HEADLINES : Ohio
Deferred pensions' interest slashed
A decision to cut the interest rate that thousands of Ohio police officers and firefighters earn on their retirement accounts isn't sitting well with some, despite contentions that the payout is too expensive.
Starting this month, the Ohio Police and Fire Pension Fund is paying 2.23 percent interest on accounts in the Deferred Retirement Option Plan, or DROP. The system had been paying 5 percent since 2003, when the optional statewide program began.
It lets police officers and firefighters defer retirement up to eight years while their pension payments accumulate with interest. They can get the lump sum upon retiring.
The pension they receive in retirement is frozen at the time of enrolling in DROP and is unaffected by later pay raises. The program has generated controversy across the state because retirees on occasion walk away with checks of several hundred thousands of dollars.
"Senate Bill 5 (the 2011 attempt to slash public employee collective bargaining) was an assault on policy. This really is an assault on your money right now," Kevin Reardon, a battalion chief with the Columbus Division of Fire, said of the interest-rate change. "This is your family's security that's being attacked right now."
Leaders of the pension fund disagree.
"You can't pay out more than what you earn. We're not the federal government. We can't print money," said Executive Director William Estabrook. "Our earned interest in 2011 was 2.24 percent."
The fight so far is between firefighters and the pension system. (Police, notably, are OK with the change.)