The Ohio Public Employees Retirement System covers state government, cities, counties, townships, universities, libraries and other Ohio public employers. Public school teachers are in STRS Ohio, and police and firefighters are in OP&F. OPERS is one of the few state systems that lets you take part of your pension as a lump sum. Here's how it works, based on OPERS's own retirement leaflets.
The three plans
OPERS has a Traditional Pension Plan, a Member-Directed Plan (a defined contribution account) and a Combined Plan that mixes the two. The partial lump sum described here, the PLOP, is part of the Traditional Pension Plan.
The Traditional Pension Plan formula
Your retirement group (A, B or C) depends on when you would have been eligible to retire under the rules before the 2012 pension law. Your annual statement shows your group.
- Groups A and B: 2.2% of final average salary (FAS) for each of the first 30 years, plus 2.5% for each year over 30. FAS is the average of your three highest years, or your last 36 months if that's higher.
- Group C: 2.2% of FAS for each of the first 35 years, plus 2.5% for each year over 35. FAS is your five highest years, or your last 60 months if that's higher.
The benefit can't exceed 100% of FAS. A Group C member with 30 years and a $70,000 FAS gets 30 x 2.2% x $70,000 = $46,200 a year, or $3,850 a month. OPERS also applies a contribution-based benefit cap meant to stop salary spiking. It rarely affects people with normal raises.
When you can retire
For state and local members, the unreduced ages are:
- Group A: any age with 30 years, or 65 with 5 years
- Group B: 52 with 31 years, any age with 32, or 66 with 5
- Group C: 55 with 32 years, or 67 with 5
Reduced benefits start at 55 with 25 years or 60 with 5 years for Groups A and B, and at 57 with 25 years or 62 with 5 years for Group C. Law enforcement and public safety members have earlier ages. Get estimates at several dates, because the reduction for each year early is significant.
How the PLOP works
At retirement, Traditional Pension Plan members can take a lump sum of between 6 and 36 times their monthly benefit. The monthly benefit is then reduced so the lump sum and the smaller monthly benefit together are the actuarial equivalent of the full benefit. The reduced monthly amount can't drop below 50% of the original. Married members need their spouse's consent.
The PLOP is paid no sooner than 90 days after your first monthly payment, and once it's issued you can't change it or your payment plan. It's fully taxable unless you roll it to an IRA or qualified plan. Ask for a direct rollover to avoid 20% federal withholding.
On the $3,850 example, a 36-month PLOP is $138,600. The monthly reduction depends on your age and the plan's factors, and your OPERS estimate shows it.
When the PLOP makes sense
Because it's actuarially equivalent, the PLOP doesn't make you richer on paper. What it changes is risk and flexibility. A lump sum helps if you have a specific use for the money, such as paying off a high-rate debt, or if your health makes it unlikely you'll collect the pension for long. It hurts if you live a long time, because you've swapped guaranteed income with a COLA for money you have to invest and manage. For a healthy retiree with no particular use for the cash, keeping the full monthly benefit is usually the safer choice.
COLA
After 12 months of benefits, OPERS retirees get an annual cost-of-living adjustment on the anniversary of their retirement date. It's based on the CPI, capped at 3%, and simple: it's always figured on your original benefit, not on the benefit plus earlier COLAs. If the CPI measure is negative, there's no increase the next year.
That COLA is part of what you give up when you take part of the benefit as a PLOP, so count it when you compare.
Member-Directed Plan
Member-Directed Plan members have an individual account instead of a formula pension. They can withdraw it, roll it to an IRA or annuitize it. It works more like a 401(k) than a traditional pension.
Combined Plan
The Combined Plan pays a smaller formula benefit plus an individual account. The defined benefit part is 1.0% of FAS for each of the first 30 years (35 for Group C), plus 1.25% for each year beyond. The account can be withdrawn or annuitized. Check which plan you're in before running any numbers, because the PLOP rules here are for the Traditional Pension Plan.
Social Security
OPERS members don't pay Social Security tax on their OPERS-covered pay. If you have Social Security from other jobs, the Windfall Elimination Provision used to cut it, and the Government Pension Offset could cut spousal and survivor benefits. The Social Security Fairness Act, signed January 5, 2025, repealed both for benefits payable after December 2023. Check your my Social Security account to make sure the change shows up.
Health care
OPERS runs a health care program for eligible retirees, but OPERS states plainly that it isn't required by law to provide retiree health coverage, and eligibility rules differ from the pension rules. Check the current OPERS Health Care Program Guide for what you'd qualify for before choosing a retirement date.
Leaving before retirement
Members who leave OPERS-covered employment can take a refund of 100% of their own contributions plus 0% to 67% of the employer contributions, depending on service. A refund ends your OPERS membership. Vested members (5 years) can instead leave the money in and draw a pension later. Ask OPERS for both figures before deciding.
OPERS and the other Ohio systems
Ohio has five statewide public retirement systems: OPERS, STRS Ohio for teachers, SERS for school support staff, OP&F for police and fire, and the Highway Patrol Retirement System. If you have service in OPERS and SERS or STRS Ohio, you may be able to combine it as joint service credit. Call OPERS for an estimate in that case.
STRS Ohio has its own rules. Its formula is 2.2% of a five-year final average salary per year of service. From June 1, 2025 through May 1, 2035 it pays an unreduced benefit at any age with 32 years or at 65 with 5 years, and it has its own partial lump sum option of 6 to 36 times the monthly single life annuity.
Taxes
Ohio taxes OPERS pensions. For 2026, income over $26,050 is taxed at 2.75%, and small retirement and senior credits apply. Social Security and military retired pay aren't taxed by Ohio. Use the pension income tax calculator to see your after-tax income.
Before you file
Use the OPERS online benefits estimator, or call OPERS at 1-800-222-7377 if you're within 12 months of retirement. Compare the payment plans and a PLOP against the full monthly benefit, and decide on the survivor option with your spouse. Use the present value calculator to see what the full pension is worth before trading part of it for cash, and the Social Security calculator to time any Social Security from other work.