of the system for long-term employees that could ultimately result in a $513 million decrease in the unfounded actuarial accrued liability upon the retirement of all current participants, this according to Mr. Winfree. The bill would create a second tier of benefits for all new school employees by changing eligibility and increasing reduction factors for early retirement. The new requirements would be age 55 after 30 years of service (currently no age requirement after 30 years exists); age 60 after 25 years (currently 55 after 25); and age 62 after 10 years (currently age 60 after 5 years). This 62/10 plan parallels Social Security's earliest opportunity for a reduced retirement benefit.

The reduction factors would be changed from a fixed 3% per year to a percentage to be determined by the system's actuary. Actuaries believe that the reduction factors should be closer to 10% per year.

In their letter of support it was noted that the bill would improve the system's pension funding level. The group's director, Valerie Rodgers, stated that the legislation would provide for a more actuarially appropriate policy for new school employees.