OPEB FAQ's

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Other Postemployment Benefits or OPEB represents a large liability on the balance sheet of many companies across the United States. As various stakeholders try to understand it, we wanted to answer many of the frequently asked questions to allow you to make better decision on your program.

Future Liabilities & Expenses

While your projected future Total OPEB Liability may appear daunting, a more relevant metric is the relation to your budget and your ability to pay. The following graph depicts a sample OPEB Plan and shows the relation of the Total OPEB Liability to the annual budget (assuming your budget increases 3.00% per year). As you can see, while the liability increases significantly, it only increases slightly as a percent of the budget.

The above graph is based on a Total OPEB Liability that is projected to increase from $15 million to $65 million between 2018 & 2056. The Total OPEB Liability as a percentage of budget is projected to increase from 72% to 98% between 2018 & 2056.

Similarly, while benefit payments (e.g. the portion of premiums that you pay for your retirees) will likely increase significantly in coming years, the increase in costs appears far more manageable when seen as a percentage of the annual budget.

The above graph is based on benefit payments (“Employer share of costs”) that are projected to increase from $700 thousand to $3 million between 2018 & 2056. Benefit payments as a percent of budget are projected to increase from 3.5% to 4.9% between 2018 & 2056.

If you have any questions or would like more information, please contact your Odyssey Advisors representative.

Parker Elmore, ASA, EA, MAAA, FCA is a Consulting Actuary in both the Las Vegas & Connecticut offices of Odyssey.  Contact him at pelmore@odysseyadvisors.com.

Download Public Sector OPEB FAQ's