Ohio House Bill 473 could fix public pension plan contributions

A version of the following public comment was submitted to the Ohio House Public Insurance and Pensions Committee on October 29, 2025.

House Bill 473 (HB 473) addresses a common issue found in public employee retirement plans. Pension plans depend on regular contributions to fund the benefits that will become available to workers upon retirement. Typically, these contributions are split between the employee and employer according to rates established beforehand or when a public worker is hired. Employees in the Ohio Public Employees Retirement System (OPERS), for example, contribute 10% of their paycheck, while their employer contributes an amount equal to 14% of that member's pay. These rates are a key part of the decision-making and bargaining that takes place between the employer (in this case, local governments) and a potential hire.

In an effort to compete for high-value workers, some local employers offer to cover all or part of an employee's retirement contributions, a practice commonly known as a "pickup." While the intent of this strategy is honorable-it is in the public's interest to have experienced and capable government employees-the practice distorts the cost and the purpose of a collaborative retirement plan.

The reasoning behind a retirement plan in which both employees and employers share the contribution load (by far the most common approach among government pensions) is that it signals to both parties that they are contributing to the same shared goal of a secure retirement. While pickups have no impact on the total amount going toward contributions, they create unnecessary complications with government transparency and cost. Policymakers, administrators, and the public usually evaluate the compensation of public workers based on the hourly wage or salary offered, with pension costs listed and evaluated separately. A pickup arrangement is certainly part of an employee's total compensation, but it is commonly overlooked since it is part of the larger retirement package offered to all public workers. Analysis comparing compensation between different local government employers usually isn't sophisticated enough to include the variety of pickup arrangements between each employer and employee. It would better serve the public to make the costs of public service as straightforward as possible without creative compensation strategies.

As local governments compete for the best public employees, they should do so using clear, transparent, and undistorted compensation. By banning the practice of pickups for Ohio's public employers, HB 473 would ensure that pension contributions are transparent and in line with the goals of shared responsibility, all while not hurting local governments' ability to offer attractive compensation packages to remain competitive with today's workforce.