OPERS Monthly Pension & Partial Lump Sum Option Payment (PLOP) Review

What is OPERS?
 
OPERS stands for The Ohio Public Employees Retirement System. This is a retirement pension system offered to public Ohio employees that replaces the standard Social Security system. As an employee, you contribute 10% of your annual salary towards your OPERS retirement and your employer contributes another 14% of your annual salary.

What OPERS plans are available?

1. Single Life Plan: You receive a monthly payment after retirement for your lifetime and this plan ends when you pass away. If the total amount of payments received is less than your accumulated contributions, your beneficiaries will receive the remaining amount.
2. Joint Life Plan: You receive a monthly payment after retirement but less than a single life plan because you can designate a monthly amount to go to one beneficiary for as long as they live after you pass away.
3. Multiple Life Plan: You receive a monthly payment after retirement but even less than Joint Life Plan because you can designate a monthly amount to go to up to four surviving beneficiaries if they live after you pass away.

 What OPERS payment options are available?

1. Monthly Payments: This option allows the member to receive full monthly retirement payments starting approximately 30 business days after OPERS receives all valid documentation or your retirement effective date, whichever is later.
2. Monthly Payments and a Partial Lump Sum Option Payment (PLOP): Allows the member to receive a partial lump-sum benefit at retirement along with a reduced monthly retirement payment. The lump-sum payment amount cannot be less than 6 times or more than 36 times the monthly amount that would be payable and it cannot result in a monthly benefit that is less than 50% of the original monthly benefit. 

 
Let’s look at an example:
 
Single Life Plan member who retires at age 63 with 30 years of service and a Final Average Salary (highest 3 paying years) of $55,000. 

If they chose to take the full monthly payments:

Annual Benefit:
(FAS x Up to 30 Years) x 2.2% = Annual Payment
($55,000 x 30 years) x 2.2% = $36,300

Monthly Benefit:
($36,300 per year) / (12 months) = $3,025

If they chose to take a PLOP of $50,000 with reduced monthly benefits:

Monthly Benefit Reduction:

Cost of PLOP (changes by age) x each $1,000 taken = Monthly Reduction
$7.87 x 50 (for $50,000 PLOP) = $393

Reduced Monthly Benefit:

Full Monthly Benefit - Reduction = Reduced Monthly Benefit
$3,025 - $393 = $2,632

Which option should you choose?
 
Unfortunately, no one solution fits all to whether you should take a Partial Lump Sum Option Payment. When deciding whether to take the PLOP, you may want to consider the following:

1. Are you in need of a large lump sum for any reason when you retire?
2. Are you retiring late and have a fear of missing out on most of your retirement pension?
3. Are you looking to invest a large amount of money?
4. Does it make financial sense in your tax bracket?

 
I hope this answers some of the questions you may have about the Ohio Public Employee Retirement System and PLOP. If you have additional questions, don’t hesitate to schedule a free, initial consultation so that we may begin sorting through your options.