IS 19-029 Oklahoma Police Pension & Retirement System November - PowerPoint PPT Presentation

Information for House Interim Study IS 19-029 Oklahoma Police Pension & Retirement System November 15, 2019

OPPRS 2019 Update • Assets of $2.619 billion at June 30, 2019 • Increase in net position of $55.4 million for fiscal 2019 • The System achieved a net return of 4.24% for fiscal 2019 • Actuarial funded status of 102.5% at June 30, 2019 • GASB 67 funded status of 100.2%, at June 30, 2019 • The Board continues to follow a risk averse investment strategy due to the strong funded positon. However, the System is implementing changes to capture more of the upside. The Board is also looking at making changes to reduce overall investment fees as well. • Since inception through June 30, 2019, the OPPRS investment portfolio has produced an annualized return of 8.24%, in excess of the 7.5% actuarial assumed rate of return. Oklahoma Police Pension & Retirement System 2

Structure of the Agency and Plan • 11 FTE positions (12 authorized) • 13 member Board, 6 are current police officers from designated state regions, 1 is a retired officer from anywhere within the state, and 6 are appointees or designees • The Plan is a traditional 20 year and out plan, with at least 10 years of service required to vest. Benefits no longer accrue after 30 years of service or 75% of final average salary. • Retiring members use a 2.5% multiplier based on the highest salaried 30 consecutive months of the last 60 months of credited service • The Plan has two deferred options, the Forward DOP and the Back DOP. Entry in the Forward DOP plan locks a member into a 5 year maximum future retirement date, while the Back DOP can be elected anytime after 20 years of service, with a maximum participation period of 5 years. • The Plan offers a payout provision to members who elect to leave their DOP balance in the Plan at retirement. The Plan does not guarantee a minimum rate of return. The member participates in the actual performance of the portfolio with an added administrative fee. Oklahoma Police Pension & Retirement System 3

Funded Ratio (Actuarial) • 120.00% Change in the actuarial funded ratio over the last 10 years (at June 30): 102.80% 102.50% 101.80% 98.70% 98.20% 100.00% 93.00% 94.60% 90.20% 89.30% 80.00% 74.90% 60.00% 40.00% 20.00% 0.00% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Funded Ratio Oklahoma Police Pension & Retirement System 4

Actuarial Results • Actuarial accrued liability at July 1, 2019: $2.612 billion • Actuarial value of assets at July 1, 2019: $2.677 billion • Unfunded Actuarial Accrued Liability (UAAL) at July 1, 2019: ($64.8 million) • Change in the UAAL over the last 10 years (at June 30): 700,000,000 587,247,000 600,000,000 500,000,000 400,000,000 300,000,000 228,591,000 200,315,000 200,000,000 137,274,000 118,500,000 100,000,000 39,801,000 31,408,000 - (44,278,000) (100,000,000) (70,250,000)(64,782,000) (200,000,000) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Unfunded Actuarial Accrued Liability Oklahoma Police Pension & Retirement System 5

Historical Returns • System returns over the last 12 years (at June 30): 8.24% return since inception 25.00 25.00 20.00 18.30 20.00 18.30 14.99 15.00 14.99 12.50 11.14 15.00 11.70 12.50 11.14 11.70 10.00 8.34 10.00 4.24 5.00 3.38 5.00 3.38 0.50 0.50 0.00 0.00 (0.61) (2.40) -5.00 (0.61) (2.40) -5.00 -10.00 -10.00 -15.00 -15.00 (16.40) -20.00 (16.40) -20.00 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 OPPRS Historical Returns OPPRS Historical Returns Oklahoma Police Pension & Retirement System 6

System Contributions • The System employer contribution rate is 13.00% ($42.2 million contributed in 2019) – The employer contribution rate has been in effect since 1996 • The System members contribute 8.00% of covered pay ($26.2 million contributed in 2019) – The employee contribution rate has been effective since 1983 • The System receives 14.00% of the insurance premium tax ($39.6 million in 2019) – This rate has been in effect since July 1, 2009 • Total contributions for the last 10 years (at June 30): 120,000,000 107,886,000 103,910,000 97,086,000 98,235,000 95,618,000 100,000,000 87,575,000 89,007,000 81,101,000 74,158,000 75,980,000 80,000,000 60,000,000 40,000,000 20,000,000 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 OPPRS Contributions Oklahoma Police Pension & Retirement System 7

OPPRS Employers & Membership • 146 Employers (143 municipalities, 3 state agencies – ABLE, OSBI, OBNDD) at June 30, 2019 • 9,704 members at June 30, 2019 (a net increase of 256 or 2.7% over 2018) • 3,815 members receiving benefit payments at June 30, 2019 • Total monthly benefits paid in fiscal 2019 - $119,964,000 • Total deferred option benefits paid in fiscal 2019 - $33,645,000 • Refunds paid for non-vested withdrawals in fiscal 2019 - $1,877,000 • Change in membership over the last 7 years: 9800 9704 9600 9448 9400 9220 9200 9049 9000 8802 8833 8800 8580 8600 8400 8200 8000 2013 2014 2015 2016 2017 2018 2019 OPPRS Membership Oklahoma Police Pension & Retirement System 8

Changes in Net Position • Change in Net Position over the last 10 years (at June 30): 3,000,000 2,618,857 2,563,446 3,000,000 2,500,000 2,395,381 2,264,996 2,238,466 2,201,671 2,395,381 2,500,000 2,264,996 1,975,665 2,238,466 2,201,671 2,000,000 1,809,581 1,783,804 1,975,665 2,000,000 1,809,581 1,783,804 1,557,052 1,717,820 1,500,000 1,557,052 1,431,971 1,500,000 1,000,000 1,000,000 500,000 500,000 - - 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 OPPRS Net Position (in 000's) OPPRS Net Position (in 000's) Oklahoma Police Pension & Retirement System 9

POLICE PENSION RETIREES AFFECTS ON THE OKLAHOMA ECONOMY TOTAL BENEFITS PAID IN FY 19 $155,486,000 Retirees that live in Oklahoma $141,492,260 Retirees that live out of State $13,993,740 91% OF POLICE PENSION RETIREES RESIDE IN OKLAHOMA Oklahoma Police Pension & Retirement System 10

OPPRS Retiree Average Monthly Benefit & Average Insurance Costs 3,000 2,783 2,783 2,500 2,783 2,000 1,500 Monthly Benefit Average Monthly Insurance Costs 1,000 1,102 500 801 467 - Retiree Retiree & Spouse Retiree & Family Oklahoma Police Pension & Retirement System 11

POLICE PENSION’S GOALS AND OBJECTIVES • TO HELP OKLAHOMA’S PENSION SYSTEMS BECOME A TOP TEN STATE • TO MAINTAIN 100% PLUS FUNDED LEVELS • CONTINUE TO COVER ACTUARIAL CONTRIBUTION REQUIREMENTS TO MAINTAIN FUNDING • ADJUST INVESTMENT OBJECTIVES TO INCREASE RETURNS WITHOUT INCREASING RISK • CONTINUE GOOD COMMUNICATION AND EDUCATION WITH OUR MEMBERSHIP Oklahoma Police Pension & Retirement System 12