The Ohio Public Employees Retirement System (OPERS) was established and exists solely for the purpose of providing retirement, disability and survivor benefits promised to Ohio’s public employees. OPERS is the largest public pension system in Ohio and the 12th largest public pension system in the nation. With a net asset base of $114.3 billion, OPERS serves approximately 1,184,000 members, including more than 216,000 retirees and beneficiaries.
The above numbers clearly demonstrate OPERS’ importance as an economic driver for the state of Ohio. As a result of its massive investment program, potential mismanagement, corruption or fraud related to the pension is of paramount concern to all stakeholders, including Ohio taxpayers.
In recent years, OPERS has slashed retirement benefits promised to workers and retirees and additional, deeper benefit cuts in the future have been proposed. As a result of promises broken, workers no longer trust pension officials to fulfill their fiduciary duty to manage the pension solely with their best interests in mind.
Worse still, earlier this year a forensic investigation of the State Teachers Retirement System of Ohio (STRS) commissioned by the Ohio Retired Teachers Association and conducted by a renowned independent expert in pensions selected by participants, former SEC attorney Edward Siedle , revealed widespread mismanagement of STRS investments and other profound concerns. The 126-page expert report included in its findings: STRS has long abandoned transparency; legislative oversight of the pension has utterly failed; Wall Street has been permitted to pocket lavish fees without scrutiny; investment costs and performance may have been misrepresented; and failure to monitor conflicts may have undermined the integrity of the investment process, as billions that could have been used to pay retirement benefits promised to teachers have been squandered. The STRS forensic report noted that legislative oversight of OPERS by the Ohio Retirement Study Council has also failed. The last fiduciary audit for the pension, which is statutorily mandated every ten years was three years late and was not performed by an independent auditor (as required under applicable law).
We believe that a forensic investigation of OPERS will reveal deficiencies which, if properly addressed, will improve the management and sustainability of the fund. Retired workers who are dependent upon the pension for their retirement security should have an independent expert of their own choosing, to review investment selection, advisory fees and expenses, disclosure practices, conflicts of interest involving vendors and potential violations of law. After all, it’s their retirement savings at risk.
The pension should welcome a second opinion by a qualified expert. All pension stakeholders—taxpayers and participants—can only benefit when transparency and accountability are enhanced.