Retirement updates

posted 11/24

November Board News


Retirement Board Reviews Methods to Monitor Funding Progress
During the November meeting of the State Teachers Retirement Board, Segal Consulting made a presentation on funding policy elements that could result in a more robust way to monitor the progress of the pension fund. Segal, the board’s actuarial consultant, described a funding policy as a roadmap for measuring the pension plan’s funded status and noted that public plan funding policies are gaining national attention.
The presentation included a funding policy overview based on best practices issued by the Government Finance Officers Association (GFOA) and guidance from other actuarial organizations. STRS Ohio’s current funding period — the length of time it is projected to take to pay off the system’s unfunded liabilities — is 29.5 years. Ohio’s public retirement systems are required by law to amortize any unfunded liabilities over a period of not more than 30 years. However, the GFOA recommends a more conservative standard of not more than 25 years.
Segal also reviewed additional reports and analysis the board could request to outline how the pension plan is measuring up to these standards. The board is expected to continue funding policy discussions in the months ahead.
Retirements Approved
The Retirement Board approved 219 active and 130 inactive members for service retirement benefits.
Other STRS Ohio News
Retirement Board Election Process Begins this Month
On Nov. 7, notices were sent to all STRS Ohio reporting employers and other interested parties about the upcoming Retirement Board election for one contributing member seat. In addition, election information is posted on the STRS Ohio website and is included in the fall newsletters. Individuals interested in running for a seat on the State Teachers Retirement Board can request petitions from STRS Ohio. The deadline for returning petitions is Feb. 27, 2015.
Satisfaction Survey Responses Reflect 96% Satisfaction Rating for First Quarter
During the first quarter of the fiscal year, nearly 1,900 members who met with a counselor completed a satisfaction survey, with 97% responding that the service met or exceeded their expectations. Of those members who met with a counselor, 66% provided a perfect 10 for overall service. Staff continues to be rated the highest in the areas of professionalism, courtesy and knowledge, with more than 70% providing a perfect 10 rating.
About 400 members who attended a Member Education program also completed satisfaction surveys for the quarter, with 93% stating that the program met or exceeded their expectations and 41% rating the program a perfect 10. More than 70% of respondents rated the Member Education staff a perfect 10 regarding professionalism, courtesy and knowledge.

posted 9/19

OEA Retirement Systems Update

Report to the OEA Board of Directors: September 2014

 Please distribute to other OEA members

 Report Touts Economic Benefits of Pensions

 A new report from the National Institute on Retirement Security (NIRS) details the positive economic impact of defined benefit pensions.  The report entitled Pensionomics 2014: Measuring the Economic Impact of DB Pension Expenditures finds that the benefits provided by state and local government pension plans have a sizable impact that ripples through every state and industry in the nation.

Specifically, the report finds that pension expenditures in the year 2012 nationwide:

had a total economic impact of more than $943 billion

  • Supported 6.2 million American jobs
  • Those jobs paid nearly $307 billion in labor income to American workers

The report also analyzes the economic impact of pensions in each state.  The findings in Ohio are dramatic:

State and local pension funds paid a total of $12.1 billion in benefits to Ohio residents in 2012.  Retiree expenditures from these benefits supported a total of $19.7 billion in economic output.

  • The average pension benefit received was $28,351 per year.  These are modest benefits provided to retired teachers, ESPs, safety personnel and other public servants.
  • For every dollar contributed by Ohio taxpayers to pensions over 30 years, $5.71 was paid out in benefits.  This reflects that employees contribute toward their pensions and investment earnings make up the majority of pension funding.

The information in the NIRS report is another powerful way to defend public pensions against attacks from those who wish to deny the earned benefits of public employees or profit from moving away from defined benefit plans.  More information is available at





posted 3/26

OEA Retirement Systems Update

Report to the OEA Board of Directors: March 2014

Please distribute to other OEA members

STRS Board Continues Funding Discussion

At its February meeting, the STRS Board reviewed several options to reduce the amortization period for the pension fund. Ohio law requires that state retirement systems amortize unfunded liabilities over a period of not more than 30 years. Since STRS currently has a funding period of 40.2 years, the system is required to submit a board-approved plan to the legislature to reduce the funding period to 30 years.

STRS submitted a letter outlining its plan on February 21, 2014.  The letter reviewed the significant impact that pension reform legislation had on the pension fund—reducing unfunded liabilities by over $15 billion and reducing the system’s funding period from infinity.  Due to the smoothing of investment returns over a four-year period, STRS also has a net $2.8 billion in unrecognized investment gains. STRS projects that if the current year investment returns hold until June 30, the valuation for the fiscal year ending June 30, 2014 will show about a four-year reduction in the amortization period.

The board is considering several options to reduce the amortization period. One option discussed by the board at its meetings in January and February was directing all or part of the one percent of employer contributions that now help fund the STRS Ohio Health Care Fund into the pension fund. Directing the full one percent employer contribution to the pension fund beginning July 1, 2014 is projected to reduce the amortization period by about four years. STRS Ohio’s actuary projects this move, coupled with the smoothed gains from strong investment returns, would result in an amortization period of about 32 years and put STRS Ohio on track to reach a 30-year amortization period in the time frame that was projected when pension reform legislation was passed in 2012. Such a move would shorten the projected life of the Health Care Fund to about 20 years.  However, the board has authority to direct the one percent back to the Health Care Fund in the future, and to make “catch-up” payments to the Health Care Fund once the financial condition of the pension fund improves.

OEA Vice President Scott DiMauro, who also serves as Co-Chair of the Healthcare and Pension Advocates (HPA) coalition, addressed the STRS Board to reiterate stakeholder support for the changes adopted through pension reform legislation and for moving the 1% contribution to health care into the pension fund to accelerate paying down the unfunded liabilities of the pension system.  HPA does not support further changes to pension benefits that would impact active teachers or retirees.

Hill and Price Unopposed for STRS Board

Mark Hill and Dale Price, OEA’s endorsed candidates for the STRS Board, were the only candidates to submit nominating petitions and qualify for the ballot for the Board election.  Because there are only two candidates on the ballot for two seats on the Board, no election will be held.  Hill and Price will officially begin their second terms in September.  OEA’s officers would like to thank OEA local leaders and members who aided in the signature gathering process and extend congratulations to the candidates.

SERS Health Care and Investment Update

At its February meeting, the SERS Board received an update on investment performance from Summit Strategies Group, their investment consultant firm.  For the calendar year of 2013, the fund had a 16.09% return on investments and outperformed its benchmark by 0.77%.  The market value of assets increased by approximately $1.2 billion over the 12 month period.  For the fiscal year to date (six months), investments were up 10.61%.

OPERS Posts Large Return for 2013

OPERS earned 13.9% return on its investments in calendar year 2013, well above the actuarial assumption of 8%.  At the end of the year, total assets were $88.6 billion including over $13 billion in the OPERS Health Care Fund.

The unaudited results indicate that the OPERS Defined Benefit fund returned 14.38% and the Health Care Fund, which is investment more conservatively, returned 11.37%.