Health Care Fund
The primary objective of the Health Care Fund is to secure health care coverage (a discretionary benefit) for eligible Traditional Pension and Combined Plan retirees. The assets of the Health Care Fund shall be invested with the objectives of preservation of capital and maintaining a reasonable solvency period as defined by the OPERS Board of Trustees from time to time.
The Board believes OPERS’ assets should be managed in a fashion that reflects OPERS’ unique liabilities, funding resources, and portfolio size, by incorporating accepted investment theory and reliable, empirical evidence.
Specifically, OPERS has adopted the following principles:
- Asset allocation is the key determinant of return and, therefore, commitments to asset allocation ranges will be maintained through a disciplined rebalancing program.
- Diversification, both by and within asset classes, is the primary risk control element.
- The pursuit of returns in excess of risk-free alternatives entails the distinct probability of disappointing results over very short periods of time and, therefore, the assets will be invested with a sufficient long-term perspective. However, the Board may review this policy and the asset allocation on an annual basis and adopt appropriate changes depending on the status of the Health Care plan and cost increases.
- The Health Care Plan may be invested in liquid securities in view of the greater need for liquidity and the shorter duration of the Health Care plan.
- Inflation protected securities (TIPS) may be included in the asset mix as a hedge against observed high inflation in health care costs.
- Passive alternatives (index funds) to actively managed portfolios are suitable investment strategies, especially in highly efficient markets.