Cincinnati’s pension system still has a large unfunded liability, but the future outlook has improved.
Actuaries from the firm Cheiron presented the 2024 annual report to the system’s Board of Trustees last week. Janet Cranna says if investment returns continue at the current pace, the pension will be fully funded in 2061.
"You had a great return on market value this year: the market value of assets earned 9.73% this year, which is greater than the assumption of 7.5%," Cranna said.
The five-year average of returns is just over 7%, thanks to losses in 2022.
"It highlights just exactly how much investment returns drive the health of the system," said Cheiron's Kevin Woodrich. "It's the single top thing from year to year that's driving where the plan is currently and where it's headed, and it can change with just one single year."
Officials say it’s too soon to determine the impact of tariffs on the fund’s investment returns.
The current unfunded liability is $846 million (an increase from 2023), and the fund is now 68.3% funded (a decrease from 2023).
The pension fund reached a crisis point about 12 years ago with only 61% of the system funded. A one-time transfer of funds from the health benefits fund in 2015 boosted that to 77%, but it's declined nearly every year since then. A federally mandated settlement agreement requires the city to put no less than 16.25% of active salaries into the fund each year. That's no longer enough to reach solvency by 2045, also a requirement of the agreement.
Council approved increases for the past two city budgets, contributing 17% in fiscal year 2024 and 17.75% in fiscal year 2025 — that's still not enough to fully fund the pension by 2045.
Payments into the retirement fund come from three sources:
- Contributions from active employees (9% of salary)
- Contributions from employer (minimum 16.25% of active salaries)
- Investment income
The retirement system Board will ask City Council to increase the city’s contribution again this year in order to reduce the unfunded liability and reach full funding more quickly.
City Manager Sheryl Long and Mayor Aftab Pureval are expected to release the first draft of the fiscal year 2026 budget in mid-May. City Council has until the end of June to approve a final version.
The "liability" comes from retirees collecting benefits from the pension fund. This fund does not include the Fire Department or Police Department. As of the end of 2024, there were:
- About 2,900 active full-time employees
- About 1,400 active part-time employees
- About 4,100 former employees now collecting benefits
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