Other Post-Employment Benefits (OPEB)

What Are Other Post-Employment Benefits?


Other Post-Employment Benefits (OPEB) include non-pension benefits provided to public sector employees after they retire. These benefits often include healthcare coverage, life insurance, and other welfare programs to support retirees. Unlike pension plans, which focus on income replacement, OPEB addresses additional needs that arise in retirement, particularly in the realm of health and well-being. Providing OPEB is a crucial aspect of public sector employment packages, aiming to attract and retain qualified personnel by offering comprehensive support beyond basic retirement income.

Why Do Other Post-Employment Benefits Matter?

Most governments have very little money set aside to pay promised OPEB benefits because they follow a pay-as-you-go approach, paying an amount each year equal to the benefits distributed or claimed in that year. But this does not negate the fact that each year, employees earn these benefits, and a corresponding liability is created. The pay-as-you-go approach pushes current compensation costs and liabilities onto future taxpayers. To promote accountability and truly balance their budgets, governments should contribute the full amount of benefits that employees have earned to their OPEB plans each year. While states do set aside more money for their pension plans, it is still not enough to finance pension benefits after employees are no longer working.

Free OPEB Database

To help shine a light on this issue, we created an OPEB database that allows citizens and government employees to explore the funding status and more information about their state and local benefit plans.