Ohio’s Pension Systems Reap Substantial Investment Returns in 2017

The Columbus Dispatch Publishes Article on HB 413
February 19, 2018
COLA Reduction Legislation is Reportedly Dead in the Ohio House
March 22, 2018

Ohio’s Pension Systems Reap Substantial Investment Returns in 2017

(February 28, 2018)  Ohio’s five retirement systems scored a big year in 2016 with investment returns that eclipsed even the most optimistic projections, according to a story that appeared in today’s Dayton Daily News and other Ohio newspapers.  In the case of the Ohio Public Employees Retirement System (OPERS),  the 2017 return on investments reached 16.61%, more than double the 7.5% annual anticipated rate of return.  Other Ohio pension systems performed similarly and all will likely see improvements to their overall funded status.

PERI President & CEO Geoff Hetrick issued the following statement, “This is great news for members of OPERS, especially retirees, who have found themselves in the midst of a battle with the retirement system over a proposed reduction in their guaranteed 3% COLA to actual inflation capped at a maximum of 2.5%.”  “Returns such as this remind us that the system is financially strong.  OPERS’ plans to reduce the COLA are unnecessary and a threat to our most vulnerable population, the elderly.”  We have provided a link to the story here:  https://www.daytondailynews.com/news/big-returns-help-bolster-ohio-five-public-pension-funds/61mj6w35nXeMflJhZrgvJP/

 

15 Comments

  1. Jim says:

    Oooh, oooh, I know. Instead of lowering the expectations from 8% to 7.5% and then taking bonuses when when we grow by 16%, lets have them lower their expectations to 6% and then they can line their pockets with even bigger salaries and bonuses.

  2. James says:

    Just read the article on the exorbitant amount of fees, billion upon billions of dollars, payed to consultants and managers, by OPERS, over the last two decades alone. That’s outrageous! Of note, an investment consisting of an allocation of 70% -U.S. equites/ 30% – U.S. total bond ,index funds, has had an annualized return of 9.41%, over the last 31 years. That far exceeds the OPERS benchmark goal of 7.5%. And just imagine the billions of dollars saved in fees, back on the books. What exactly, are we paying these guys for? Put the investments in an appropriate allocation of index funds, and save millions/billions in fees. Mama, don’t let your babies grow up to be cowboys. May they grow up to be a hedge fund manager.

    • Michael Roberts says:

      And you are so right, make it about them and not us. Billion paid to poor performing hedge fund managers since 2011. Our own OPERS chief financial officer making over 600,000 per year plus incentives (bonuses) in the millions each year. Why are we paying him to invest when we are paying the hedge fund managers billions? The pension systems here in Ohio lost multi millions when Kasich was with Lehman Brothers and went around to the pension funds and talked them into investing in Lehman Brothers as they went out of business. Then he becomes governor and along with Carraher in 2011 we start investing in poor performing hedge funds paying billions out in fees for the right to put money in these poor performing financial instruments. Hedge funds donated to Kasich 2016 presidential run, if he runs again in 2020 are we going to invest more in these funds. Ohio has the most money of any public pension state invested in these hedge funds. Add to this that 50 people at OPERS make more than the governor and you can see we have an out of control organization.

  3. Ginny says:

    How can OPERS justify reducing the COLA for retirees in light of this information? Why is OPERS not contributing monies to the healthcare fund? And most significantly why is the Ohio legislature allowing all the changes that have been made and are in the process of being made when they see these returns. Does the legislature know what is paid to the top management personnel at OPERS? Does any congressional committee have oversight on these OPERS guys?

  4. Jerry M. says:

    This is why retirees need to keep contacting members of the general assembly. Retirees need to keep a close eye on the Opers board. I now feel there is no trust as it pertains to Opers. Very serious situation! Remember to vote carefully for the Opers board and vote carefully this November.

  5. Ben Grabill says:

    Is there a need to change current retirees colas? We are dying off eventually anyway, why the cola change? Every year should see a decrease in the traditional retiree cola cost to OPERS. If not, somebody better start investigating!

