State’s 5 pension funds want to weather storm
The last financial crisis taught lessons about responding to this one.
The three things the operators of Ohio’s public pensions want their 650,000-plus active members to know:
■ They’re moving most services online.
■ Benefits will go as scheduled. ■ It’s too soon to say what kind of impact the coronavirus will have on funds’ long-term health.
“There are so many things we just don’t know about yet,” said Republican state Sen. Kirk Schuring, who chairs the legislative committee that oversees the state’s five public employee pension funds. “I think we need to be vigilant, and I’m looking to the financial advisers to keep a close watch on what is happening in the financial markets.”
Goldman Sachs economists recently released what they described as an “unprecedented” forecast for a 24% decline in the second quarter’s gross domestic product. And the stock market has seen “historic volatility” as investors — some fueled by fear — try to gauge how long quarantines and business closures will last.
There’s a lot of uncertainty, but here’s what we know about how the different systems are handling the outbreak:
Ohio Public Employees Retirement System
“OPERS has a longstanding plan in place to continue business during a crisis such as the coronavirus issue,” spokesman Michael Pramik said in a statement to The Dispatch.
“Most importantly, OPERS members should rest assured that pension benefit payments will be released on the first of the month as scheduled, and our health care program will continue uninterrupted.”
But in-person services at the system’s Downtown headquarters in Columbus came to an end Friday.
OPERS staff were given the option to work from home earlier this month, but later the main
building was closed to all but essential personnel.
When it comes to the system’s investment portfolio, however, “it’s difficult to get a read on intra-month investment performance given the extreme volatility of the market,” Pramick said.
Public pension systems use 30-year projections and baked into those forecasts are a couple of bad years.
“And as such,” Pramik said, “(OPERS) will assess the impact of the current short-term volatility.”
The board should have preliminary performance numbers in May for the first quarter of 2020, but a full, audited accounting of the coronavirus impact won’t be finalized until the fall of 2021.
School Employees Retirement System
The SERS board meeting in March was different.
“We had board members calling in for the first time,” spokesman Tim Barbour said.
Staff members were asked not to be in the room unless they were presenting, and only one visitor showed up to watch.
The board asked about its investments, but the financial officers didn’t have a lot of answers yet.
“A lot of our investments, like real estate and private equity, are a quarter in arrears,” Barbour said. “We are not going to know for another three months how it affects them.”
There was some good news though.
“We were told, at least on
Thursday, that we made a lot of changes to our portfolio after the 2008, 2009 crises, and those are helping a lot to stop the downside,” Barbour said about market effects on its funds. “They are confident we are going to have a much better scenario this time than last time.”
As for the fund’s day-to-operations, those have mostly moved online.
“We are canceling all our spring retirement conferences, remote counseling sessions and employer meetings,” said a recent SERS announcement.
And its headquarters is closed to the public.
But Barbour was quick to point out that people planning to retire in the next couple of months can still do so. SERS continues to process applications; they just aren’t doing it in the office.
He did ask retirees who are still receiving paper checks consider switching to direct deposit. People are ordering a lot more online, and mail delivery could be slower than usual.
Ohio Police & Fire Pension Fund
“Sure, it has not been a very good last 14 to 18 days,” spokesman David Graham said. “We went through this in 2008, and you don’t really take drastic (investment) actions.”
Short-term losses don’t technically affect the fund unless those assets are sold. It’s kind of like the value of a home. It can go up and down, but it those fluctuations don’t become real dollars lost or gained until the owner sells.
“We’d lock in those losses if we started selling everything,” Graham said.
The important thing, he said, was that the fund will continue “paying benefits on time. There is no panic as far as that is concerned.”
What OP&F is asking of its members is to “reserve less urgent questions or concerns until we resume normal operations.”
On Tuesday, the fund announced that “only essential OP&F employees will be working through April 3, 2020.”
The upcoming board meeting, scheduled for Tuesday, will be held via teleconference.
State Teachers Retirement System
“Benefit payments will continue to be made as scheduled on the first banking day of the month, and our member services will continue without interruption,” according to a statement that was published March 16.
But some of those services, like counseling and member education seminars, are moving to online only.
Highway Patrol Retirement System
“All face-to-face meetings have been postponed and business is being conducted by phone,” Executive Director Carl Roark wrote in an email to The Dispatch. “The HPRS staff are working remotely as much as possible.”
As for its investments, Roark said, “Obviously, the last few weeks have hurt us, however, HPRS is a longterm investor and continues to manage the portfolio with that in mind.”