Public pension funds all see big returns

Systems, which cover over 1.9M Ohioans, all end 2020 in the black.

A year ago the global pandemic cast a cloud of uncertainty over all things financial, including Ohio’s five public pension funds that have hundreds of billions of dollars invested for more than 1.9 million Ohioans, but each retirement system ended 2020 in the black.

“I recall in March of last year, we were down over 12%. If you had told me we had a chance of breaking even, I’d have been glad,” said Carl Roark, director of the Ohio Highway Patrol Retirement System.

Instead, the patrol’s retirement fund earned an annual return of 14.3% and its portfolio tipped over $1 billion in value for the first time in its history.

“It’s one of those years you get to celebrate a little bit,” Roark said.

Each pension system has a carefully crafted mix of assets including stocks, bonds, real estate and other investments. The funds strive to hit or exceed their expected rate of return every year to cover the obligations of current and future benefits.

The rate of returns range from a high of 8% at Ohio Police & Fire Pension Fund to a low of 6% for the Ohio Public Employees Retirement System health care fund.

In 2020, each system exceeded its target. Returns ranged from a high of 14.3% at the Ohio Highway Patrol Retirement System to a low of 9.2% at Ohio Police & Fire Pension Fund.

The five systems collectively have $234 billion invested for nearly 2 million government workers, retirees and beneficiaries.

Ohio pension benefits and contribution rates are largely set by state law — not union contracts. Generally, public employees and their employers do not contribute to nor receive Social Security benefits, so the pension systems are their mainstay of retirement incomes.

The retirement systems are legally and financially separate entities that are governed by elected and appointed trustees.