Pension reforms implemented earlier this year have reduced the state’s pension debt by $5.5 billion. This is the largest single-year debt reduction in Oklahoma history, lawmakers were informed today.
Thanks to recently enacted reforms, the unfunded liability of all the state pension plans has fallen from over $16 billion to $10.6 billion, officials announced.
“The reforms are making a meaningful difference. At a time when nations in Europe as well as other states in our country struggle to even address their structural debt problems, Oklahoma’s financial condition is already exhibiting remarkable improvement,” said state Rep. Randy McDaniel, an Oklahoma City Republican who chairs the House Pension Oversight Committee.
“This is good news for all Oklahomans,” said state Rep. Todd Russ, a Cordell Republican who is vice-chair of the House Pension Oversight Committee. “Workers depending on state pension systems benefit from greater long-term security, and all working families are protected from the tax increases that might have otherwise occurred.”
In addition to reducing debt, the state pension plans are experiencing growth in asset levels. The state’s major pension plans now have $21.5 billion in assets, an increase of over $3.5 billion in the past year due to healthy investment returns.
The combination of a reduced unfunded liability and asset growth has improved the integrated ratio of Oklahoma state pensions from 56 percent to 67 percent, McDaniel noted.
“The reforms we approved this year are working exceedingly well. Our debts are declining significantly while our assets are increasing,” McDaniel said. “Although more can be done to solidify our pension system, this has been an exceptional year for improving the financial stability of our pension plans.”
The reforms enacted this year included House Bill 2132, which requires a funding source before cost-of-living adjustments (COLAs) can be granted, and several acts that increased the retirement age for future employees.