Ohio’s largest pension plans are at risk of falling significantly short on their obligations to hundreds of thousands of Ohioans. In fact, Ohio ranks ahead of only Mississippi in terms of the level of unfunded liabilities relative to the size of the state’s income.
Despite having assets of more than $150 billion, some estimates show that Ohio needs to increase pension funding by at least $275 billion to be fully funded—that’s almost $25,000 per Ohio citizen. If lawmakers fail to make the decision about how to close the gap now, future generations will bear the burden of higher taxes, reduced government services, or even reduced benefits.
Using Ohio government data, economists Erick M. Elder and David Mitchell ran 100,000 simulations of likely investment returns for each pension. They find that Ohio’s pensions have sufficient assets to pay promised benefits in the next five years, but the probability that assets will be sufficient declines very rapidly thereafter.
By 2037, Ohio’s largest public pension, the Ohio Public Employees Retirement System (OPERS), has only a 50 percent chance of being able to fulfill its obligations. The Ohio Police and Fire Pension Fund (OP&F) has less than a 25 percent chance of fulfilling them.
To learn more, read the full research paper.