Columbus, Ohio—Ohio's five retirement systems sent a joint letter to Governor Taft, Senate President Doug White and Speaker of the House Larry Householder, in opposition to two provisions in House Bill 227 (H.B. 227). These provisions could have a negative impact on 1.5 million future and current retirees in the Ohio systems, which have combined assets totaling over $115 billion.

The first provision of H.B. 227 requires that 70% of investment trades and 50% of externally managed assets go to managers with a significant presence in Ohio. Restricting the retirement boards' investment authority with the "buy Ohio" provision could cost an estimated $180 million needed to finance retirement and health care benefits for future and current retired public employees.

The second provision of H.B. 227 gives the state treasurer super-authority over the management and administration of the systems and their investments. This would disrupt the checks and balances that exist in the current board structure by concentrating too much power with one person, especially for the investment of retirement funds. Furthermore, empowering the state's treasurer with these appointment responsibilities impedes board members' fiduciary duty. The retirement systems are created in statute to have the independence they need to serve in the best interest of their members, where investment decision-making is appropriately removed from political considerations. Ohio has been recognized by pension benchmark analysts as having some of the most fiscally sound and financially responsible systems in the country.

The board chairpersons also point out that these provisions could threaten the systems' qualified status as "trusts" under Internal Revenue Code, which provides the tax-deferred status of members' contributions until benefits are paid out to them upon retirement. The Ohio Retirement Study Council made this point in it rejection of these two provisions of H.B. 227.

OP&F is one of five state pension funds in Ohio, with assets over $8 billion. Created in 1965 as a result of an act passed by the Ohio General Assembly, OP&F is a multi-employer pension fund serving over 50,000 members.

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Contact: Dave Graham (614) 628-8396, dgraham@op-f.org