Historical Analysis

Highlights of Ohio Police and Fire (OP&F) assets, liabilities, and other important funding metrics over the last two decades.

Funding Status

The funded ratio is calculated by dividing the value of plan assets by liabilities. When “Actuarial Value” is selected the actuarially smoothed assets are used. When “Market Value” is selected the market value of those assets are used. The difference between plan assets and liabilities is the unfunded accrued liability (UAL). Again, when “Actuarial Value” is selected the actuarially smoothed assets are used. When “Market Value” is selected the market value of those assets are used.

Unfunded Accrued Liability (Actuarial Value)Funded Ratio (Actuarial Value)$0.0$2.0 B$4.0 B$6.0 B$8.0 B$10 B0%20%40%60%80%100%200020022004200620082010201220142016201820202022

This chart also shows the difference between plan assets and liabilities–looking at the difference between those assets and liabilities (UAL). When “Actuarial Value” is selected the actuarially smoothed assets are used. When “Market Value” is selected the market value of those assets are used.

Actuarial Accrued Liability(Actuarial) Value of Assets$0.0$5.0 B$10 B$15 B$20 B200020022004200620082010201220142016201820202022

Pension Debt Drivers

What is driving OP&F Debt? (2001 to 2021)

$0 B$2 B$4 B$6 B$8 B
Investment Performance
Negative Amortization
Other
Changes to Actuarial Methods & Assumptions
Benefit Changes
Deviations from Demographics Assumptions
Net Change to Unfunded Liability
 $4.48 B $2.96 B $1.00 B −$0.93 B −$0.81 B −$0.28 B $6.41 B
  • Investment Performance below assumption has added $4.479 billion to unfunded liabilities.
  • Negative Amortization has resulted in interest on OP&F debt exceeding the actual debt payments (negative amortization), adding $2.958 billion in unfunded liabilities.
  • Other unclassified changes to OP&F over the last several decades have reduced unfunded liabilities by $1 billion.
  • Changes to Actuarial Methods & Assumptions reduced recognized unfunded liabilities by $0.925 billion.
  • Benefit Changes reduced unfunded liabilities by $0.815 billion.
  • Deviations from Demographics Assumptions reduced unfunded liabilities by $0.284 billion.
  • Net Change, from 2001 to 2022, unfunded liabilities increased by $6.414 billion.

Unpaid Interest

Unfunded Liabilities from Other SourcesUnpaid Interest on Unfunded Liabilities$0.0$2.0 B$4.0 B$6.0 B 200020022004200620082010201220142016201820202022

Amortization Payments

Amortization ContributionsInterest on DebtNet Amortization2000200120022003200420052006200720082009201020112012201320142015201620172018201920202021−$400M−$200M$0$200M$400M

Assets & Returns

Investment Returns

The chart below compares assumed returns with market, actuarial, and geometric rolling returns.

Market ReturnAssumed Return5-Year Geometric Rolling Return−20%−10%0%10%20%20022004200620082010201220142016201820202022

Asset Allocation

  • Fixed Income: Government securities, corporate bonds, mortgage-backed securities, asset backed securities, etc.
  • Public Equities: Publicly reported and traded stocks.
  • Private Equity: Investments in funds managed by private firms such as Blackrock, StateStreet, and The Vanguard Group.
  • Commodities: Hedge funds, commodities, and other investments.
  • Real Estate: Investments in REITs and other real estate funds.
  • Cash: Cash and cash equivalents.
0%20%40%60%80%100% 200220042006200820102012201420162018202020222023 undefined

Return Probability

The boxes below represent the probability that OP&F will hit a given assumed rate of return based on 10,000 simulations of various capital market assumptions, in addition to plan assumptions and historical data.

%
Plan Assumptions: 59%
Historical: 52%
Horizon20: 33%
BlackRock: 29%
Horizon10: 25%
BNY Mellon: 16%
JP Morgan: 10%
Research Affiliates: 4%
0%2%4%6%8%10%12%14%16%18%% changePlan AssumptionsHistoricalHorizon20BlackRockHorizon10BNY MellonJP MorganResearch Affiliates7.5%