October 2015 Monthly Board Report
FUNDING REPORT SHOWS OP&F MEETS STATE REQUIREMENT
An actuarial report presented to the Ohio Police & Fire Pension Fund (OP&F)
Board of Trustees on Oct. 21 shows that the retirement system is in compliance
with the state’s funding requirement.
An independent actuarial firm, Buck
Consultants, presented the findings which showed that as of Jan. 1, 2015, OP&F’s
funding period is 30 years, an improvement from 33 years in the 2014 valuation
study. The funding period projects the amount of time it will take to pay down
the system’s unfunded accrued liabilities. The State of Ohio requires a 30-year
funding period or a plan to reach that level.
OP&F’s funding ratio also
improved from 2014 to 2015. The ratio is now 70.8 percent, compared to 66.7
percent in 2014. The funded ratio measures a pension system’s assets to its
liabilities.
Pension reform legislation passed in 2012 greatly improved
OP&F’s long-term funding status, resulting in the current 30-year funding level.
Significant funding provisions were the basis for the legislation and included
increased member contributions, an increase in the minimum retirement age for
new hires and adjustments to the Deferred Retirement Option Plan and cost of
living allowances. OP&F also shifted more dollars toward pensions from its
health care funding stream. These factors all contributed to OP&F meeting the
state’s funding requirement without any additional taxpayer dollars.
PORTFOLIO UPDATE
OP&F's investment portfolio value:
|
Current value (10/21): |
$14.0 billion |
|
End of September value: |
$13.6 billion |
|
End of August value: |
$14.0 billion |
Board of Trustees Committee Notes
(Motions approved by the Board are listed separately)
- DISABILITY: In addition to the regularly scheduled
hearings and appeals, the Disability Committee received the Disability
Experience Report for the 3rd quarter of 2015. Staff provided a report to the
Committee with details of the eight disability benefit recipients who have not
submitted the required Annual Earnings Statement to date. Also discussed were
the disability case file triage process and the size of some recent case
files. This issue will be discussed in detail with physicians and experts
included during the November Disability Committee meeting.
- BENEFITS: The Committee reviewed and discussed the 3rd
Quarter 2015 Deferred Retirement Option Plan (DROP) Experience Report. The
Committee also was given a demonstration of the new DROP estimator that is
now available on the OP&F website. Staff also informed the Committee that
Optum Rx is transitioning their specialty dispensing pharmacy to the legacy
Catamaran BriovaRx. Effective Nov. 1, a small group of members will
transition to BriovaRx. Members will be moved in a phased-in approach over
the next nine months to BriovaRx specialty pharmacies.
- ADMINISTRATION/AUDIT: The Committee received and
discussed a presentation on the recently completed Compensation Study. Also
discussed were the salary and wages budget planning and employee health care
budget planning for 2016. OP&F’s new internal auditor, Caren Sparks,
provided the Committee with a status report on her audit schedule and
processes.
- FINANCE: The Committee received and discussed the
proposed 2016 Finance Department Budget and the proposed 2016-18 Capital
Budget.
- INVESTMENT: In addition to the monthly portfolio
update, the Board discussed several items requiring motions and votes. The
results of these motions are detailed in the next section of the Board
Report.
Motions: At its October 2015 meeting, the OP&F Board of Trustees voted on the following motions:
- At its October 2015 meeting, the OP&F Board of Trustees voted on the
following motions:
- Approved manager ratings for OP&F’s real estate managers as recommended
by The Townsend Group. Motion passed by unanimous vote (Investment
Committee).
- Approved Townsend’s recommendation to commit up to 50 million Euros to
PW Real Estate Fund III. Motion passed by unanimous vote (Investment
Committee).
- Approved staff’s and TorreyCove’s recommendation to commit up to $40
million to Harvest Partners VII. Motion passed by a vote of 8-1 (Investment
Committee).
- Approved staff’s recommended manager ratings for DFA, Franklin
Templeton, Pyramis Global International Small-Cap mandate and the PIMCO
fixed income mandate. Motion passed by unanimous vote (Investment
Committee).
- Approved staff’s request to waive OP&F’s Investment Manager Search
Policy with respect to OP&F’s search for a multi-strategy manager. Motion
passed by unanimous vote (Investment Committee).
- Approved the submission of the Actuarial Pension Valuation and the
Health Care Valuation as of Jan. 1, 2015 to the Ohio Retirement Study
Council, as presented by Buck Consultants. Motion passed by unanimous vote
(Full Board).
- Approved the Committee recommendations for the initial determination of
disability for the members as identified in the initial determination
hearings list presented to the Board on Oct. 21, 2015. Motion passed by
unanimous vote (Disability Committee).
- Approved the Committee recommendation for reconsideration for the
members identified in the reconsideration hearings list presented to the
Board on Oct. 21, 2015. Motion passed by unanimous vote (Disability
Committee).
- Approved the recommendation for the appeal hearing for the members
identified in the appeals hearings list presented to the Board on Oct. 21,
2015. Motion passed by unanimous vote (Disability Committee).
- Approved the Committee recommendation for Death Fund benefits for the
members identified. Motion passed by unanimous vote (Disability Committee).
- Approved the 2016 Member Services Budget to the Finance Committee for
review and approval. Motion passed by unanimous vote (Benefits Committee).
- Approved the 2016 budgets for the Administration Department, Business
and Technology Solutions Department and Trustees to the Finance Committee
for review and approval. Motion passed by unanimous vote
(Administration/Audit Committee).
- Authorized the expense for a bench in the Police and Fire Memorial Park
to honor Darryl Dever, OP&F’s long-time legislative consultant who passed
away last month. Motion passed by unanimous vote (Finance Committee).
Next Board of Trustees Meetings: November 17-18, 2015