OHIO LEGISLATIVE SERVICE COMMISSION
Office of Research Legislative Budget
www.lsc.ohio.gov and Drafting Office
H.B. 492 Bill Analysis
135th General Assembly
Click here for H.B. 492’s Fiscal Note
Version: As Introduced
Primary Sponsor: Rep. K. Miller
Effective date:
Chris Edwards, Attorney
SUMMARY
▪ Requires the Public Employees Retirement System (PERS) Board to establish and
administer a deferred retirement option plan for PERS law enforcement officers.
DETAILED ANALYSIS
Deferred retirement option plan for PERS law enforcement
The bill requires the Public Employees Retirement System (PERS) Board to establish and
administer a deferred retirement option plan (DROP) for PERS law enforcement officers.1 Under
continuing law, PERS has special retirement and benefit provisions for PERS members who are
considered law enforcement officers. These are officers whose primary duties are to preserve
the peace, protect life and property, and enforce Ohio law. They include deputy sheriffs,
township police officers, and university police officers.2
Under the bill, DROP is an optional program that allows a PERS law enforcement officer
who is retirement eligible to accumulate an additional benefit for retirement while continuing
to work. On being approved to participate in DROP, an officer’s retirement allowance is
calculated, and those payments accrue to the officer’s benefit while participating in DROP. The
officer continues in active service receiving a salary but does not earn service credit. During
DROP participation, the officer and the officer’s employer continue to contribute to PERS, and
most of the officer’s contributions accrue to the officer’s benefit. All amounts accrued to the
officer’s benefit earn interest at a rate established by the Board. On ceasing DROP participation,
1 R.C. 145.71.
2 R.C. 145.01(YY) and 145.332, not in the bill.
October 30, 2024
Office of Research and Drafting LSC Legislative Budget Office
in most cases the accrued amounts in the officer’s DROP account are paid as a benefit that is in
addition to the officer’s retirement allowance.3
The Board must adopt rules to implement DROP. It must specify in the rules DROP’s
initial implementation date. It may specify in the rules a period during which an election to
participate in DROP may be rescinded.
The Board, in establishing and administering DROP, may do all things necessary to meet
federal Internal Revenue Code requirements applicable to governmental plans.4
Electing DROP participation
A PERS law enforcement officer who is eligible for retirement, at any time before
applying for retirement, may elect to participate in DROP. However, eligibility for a reduced
retirement allowance does not make an officer DROP eligible. The officer must make the
election by filing with the Board an election form the Board provides. The election is effective
on the first day of the employer’s first payroll period immediately following the Board’s receipt
of the notice of election.
At the time of electing to participate, the officer also must elect a payment plan
prescribed under continuing law for purposes of calculating the officer’s retirement allowance.
Payment plan options include single-, joint-, and multiple-life plans. This election is irrevocable
from the date the Board receives it.
An officer electing to participate must agree to terminate active service and begin
receiving the officer’s retirement allowance not later than eight years after electing to
participate. If the officer refuses or neglects to terminate active service under that agreement,
the Board must consider the officer’s service terminated for DROP purposes.5
Effect of electing DROP participation
While participating in DROP, a law enforcement officer is not considered to have elected
retirement. The officer continues in active service but does not earn service credit. While in
active service, the officer and the officer’s employer must continue contributing to PERS.
Currently, a PERS law enforcement officer contributes 13% of the officer’s salary. The officer’s
employer contributes an amount equal to 18.1% of the officer’s salary.6
After the officer elects to participate in DROP, the officer is ineligible to purchase service
credit, such as credit for military service or a leave of absence. The officer also is ineligible to
3 R.C. 145.71 to 145.77.
4 R.C. 145.71, by reference to 26 United States Code (U.S.C.) 401(a).
5 R.C. 145.72, with a conforming change in R.C. 145.46.
6R.C. 145.72(E) and 145.721(A), by reference to R.C. 145.49, not in the bill, and see What is OPERS?,
which may be accessed by conducting a keyword “what is OPERS” search on the Public Employees
Retirement System website: opers.org.
