Cincinnati Pension System Funding Level Remains Good, But Flat
Cincinnati's retirement system was better funded last year when compared to just five years ago.
The improved results largely stem from a collaborative settlement agreement negotiated with the oversight of a federal judge in 2014, and signed by all the parties in 2015. The deal was reached to help keep the system solvent in the future.
The settlement resulted in the city putting a large amount of cash into the pension system. It is required to put a set amount of money into the plan each year.
Current retirees agreed to reduced cost of living adjustments and future retirees will also see changes to their retirement benefits.
But retirement system executive director Paula Tilsley said there are still challenges ahead.
"Our population continues to kind of stay stable, which depending on which way you look, at it can be good news or bad news," Tilsley said. "The bad news for us is that we are still upside down and will likely be upside down for the future, meaning we have more retirees that we do actives."
And more retirees in the system than active workers making contributions affects the system case flow.
"Since I have been here, our biggest challenge is we're paying out more money for pension benefits than is coming in from employer contributions and from investment returns," Tilsley said. "So when we hit a soft market, it takes us twice as long to earn our way back to where we were because we're not putting money in the plan."
Officials have to take investment funds and use them to pay retiree benefits.
As of Dec. 31, 2016, the pension system was 76.9 percent funded. That compares to 77.1 percent at the end of 2015. Back in 2012, it was only about 61 percent funded.