  6. Michael Roberts says:

    For each class of investments, I.e. real estate, private equity, domestic, equity, ect, OPERS sets benchmarks. A benchmark is a standard assigned to each investment class to measure the fund’s performance.

    All of the investment classes far surpassed their benchmarks for 2017 except the OPERS Hedge Funds, which fell short of their benchmarks.

    All external fund managers employed by OPERS have high fees, but the Hedge Funds are the external managers with very highest management fees in the OPERS portfolio. For every $1 earned by PERS in a Hedge Fund, Hedge Funds take 34 cents.

    The OPERS Board voted to invest in Hedge Funds again for 2018. The OPERS Director says fees don’t matter because stated returns are net fees.

  7. Jim says:

    One of the committee members who wrote back to me expressed their concern about the proposed cuts to our COLAs but alarm concerning paying hedge fund managers $428 million dollars to handle a fund that only produced $9 million dollars in return. https://www.opers.org/pubs-archive/financial/cafr/2015%20CAFR%20lowres.pdf

    We should all be worried that with the cuts to health care and COLAs the next cut will be to our pensions. This mismanagement must be stopped with an entirely new administration at OPERS.

  8. LorenzoVinci says:

    Well, I suppose it”s arguably good for everyone else as Ohio falls further behind by wasting its money on garbage. It”s definitely bad for Ohio, though.

  9. Jerry M. says:

    I would would like to offer more food for thought for retirees, It is time for a full audit of opers! An overall fiscal audit of opers is needed to verify financial stability and to verify if upper administrative salaries are justified or not! When retirees contact members of the general assembly, Include this suggestion.

  10. Donna says:

    Thanks for all the info. I have just emailed the members of the General Assembly.

  11. James says:

    Empty gestures from a kinder, gentler OPERS. HB 413 provision covering those who retired on or before December 31, 1979.
    I don’t have any hard figures on those people but after almost forty years, how many are left? I’ll bet it’s negligible, a “ghost” provision.
    Those people enjoyed a pre taxed income with full healthcare and a COLA supported by people like you and me. That’s the way it was supposed to work.
    Now OPERS, through HB 413 say they want to “support” those people with a increase in their COLA based on their last benefit of 2018. Is your COLA based on your last Benefit?
    More smoke and mirrors from OPERS? You bet! This is nothing more than fluff for HB 413 as that group fades away.
    On a side note, we used to joke about sharing the same pension with the politicians because they would never shoot theirselves in the foot. I guess the joke was on us.
    I can’t wait to see how many politicos like Mr. Scherer have built in a side door exemption to this bill for themselves.

  12. Jim says:

    This bill is a long way from dead!!!

    Although I sent out dozens of letters, I received only a few responses—all from Democrats—All Democrat responses were totally against the bill.

    Today, I received a letter from the Sole Sponsor of House Bill 413, Representative Gary Scherer, Republican and the only Republican to respond to me, so far. He writes that, “He does not favor the bill as it is currently drafted.” He writes that he introduced the legislation “…at the request of Speaker Pro Tempore Kirk Schuring,” He very much alarmed me by stating, “I look forward to hearing future testimony regarding this bill, both proponent and opponent in this committee.”

    We must be very careful as we vote this November. We must not allow people to get elected that waver or equivocate as it pertains to protecting pensions from any cuts for those who are currently hired; whether they be cuts to our pensions, social security or any other employer pensions.

    Anyone mismanaging these funds must be jailed.

  13. Jerry M. says:

    Retirees need to keep an eye on the general assembly as it pertains to H.B. 413. The general assembly may just let it go dormant until after the election in November. Then, the general assembly may try to ram it through in a lame duck session by the end of the year. This may be the plan of Opers also. Keep an eye on the general assembly and Opers!

  14. Retiree says:

    How long is Karen Carraher in her position as CEO? Is it open ended or does she have to be reappointed at some time?

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