OCHER, OPERS March 21, 2017
The following report is by Peggy Bott, WSURA's OPERS representative to OCHER. The Council meets four times a year to discuss topic of interest to retirees. These topics almost always concern pension and health matters, especially pertaining to STRS and OPERS. For the STRS report from OCHERS look elsewhere on the WSURA News website.
Gordon Gatien, OPERS Interim Director of Government Relations, reported that OPERS funding is strong with assets of 89.2 billion, 11.5 billion of this is dedicated to Health Care. Two thirds of revenue is from investments and the rest from contributions. OPERS is the 11 largest retirement system in the US.
Health Care: He said they are feeling good about health care . Since they have an 11.5 billion fund dedicated to Health Care they are confident their benefits should be stable for at least 20 years. They are advocating for actions to fight high drug prices. One particular push is to have drugs move to generics sooner than is possible now. One Exchange is mostly successful but they are working to improve the areas where there have been problems. He will probably have more to say about health care in May now that ACA will continue to be the law for at least the foreseeable future.
That biggest threat faced by PERS and other defined benefit pension plans is the assault from right wing think tanks and centers. One of the best-known studies is from the Mercatus Center at George Mason University. Gordon pointed out that it came with a disclaimer that neither the Mercatus Center nor George Mason University shared the views of the study. This is the study that was the basis of the story in the Dayton Daily News and other Ohio papers that that there is only a 50% chance that PERS could pay benefits by 2037. The results of this study were based on the assumption that there would be no more contributions into the system.
Another study by (PEPCO?) predicted a dire future for defined benefit plans but it was based on the assumption that the value of the pension funds would only increase at the rate of return of US treasuries. The actual rate of return in 2016 was 8.3% and 7% is the assumed rate of return for future years. These studies also seem to assume that the pension plans would fail all at once, PERS is solvent for at least 20 years and would have time to plan and adjust to a disastrous economic event.
However we should not underestimate this threat. It is based on ideology opposed to most public funding and/or the belief that the State should not be contributing 14% to our retirement funds and many share these beliefs. OPERS is continually trying to educate the Legislators and conservative think tanks such as the Buckeye Institute about the actual solvency of Ohio public pensions.