OPERS funding steady in 2023
Good investment returns help retain an 84 percent funded level for pensions
By Michael Pramik, Ohio Public Employees Retirement System
March 7, 2024 – OPERS’ funded level at the end of 2023 is expected to remain relatively unchanged from the previous year, according to last year’s preliminary investment returns.
As the Defined Benefit Fund preliminary return was a gain of 11.34% last year, the system’s estimated funded ratio is expected to remain at 84%. That means OPERS has 84 cents for every dollar it owes in future liabilities. This analysis considers the impact of the investment returns without considering the impact of the other assumptions for which the data is not available yet.
The forecasted time expected to pay off the system’s unfunded actuarial accrued liabilities, defined as the amortization period, is estimated to decline from 16 years to 15 years.
OPERS smooths its pension investment returns over a four-year period for funding purposes. Thus, the excess 2023 gain (beyond OPERS’ assumed investment rate of return of 6.9%) helps to offset what was an unrealized loss of $9.7 billion carried over from 2022. The positive investment results last year are expected to reduce that carryover loss to an estimated $5.5 billion going forward. OPERS will recognize that amount over the next three years.
For the OPERS Health Care Plan, the primary funding metric is the estimated remaining years of solvency. With a strong preliminary investment gain of 13.96% in 2023, the plan’s solvency years are expected to improve to 22 years, from 21 at the end of 2022.
OPERS’ external actuary will present the final asset and liability results to the OPERS Board of Trustees in May for the pension plan and in September for the health care plan.
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.