Docstoc

Tom Sherman Ohio Association of Public Treasurers Home page

Document Sample
Tom Sherman Ohio Association of Public Treasurers Home page Powered By Docstoc
					Ohio Public Employees Retirement System


      OPERS Overview
      Ohio Association of Public Treasurers


                             Tom Sherman
                             Government Relations Officer
                             Chris Lowe
                             Legal/Legislative Research
                             Analyst
                             October 4, 2007
                                                            1
                  OPERS At a Glance

OPERS serves more than ½ million Ohioans:
     381,000 active members
     200,000 retirees and benefit recipients
$78 billion in assets as of 12/31/06.
Overall investment return for 2006 was 15% (assumption rate
 of 8%).
OPERS pension funding ratio is 93%.
Solvency period for OPERS health care fund estimated at 22
 years (27 years in 2007).

                                                               2
                              Fund Overview
Total Fund
Segregation of Pension and Health Care Assets Completed in 2007
 Total OPERS Assets as of July 31, 2007 was $ 81.1B
 Total Return as of July 31, 2007 was 5.07%

                                 Total Fund
                                $ 81.1 Billion




         Defined Benefit Fund                    Health Care
             $ 68.1 Billion                      $ 13.0 Billion




                                                                  3
                         Program Review
Defined Benefit Fund
Seek Broad Exposure to the Markets

                                 Asset Allocation – Defined Benefit Fund
                                 As of July 31, 2007


                                        $0.9
                                 $1.7
                         $4.9
                                                                   U.S. Equity
                                                                   Global Bonds
                 $14.8
                                                $30.1              Non-U.S. Equity
                                                                   Real Estate
                                                                   Private Equity
                                                                   Cash Equivalents
                         $15.7


                                                                                      4
                            Program Review
Health Care Fund
Seek Broad Exposure to the Markets

               Asset Allocation - Health Care Investments
               As of July 31, 2007


                                      $0.1
                             $0.5

                                                            U.S. Equity
                     $2.2
                                             $3.8           Universal Bonds
                                                            TIPS
                                                            Short Duration
                    $1.9                                    Non-U.S. Equity
                                                            REITS
                      $2.6                                  Cash Equivalents

                                    $1.9

                                                                               5
                                                 Asset Base: $78 billion

             $70.0

             $60.0

             $50.0
$ Billions




             $40.0

             $30.0

             $20.0


             $10.0

              $0.0
                     1993   1994   1995   1996    1997   1998   1999   2000   2001   2002   2003   2004   2005   2006




                                                                                                                   6
                                                   Challenges Ahead
                            The Baby Boom Tidal Wave
            400
                                                                                                           Retiree Population Growth
            350

            300
                                                                                                                Past 5 years – increased by 21,000
                                                                                                                Next 5 years – will increase 25,000
Thousands




            250

            200
                                                                                                                Next 10 years – will increase 60,000
            150
                                                                                                                Next 20 years – will double to
            100
                                                                                                                                 272,000
             50

              0                                                                                            Active Workers Growth
              2001 2006 2011 2016 2021 2026 2031 2036 2041 2046 2051 2056 2061 2066 2071 2076
                                                                                                                Past 5 years – increased by 41,000;
                                                             Year
                                                                                          Total Retirees         declined last year



                                                              80.0
            Worker/Retiree Ratio                              75.0
                                                                                                                             Life
            2001:           2.6                               70.0                                                           Expectancy
                                                              65.0                                                           at Birth
            2006:           2.2                               60.0
                                                              55.0                                                           Average age
            2011:           1.8
                                                              50.0                                                           at retirement
            2016:           1.5
                                                                30

                                                                36

                                                                42

                                                                48

                                                                54

                                                                60

                                                                66

                                                                72

                                                                78

                                                                84

                                                                90

                                                                96
                                                              19

                                                              19

                                                              19

                                                              19

                                                              19

                                                              19

                                                              19

                                                              19

                                                              19

                                                              19

                                                              19

                                                              19

            2021:           1.4                                                                                                                        7
 Challenges Ahead


Climate of „pension envy.‟

Baby Boomers increase service demands.

Legislative challenges – state and federal.

Increasing cost of providing access to
retiree healthcare.




                                               8
                      OPERS Responds

 Educate lawmakers and interested parties on the value of defined
  benefit pension plans.

 Continuous investment in technology – member/retiree self-service.

 Advocate for members‟ / retirees‟ interests.

 Ongoing incremental changes to retiree health care program.

 ORSC Service Credit Study – Study recently completed;
  recommendation is to charge full actuarial cost for the purchase of
  service credit.




