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.
I have been through state audits and plan audits but can’t find any clear representation of what the state’s share of the net pension liability is, or what the state’s share of the contribution is. Am I missing a source document that identifies state’s share of the liabs, or any other of the metrics that the state is specifically responsible for from a funding or liability perspective? I see the plans are well funded, but I am not sure the audits, when they report “employer’s Portion” show numbers as a combination of funding from the state and other sources.
Any guidance you might have would be helpful. Thanks
Patrick,
OPERS membership includes employees from state, local, public safety and law enforcement employers. Members’ benefits (liabilities) are funded by member and employer contributions. For state and local employees, contribution rates are currently set at 10% of pay for members and 14% of pay for employers. The state of Ohio is not directly assigned any liability. Liability is assigned to the participating employers, per GASB accounting standards 67/68, based on their proportionate shares of the system’s overall liability. Employers are legally responsible only for making their statutory employer contributions.