P a g e |2 H.B. 492
As Introduced
Office of Research and Drafting LSC Legislative Budget Office
transfer to PERS service credit earned under the Ohio Police and Fire Pension Fund, State
Highway Patrol Retirement System, State Teachers Retirement System, School Employees
Retirement System, or Cincinnati Retirement System.
While participating in DROP, neither the officer nor the officer’s spouse or dependents
are eligible for any health care benefits PERS otherwise offers to eligible benefit recipients
meeting certain age and service credit requirements.
The officer is eligible to vote in elections for the employee members of the Board but
not for the retirant Board members.7
Retirement allowance calculation and DROP accruals
On electing DROP participation, the Board must calculate the law enforcement officer’s
retirement allowance. The Board must use the officer’s total service credit and final average
salary as of the last day of the employer’s payroll period immediately before the election’s
effective date. The benefit must be calculated using the payment plan the officer elected.8
During DROP participation, the officer’s monthly retirement allowance accrues to the
officer’s benefit. Any cost-of-living increases the officer would be eligible for under continuing
law as if the officer had retired are added to this amount.
The officer’s employee contribution amounts are credited as follows:
▪ 10% of the officer’s earnable salary accrues to the officer’s benefit;
▪ Any amount of the officer’s earnable salary that exceeds 10% is credited to the
Employers’ Accumulation Fund.
PERS must credit to the Employers’ Accumulation Fund the amounts contributed by an
employer on behalf of an officer participating in DROP.
During DROP participation, the amounts accruing to the officer’s benefit under DROP
earn interest at an annual rate established by the Board and is compounded annually using a
method the Board establishes by rule.9
Ceasing DROP participation
A PERS law enforcement officer’s DROP participation ceases on:
▪ Termination of active service as a PERS law enforcement officer;
▪ The end of the eight-year DROP participation period;
▪ The officer’s acceptance of a PERS disability benefit; or
7 R.C. 145.721.
8 R.C. 145.722.
9 R.C. 145.73, with conforming changes in R.C. 145.23.
P a g e |3 H.B. 492
As Introduced
Office of Research and Drafting LSC Legislative Budget Office
▪ The officer’s death.10
Terminating active service
A law enforcement officer participating in DROP who terminates active service (either
through terminating that service or because the DROP participation period has ended) must
notify the Board of the termination date on a form the Board prescribes. The officer is not
eligible to make another election to participate in DROP.
After ceasing DROP participation, the officer’s retirement allowance must be paid to the
officer. The payment begins on the day following the officer’s last day of active service.
The officer also must select a distribution option provided under federal law as the
method of distributing the amounts accrued to the officer’s benefit under DROP. PERS must
distribute the accrued amounts, including interest credited to the officer’s benefit under DROP,
except as follows:
▪ An officer who was younger than 52 years old when electing DROP participation forfeits
the interest if the officer terminates active service before the date that is four years
after the election’s effective date. That officer must wait until the first day of the fourth
year after the election’s effective date to begin receiving the remainder of the amounts
accrued under DROP.
▪ An officer who was 52 years or older when electing DROP participation forfeits the
interest if the officer terminates active service before the date that is three years after
the election’s effective date. That officer must wait until the first day of the third year
after the election’s effective date to begin receiving the remainder of the amounts
accrued under DROP.11
Disability
A law enforcement officer participating in DROP who is disabled in the line of duty and
qualifies for a PERS disability benefit may elect either to receive:
▪ The disability benefit; or
▪ The officer’s retirement allowance, plus any amounts accrued to the officer’s benefit
under DROP.
If that officer elects to receive a disability benefit, the officer forfeits all amounts
accrued to the officer’s benefit under DROP. Those amounts are treated as if the officer had
continued in active service and not participated in DROP. The officer receives service credit for
the period the officer participated in DROP.