                                                                        9
                         OPERS Responds
                                   1/1/06     1/1/07     1/1/08     1/1/09     1/1/10     1/1/11
                   Pre Phase-In   Through    Through    Through    Through    Through    Through
                       Rate       12/31/06   12/31/07   12/31/08   12/31/09   12/31/10   12/31/11

Employer Rate:

Local                   13.55%      13.70%     13.85%     14.00%     14.00%     14.00%     14.00%

State                   13.31%      13.54%     13.77%     14.00%     14.00%     14.00%     14.00%

Law Enforcement         16.70%      16.93%     17.17%     17.40%     17.63%     17.87%     18.10%

Public Safety           16.70%      16.93%     17.17%     17.40%     17.63%     17.87%     18.10%


Employee Rate

Local                    8.50%       9.00%      9.50%     10.00%     10.00%     10.00%     10.00%

State                    8.50%       9.00%      9.50%     10.00%     10.00%     10.00%     10.00%

Law Enforcement*        10.10%      10.10%

Public Safety            9.00%       9.00%      9.50%     10.00%




                                                                                                    10
               Pension and Healthcare Funding Basics
                                               Funding mandatory
                                                pensions take first
                           5.50% Healthcare*    priority.
           14.00%
          Employer                             The healthcare fund
         Contribution                           receives what is not
                                                needed to fund pensions.
                                               Over all pension
                                                amortization 26 years.
                                               *Healthcare allocation to
                            Pension Funding     increase to 7% in 2008.
           10.00%               18.50%
          Employee
         Contribution




Totals     24.00%          24.00%
                                                                           11
                      Current State Legislation
H.B. 151 – Divestiture bill

 Prohibits state retirement systems from acquiring direct holdings in publicly
  traded companies with scrutinized business operations tied to Iran or Sudan.

 Re-referred to House Rules & Reference Committee.

 Executive Directors of the state retirement system sent a letter to Speaker
  Husted agreeing to work with their board to develop a voluntary divestment
  policy consistent with their fiduciary duty.

 OPERS Board approved Iran/Sudan investment policy at its September
  meeting. Fiduciary duty to act in the best interest of our members is still the
  first priority.




                                                                                    12
                        Current State Legislation

H.B. 240 – Reemployment bill
   Requires a public employer that seeks to reemploy a retired “administrative
   employee” in the position held at the time of retirement to have the
   employment approved by the state retirement system board that covers the
   employment.

     Limits the annual compensation of such a retirant to 60% of the retirant's
      final average salary and specifies that the retirant may not receive non-
      monetary compensation for the employment other than health care
      coverage.
     Currently pending in House Financial Institutions, Real Estate &
      Securities Committee.
     OPERS is an interested party at this time.




                                                                                   13
                      Current State Legislation
H.B. 270 – Reemployment bill
     Generally prohibits a retiree from returning to work, less than 180 days
     after the retirement commenced, in the same position with the same public
     employer by which the retiree was employed at the time of retirement.
     Provides the following if the retiree is not reemployed within these
     parameters:

              During the period of reemployment, forfeiture of the portion of
               the retirement allowance funded with employer contributions.
              During the period of reemployment, suspension of the portion
               of the retirement allowance funded with employee
               contributions until reemployment ceases.
              The reemployed retiree is not entitled to an annuity benefit for
               the period of reemployment; instead the retiree is only entitled
               to a refund of the employee contributions.



                                                                                  14
                          Current State Legislation

H.B. 8 – Forfeiture bill (As Passed by the House)
   Requires a member of a state retirement system who pleads guilty to or is
   convicted of a felony while engaged in the performance of the member‟s
   duties to forfeit the right to a retirement allowance or disability benefit or any
   other right earned by being a member except for the member‟s accumulated
   contributions.
     As drafted, the bill would apply to certain felonies.

     Currently pending in Senate Judiciary – Criminal Justice Committee.

     OPERS is an interested party at this time.




                                                                                        15
                            Current State Legislation

S.B. 3 – Forfeiture bill (As Passed by Senate)
   If a public employee pleads guilty to or is convicted of a felony while serving
   in a position of “honor, trust, or profit,” the employee would forfeit the right to
   a retirement allowance or disability benefit or any other right earned by being
   a member except for the member‟s accumulated contributions.
      As drafted, the bill would apply to certain felonies.

     Currently pending in House State Government & Elections Committee.

     OPERS is an interested party at this time.




                                                                                         16
               Current Federal Issues

 Mandatory Social Security coverage
    No action anticipated in 2007

 Government Pension Offset (GPO) and Windfall Elimination Provision (WEP)
    H.R. 82 and S. 206, a companion bill, were introduced in Congress in
     January.
    Both bills seek to repeal the GPO and WEP requirements.
    OPERS supports this legislation due to the negative financial impact on
     our members (retirees) to the extent they do not result in mandatory social
     security coverage for Ohio‟s public employees.
    House Ways and Means Subcommittee on Social Security may hold
     hearings on H.R. 82 this fall.




                                                                                   17
     Questions?




govtrelations@opers.org
    www.opers.org


                          18

				
DOCUMENT INFO
Shared By:
Categories:
Stats:
views:3
posted:3/18/2011
language:English
pages:18