Strong returns bolster Ohio’s public pension funds

The Ohio Public Employees Retirement System, the largest of the state’s five public pension funds, earned 13.9 percent return on its investment portfolio last year. The 13.9 percent was in the top 10 annual returns in OPERS’ 79-year history. Total assets hit a record $88.6 billion.

“The strong performance of our investments in 2013 illustrates the professional, prudent manner in which the OPERS pension and health-care portfolios are managed,” said OPERS Executive Director Karen Carraher in a written statement. “One of our goals is to earn an average return of 8 percent over the long term. These strong returns surpass that goal, and allow us to continue to be well-funded.”

The investment performance as well as pension law reforms passed in 2012 by Ohio lawmakers helped improve the system’s overall fiscal strength, she said.

OPERS domestic stock investments returned 33.72 percent while non-U.S. equities returned 15.27 percent. Private equity returned 16.3 percent, real estate increased by 15.2 percent and hedge funds increased 9.1 percent.

The State Teachers Retirement System of Ohio, the second largest fund, reports its returns on a fiscal year basis. But the 2013 calendar year return was 17.4 percent and total assets hit $72.3 billion. The returns far exceeded the assumed rate of return of 7.75 percent.

The Ohio Police & Fire Fund’s return for 2013 was 16.5 percent, boosting the total portfolio to $14.1 billion at the end of the year. The system assumes an annual average return of 8.25 percent.

School Employees Retirement System of Ohio, which serves bus drivers, janitors, cafeteria workers and other non-teaching staff, had an investment return of 16.1 percent in 2013. Its portfolio now stands at a record high of $12.1 billion.

The Ohio Highway Patrol Retirement System, the smallest of the five funds, had a return of 18.8 percent in 2013, increasing its total assets to $810 million. The system assumes an annual return of 8 percent.

A good year like 2013 helps make up for years in which there are losses or the portfolio fails to hit the assumed rate of return.

The five pension systems serve roughly 1.7 million Ohioans who are retirees, active workers or former government employees. Collectively, they have $188 billion in assets.

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