On Thursday, February 18, 2010, the Pew Center on the States released a report on the financial status of the public retirement systems operated by the fifty states. While there are valid reasons for concern raised by the report, most states have adequate resources set aside to pay their pension obligations. OPERS retirees should not be concerned about their pensions. OPERS is a $6 billion pension fund and our retirees’ pensions are an absolute obligation of the State of Oklahoma.
The Pew Report is a very good and accurate report, but can be slightly misleading. The report lumped all of the six Oklahoma pension systems together. That means that the severely underfunded Oklahoma Teachers Retirement System (2nd or 3rd worst funded in the country) drags all of the Oklahoma plans down in the state-by-state statistics. While the “funded ratio” for OPERS (66.8% at the end of FY 2009) has been adversely impacted by the recent economic downturn, we believe that the funding issues we face are manageable.
After several years of suffering from a cut in State contributions, OPERS has been the beneficiary of built-in statutory increases in the contribution rate each year since 2005. OPERS was only receiving a 10% employer contribution rate (percentage of payroll) in 2004. For FY 2010, the rate is 15.5% and next year it tops out at 16.5%. OPERS is still not quite collecting the full amount of contributions according to our actuaries, but we have made enormous progress over the last six years. It will just take time to recover from the unprecedented drop in the financial markets in 2007 and 2008, but we are still optimistic for the future.
OPERS will continue to advocate leaving retirement benefits for active members at current levels. It is not the time to increase benefits and or increase the State’s long-term liabilities. We will continue to manage the pension assets in a prudent manner to ensure all current and future retirees have a secure financial future. That has been our promise to members since 1964.
Posted on Fri, February 19, 2010
by Patrick Lane