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For Immediate Release
December 15, 2008
Contact: Jay Smith
(614) 224-5700
OP&F Requests Legislative
Changes for 30-Year Funding Plan
The Ohio Police & Fire pension system sent a letter in early November to
update and remind the Ohio Retirement Study Council (ORSC) of the
current status of its 30-year funding plan. On Wednesday, OP&F
emphasized that all required benefits will be paid to its members now
and in the future, however the economic downturn this year will
jeopardize the real progress that has been made to become compliant with
the state’s 30-year pension funding requirement.
According to William Estabrook, the ORSC member representing OP&F, the
most recent actuarial valuations released in October and including
numbers through January 1, 2008, shows continued steps toward complying
with the requirement. The funding level improved from 78.2 percent to
81.7 percent, he reported.
The bottom fell out, according to Estabrook, because of devastating
losses over the past six months. “With continued investment success and
prudent business practices, we were progressing toward the 30-year
funding within a manageable number of years without asking for
legislative action,” he said. The losses have negated any positive
movement and will be reflected in the next valuation.
The OP&F Board of Trustees and financial consultants, Estabrook said,
are well positioned to react to movement within the stock markets, but
“no one could have predicted the extent the devastating losses of the
past six months would have on all institutional investors. In order for
OP&F to meet the 30-year funding requirement in this economic climate,
the legislative changes that have been identified within our ‘Shared
Accountability Funding Plan’ need to be engaged.”
The changes include increasing revenue through graduated increases in
both member and employer contribution rates. The last time contribution
rates were increased for members and employers was 1986, Estabrook said.
Recognizing that the close of the 127th General Assembly is
only weeks away, the intent of the November letter was to recognize and
reach out to ORSC to explain the nature of the issue and prepare for
action to be pursued in the coming General Assembly.
OP&F has and will continue to update members of the details presented to
the ORSC concerning this matter. Estabrook said the system will receive
the latest financial status report at the close of 2008 and again submit
a plan to comply with the required funding time period.
Ohio law established a 30-year period as a benchmark for measuring the
long-term financial health of the retirement systems. Estabrook pointed
out that it has been documented that at the time of OP&F’s formation,
the system has been underfunded. “In fact, our funding level at that
time was just 9 percent. By 1988 OP&F’s funding level had increased
dramatically, but was still only 50 percent.”
He said diligent work along with the assistance of the General Assembly
in providing investing provisions, resulted in tremendous advances in
funding since that time. In 2002, OP&F’s funding period was a robust 28
years and within the statutory benchmark.
In other ORSC business, the council accepted staff recommendations for
amending HB600 (R-Wachtmann), which would make changes to the purchasing
of service credit provisions for the Ohio Public Employee Retirement
System. The amendments as recommended would include the other retirement
systems and a 90-day retirement requirement.
Because the bill has not had a hearing in the House, Rep. Lynn Wachtmann
(R-Napoleon) said he plans to introduce the bill again in the next
General Assembly.
Richard Curtis, ORSC member representing the Highway Patrol Retirement
System, gave an update on the investment report for the Ohio Based
Brokers/Managers Report established under 125-SB133. The bill required
full review of the pension systems and established how vendors access
the systems with regards to communications and lobbyist representation.
Further, the report outlines investment activities and guidelines along
with an apples-to-apples comparison of the various pension systems.
Story originally published in The Hannah Report on December 10,
2008. Copyright 2008 Hannah News Service, Inc.
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