Regular increases in the income of retired teachers would undo progress in fully funding OTRS, Legislature said | Government and politics
Historically, the OTRS has been severely underfunded as lawmakers have struggled for the past decade to put it and other pension plans on a more solid financial footing. As a result, none of the system’s retirees received a cost of living adjustment for more than a decade.
Green pointed out that lawmakers previously approved COLAs for retired educators every even year from 2000 to 2008, saying that a return to a similar pattern would have long-term implications for OTRS.
“On a case-by-case basis (COLAs) are costly and have a slight impact on our funding rate,” said Green. “If they become a pattern, we have to take that into account, and it reduces our (asset-liability) ratio significantly.”
Green said OTRS paid nearly 59,000 retirees totaling $ 1.3 billion in FY 2021. For comparison: the largest employer in the state, the US Department of Defense, has around 70,000 employees on its payroll.
The OTRS is the largest of the six state pension funds and, according to reports from Thursday’s interim study, the only one that is still well below full funding. At least two – for judges and police – are more than 100% funded.
The final part of the study turned into a critique of defined contribution plans, as imposed on the state’s second largest pension fund, the Oklahoma Public Employees Retirement System, in 2015.