Ohio Public Employees Retirement System tells committee fund is 83% funded with $21.6 billion unfunded liability

Ohio Public Employees Retirement System Executive Director Karen Caraher briefed the House Public Insurance and Pensions Committee on the size, funding status and recent policy choices of OPERS, saying the system is 83% funded with a $21.6 billion unfunded liability and a 16-year amortization period.

Caraher told members the retirement system serves roughly 1.3 million members and separates its assets into a pension trust and a health care trust: “Member money always goes into the pension trust fund.” She said the health care trust is well funded relative to pension, reporting it “sits at $13,000,000,000.”

The nut graf: Caraher said OPERS’ funding follows the basic equation — contributions plus investment earnings must cover benefits and administrative expenses — and that investment returns and statutory contribution limits determine how benefits and health care are sustained.

Caraher gave the committee these headline numbers: an actuarial accrued liability (AAL) of about $128.6 billion for 2024, market-value assets near $107 billion, and an unfunded liability of approximately $21.6 billion. She said OPERS’ funded ratio is 83% and the board’s amortization plan is currently about 16 years (the state limit is 30 years). She described the pension trust as the priority for contributions and said the board will not direct employer contributions to health care until the amortization period drops below 10 years (a discretionary, not mandatory, threshold per the board’s funding policy).

Caraher summarized recent plan-design changes and funding policy choices: OPERS moved to a relatively conservative assumed investment return (6.9%, she said) and has phased in benefit changes after the 2013 pension reforms. She described how COLA treatment differs by hire cohort: retirees who retired before Jan. 7, 2013, still receive a fixed 3% noncompounded COLA; most members covered by reforms now receive a CPI-based COLA capped at 3%. “When we made our pension reform changes prior to that, everyone was getting a fixed 3% COLA,” Caraher said. She also told the committee OPERS has twice sought legislation to change COLA rules for earlier retirees and was unsuccessful.

Committee members asked about COLA guarantees and member education. Representative Romer asked whether COLA is guaranteed; Caraher replied it is guaranteed for retirees under current law. Representative White emphasized that many OPERS members do not participate in Social Security, so the OPERS benefit is the primary retirement income for participants; Caraher confirmed that statement. Representative Young asked about past legislative attempts to change the COLA structure; Caraher summarized two unsuccessful legislative efforts in 2017–2018 to subject pre‑2013 retirees to a CPI-based COLA with caps.

The presentation included slides on historical investment returns, asset allocation differences between the pension and health care trusts, and OPERS’ funding-policy guardrails. Caraher said the board has prioritized protecting the pension fund and that health care funding is secondary and discretionary. She said the health care trust’s allocation is more liquid because it has a shorter time horizon than the pension trust.

Caraher closed by directing committee members to the full slide deck for more detail and offering to answer follow-up questions from members and staff.