Ohio’s Worsening Pension Crisis
Ohio’s unfunded pension liability was an estimated $312 billion in fiscal year 2015, a $50 billion increase from the previous year. This figure, measured using a risk-free discount rate, equals 62 percent of the state’s aggregate personal income—that is, residents’ total earnings from wages, investments, and other sources of income. The infographic below shows Ohio’s worsening unfunded liability as well as the future outlook for the state’s largest pension system. The Ohio Public Employees Retirement System has only a 50 percent chance of being able to meet its obligations by 2037—just two decades from now. Other plans at even greater risk of not meeting obligations include the Ohio State Teachers Retirement System, the Ohio School Employees Retirement System, and the Ohio Police and Fire Pension Fund.
According to Mercatus research, to significantly increase the probability of meeting future obligations, Ohio’s pension plans would need an additional two and a half times their current stock of assets. Measures such as modifying assumed rates of return or tweaking benefits will not be adequate for closing the gap between available funds and pension obligations. The severity of Ohio’s pension crisis means that much more will need to be done to get the unfunded liabilities under control.