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NY Times Reports States Targetting Pension Funds in Budget Crisis

 

 

Last week, the New York Times, published an article about states' actions across the nation to balance their budgets and close the gap in pension funding.  While Oklahoma did not have any changes in state pensions, OPEA is concerned changes in pension benefits could be on the horizon for state employees.

 

"The OPERS system is currently funded at 66 percent, which is dangerously low," said OPEA Policy and Research Director Trish Frazier.  "We should be gearing up to protect the system.  One key strategy would be to ask candidates their plans for the retirement system and if they would support an additional funding source for OPERS."

 

To view the New York Times article, click here.

Posted on Tue, June 29, 2010 by Trish Frazier

7 comments (Add your own)

1. From OPEA.org wrote:
Message from the Executive Director:

Pew report informative, but does not tell the whole story
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.

Attachment

Wed, June 30, 2010 @ 8:16 AM

2. Dave wrote:
How long will it take before the teachers start crying they want funds from our system to shore up their underfunded pension funds?

Wed, June 30, 2010 @ 11:56 AM

3. Jim wrote:
Dave,

They have already tried and failed...thank God

Wed, June 30, 2010 @ 1:49 PM

4. Bobby wrote:
As indicated above, the retirement obligation to current retirees is an absolute obligation and can not be canceled or modified. I called OPERS and they verified this information. Blacks Law Dictionary indicates that an absolute obligation can not even be changed by passing new legislation. In the past legislation has been passed with the support of OPEA and state employees ( myself included)that in retrospect may have not been the smartest move. Probation and Parole Officers and Correctional Officers can retire with full benifits after 20 years service. This means that they can retire at age 41 or 42 and draw benefits for 30 to 40 years or longer. Also they are factored at 2.5% instead of the 2.0% regular employees are factored at. I do realize we had to pay in more each month, but can the system really afford to have a bunch of 42 year old retirees? I am in no position to complain about this since I retired under this plan at age 49. I had plenty of good working years left but was not going to pass it up. I would have to believe that any hopes for a return to the rule of 80 is dead for quite some time if not forever, as is a COLA in the near future. Eventually you have to pay for being indulgent. Future employees will pay for this by higher contribution rates and longer retirement dates if not an end to the defined benefit plan all together. We must be careful what we ask for.

Wed, June 30, 2010 @ 10:51 PM

5. Jann Ensz wrote:
The return to 80 is dead until the fund has more more. OPERS cannot afford the cost of returning to 80 at this time. We do not want to be like the Teacher's Retirement System. We want to be fiscally responsible and allow our fund to build before we doing anything that costs it money.

Thu, July 8, 2010 @ 4:08 PM

6. fed up wrote:
If you think the rule of 80 or a VOBO is something to look forward to, you need to put pencil to paper and do some actual figuring on what you will have "in hand" to survive on. One of my co-workers accepted the VOBO and state retirement. Results: 42% of VOBO lump sum to be with held, and after taxes and increase in out of pocket expenses for keeping our great insurance, there will be slightly over $300 left to live on. This is after 20 plus years of employment with DHS. Is this a great retirement or what?

Fri, July 9, 2010 @ 5:41 AM

7. Ron wrote:
In case nobody has been paying attention, there was NO COLA this year or last year. Not a favorable indicator of financial strength. Normally COLAs are awarded every two years at a 4% rate. The actuaries factor in an annual 2% increase in their studies. Hopefully this will not become a habit, but could be an indicator of reduced benefits making it even more difficult for retirees in the future.

Sat, July 17, 2010 @ 9:45 AM

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