OPERS investment funds top assumed rates

Defined Benefit Fund returned 8.93% in 2024; Health Care Fund up 10.01%

By Michael Pramik, Ohio Public Employees Retirement System

Jan. 30, 2025 – OPERS recorded solid investment returns in the Defined Benefit and Health Care funds in 2024, leading to consistent funding of both plans.

Preliminary investment returns were 8.93% for the Defined Benefit Fund and 10.01% for the Health Care Fund. Those returns exceeded their actuarial assumed rates of return of 6.9% and 6.0%, respectively. The returns, net of fees, cover the calendar year of Jan. 1, 2024, through Dec. 31, 2024.

That’s positive news for members and retirees, as the assumed rate of return is the benchmark needed over the long term to fund future benefits on schedule.

U.S. equity investments performed particularly well, returning 23.7%. Securitized debt returned 13.7%, while investments in private equity, high-yield debt and non-U.S. equities all surpassed the Defined Benefit and Health Care funds’ assumed rates of return.

OPERS’ funded ratio at the end of 2024 is expected to decline one percentage point from the previous year, according to the preliminary investment returns.

Even with the strong return in the DB fund, the system’s estimated funded ratio is expected to decline to 83% from 84%. That means OPERS has 83 cents for every dollar it owes in future liabilities.

The forecasted time expected to pay off the system’s unfunded actuarial accrued liabilities, defined as the amortization period, is estimated to increase from 15 years to 16 years.

These key funding measures declined slightly because OPERS smooths its pension investment returns over a four-year period for funding purposes, which explains why the funded level is down slightly after a year in which we outgained our assumed investment rate of return. The 2024 investment return applied to the funded ratio at the end of last year includes one quarter of the actual 2024 investment return as well as one quarter of the unrecognized investment gains or losses from the three previous years.

Heading into 2024, OPERS had an unrecognized net loss carryforward of $5.5 billion. Recognizing $2.1 billion of the $5.5 billion loss carryforward amount along with one quarter of the estimated gain of $1.3 billion from 2024 yielded the 83% funded ratio.

Going forward, OPERS will have a net unrecognized asset loss carryforward of $2.5 billion to be recognized over the next three years. OPERS’ unfunded liability for its Defined Benefit plan was estimated to be $21.6 billion at the end of last year.

For the OPERS Health Care Plan, the primary funding metric is the estimated remaining years of solvency. With the strong preliminary investment return of 10.01% in 2024, the plan’s solvency period is expected to improve to 27 years, from 25 years.

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.