OPERS rates highly among peers

CEM Benchmarking lauds pension system’s service, cost levels

By Michael Pramik, Ohio Public Employees Retirement System

Jan. 11, 2022 — OPERS is a low- to medium-cost pension administrator with high service levels compared to our peers, a benchmarking consultant told the Board of Trustees during a recent meeting.

CEM Benchmarking also reported that the OPERS Investments Division works effectively for members by paying less than its peers for similar services with a lower-cost implementation style.

OPERS participates with CEM Benchmarking each year to compare its administration and investment activities with those of a custom group of 14 peers, as well as a wider universe of 67 leading, global pension systems. CEM ranks our administrative costs, service levels and investment costs, and presents this report to the Board.

CEM Principal Mike Heale said OPERS’ total pension administration cost of $55 per active member and retiree in 2020 was $22 below the peer average of $77 per client. At the same time, OPERS had a service score of 82, well above the peer median of 77.

OPERS’ 5-year net total investment return was 9.9 percent, above the U.S. public pension median of 9.6 percent and equal to the peer median. Our investment costs of 43.3 basis points (or 0.433 percent) was below our benchmark cost of 47.1 basis points (or 0.471 percent).

“We found that OPERS paid less for its external management program,” Heale said. “It had lower implementation costs that are going down, mainly because of a shift to a lower-cost asset mix.”

Michael Pramik

Michael Pramik is communication strategist for the Ohio Public Employees Retirement System and editor of the PERSpective blog. As an experienced business journalist, he clarifies complex pension policies and helps members make smart choices to secure their retirement.

Michael Pramik

Communication Strategist

12 thoughts on “OPERS rates highly among peers

  • January 11, 2022 at 10:35 am
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    I’m not surprised. I agree that OPERS pension is a well-run and well-managed fund. What I don’t understand, however, is why the Director is so adamant about freezing COLA. OPERS can clearly afford to continue paying the COLA that was promised to retirees when they retired. That action of freezing COLA would significantly hurt retirees when OPERS does not need to take that action.

    Reply
    • January 13, 2022 at 10:40 am
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      The COLA freeze is just temporary, two years. Unfortunately it’s happening at a time when the cost of living is increasing dramatically due to inflation. From what I understand it’s necessary to reduce unfunded liability which will keep OPERS solvent farther into the future. If these changes aren’t made now, it could cause problems with funding OPERS’ future liabilities and they may not be able to afford to pay what they’ve promised future retirees.

      Reply
  • January 11, 2022 at 10:37 am
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    The pension administration costs mentioned here were from 2020. Was that when the 5-year investment return was calculated? What dates did the overall study cover?

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    • January 11, 2022 at 1:54 pm
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      Peggy,

      OPERS operates on a calendar-year basis. The investment report covered the five-year period that ended Dec. 31, 2020.

      We should note that the administrative report also measured our calendar-year 2020 results and compared them to many of our peers’ fiscal-year data sets. That’s apparent in a footnote that states “your 2020 data includes almost 10 months of the COVID-19 pandemic, which had a negative impact on your service score. In contrast, 3/4 of your peers and universe participants have June fiscal year ends and their results reflect less than 4 months of the COVID-19 experience.”

      Reply
  • January 11, 2022 at 10:55 am
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    Need to let our legislators and the general public know the good news. Ohio doesn’t always do so well when comparing programs to other States.

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  • January 11, 2022 at 11:15 am
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    The pre-Medicare Via Benefits service works great! I have been using the Marketplace for the last couple of years but going through the OPERS connector paid more towards my out-of-pocket expenses. I had a few hiccups in the beginning but this process is pretty seamless. Thank you!

    Reply
  • January 11, 2022 at 11:16 am
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    I’m 83 years old and very rarely understand what you are telling me. Could you make it a bit more easier to read????????

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    • January 11, 2022 at 1:56 pm
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      Elizabeth,

      We hire an outside company to compare our administrative and investment costs and performance to some of our fellow public pension funds. The comparisons show OPERS is doing a great job containing costs and serving our members in relation to how our peers do the same things.

      Reply
  • January 11, 2022 at 1:56 pm
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    Keep up the GOOD WORK. I appreciate it. I am just glad that I retired from the GREAT State of Ohio. Thank you, Thank you, Carol E Smith

    Reply
  • January 11, 2022 at 4:42 pm
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    As a Medicare retiree now from a pre-Medicare retiree, even though my support from OPERS both retirement and medical reimbursement is less than $54 from 2005 till 2021. I believe OPERS is doing their best they can compared to other sizable retirement administrations, especially other states. As this country is entering another recession, the stock market on the verge of collapsing, escalating prices, and out of control border crossing, and what May I say about this government. God help us, get through this and back to the gold standard.

    Reply
  • January 12, 2022 at 5:34 pm
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    Thank you OPERS for being as efficient as you are and for taking steps to preserve benefits in the future. Considering inflation is twice the highest annual COLA benefit increase allowed, I hope though that our COLA remains intact for all retirees during these inflationary times which we haven’t seen so high since 1982. ***** stars to OPERS Administration.

    Reply
  • January 21, 2022 at 12:27 pm
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    Good day fellow retirees& OPERS,
    I have nothing but praise & exemplary service
    for OPERS. I have been retired 22 years this
    month. I very much enjoyed my public service
    career with Ohio DOT. I am most fortunate with
    my OPERS pension. Keep up the great work
    OPERS for we present & future retirees.
    Much thanks.👍

    Reply

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