10 R.C. 145.74.
11 R.C. 145.75 and 145.751, by reference to 26 U.S.C. 401(a).
P a g e |4 H.B. 492
As Introduced
Office of Research and Drafting LSC Legislative Budget Office
If a participating officer becomes disabled but the disability did not occur in the line of
duty, the officer receives the officer’s retirement allowance, plus any amounts that have
accrued to the officer’s benefit under DROP.12
Death
If a law enforcement officer dies while participating in DROP, the amounts accrued to
the officer’s benefit under DROP must be paid to the officer’s surviving spouse. If no surviving
spouse exists, the amounts must be paid to the beneficiary designated by the officer on a form
provided by the Board. An officer may designate an individual or a trust as a beneficiary. A
surviving spouse or designated beneficiary may select a distribution option provided under
federal law as the method of distribution. If no surviving spouse or designated beneficiary
exists, the amounts must be paid to the officer’s estate. A payment to an officer’s estate must
be made as a single lump-sum payment.
In addition, if an officer dies while participating in DROP, both of the following apply:
▪ Survivor benefits must be paid in accordance with continuing law requirements
governing the payment of survivor benefits.
▪ A death benefit (that is paid under continuing law on the death of a retirant or disability
benefit recipient) must be paid to the person or persons according to the order and in
the amounts prescribed under continuing law.13
Vesting
For a person other than a law enforcement officer participating in DROP, the person’s
right to a retirement allowance or other benefit vests when the benefit is granted. An officer
participating in DROP vests in the right to receive the amounts accrued to the officer’s benefit
under DROP when DROP participation ceases. Thus, on terminating active service, the officer is
entitled to the officer’s monthly retirement allowance and to the amounts accrued to the
officer’s benefit under DROP. As described above, however, the officer’s entitlement to
amounts accrued under DROP may be subject to forfeiture depending on the timing of an
officer’s termination of active service or whether the officer accepts a PERS disability benefit.14
Actuarial investigations
In addition to the periodic actuarial investigations required under continuing law, the
bill requires the Board to have prepared by or under the supervision of an actuary an actuarial
investigation of DROP every five years. The investigation must include an examination of the
financial impact on PERS of offering DROP, if any. The actuary must prepare a report of the
actuarial investigation. The report must include a determination of whether DROP has a
12 R.C. 145.76, with a conforming change in R.C. 145.35.
13 R.C. 145.77, by reference to 26 U.S.C. 401(a) and R.C. 145.45 and 145.451, not in the bill.
14 R.C. 145.561.
P a g e |5 H.B. 492
As Introduced
Office of Research and Drafting LSC Legislative Budget Office
negative financial impact on PERS and, if so, recommendations on how to modify DROP to
eliminate the negative financial impact. The Board must modify DROP if the report indicates
DROP has a negative financial impact on PERS. If the Board modifies DROP, the rights and
obligations of law enforcement officers who have already elected to participate in DROP cannot
be altered. The employer contributions to the Employers’ Accumulation Fund cannot be
increased to offset any negative financial impact of DROP.
The Board may include the report as part of the actuarial investigation report required
under continuing law. If the Board does not do so, by November 1 following the last fiscal year
of the period the report covers, the Board must submit the report to:
▪ The Ohio Retirement Study Council; and
▪ The House of Representatives and Senate standing committees with primary
responsibility for retirement legislation.15
Ohio Public Safety Officers Death Benefit Fund
The bill addresses PERS law enforcement officers covered by the Ohio Public Safety
Officers Death Benefit Fund who participate in DROP. The fund provides benefits to eligible
survivors of most full-time public safety officers who are killed in the line of duty or die of
injuries or diseases incurred in the performance of official duties. Under the bill, a PERS law
enforcement officer covered by the fund who participates in DROP continues to be covered by
the fund.16
HISTORY
Action Date
Introduced 04-16-24
ANHB0492IN-135/sb
15 R.C. 145.22.
16 R.C. 742.63.
P a g e |6 H.B. 492
As Introduced


Statutes affected:
As Introduced: 145.22, 145.23, 145.35, 145.46, 145.561, 742.63