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STRS Ohio March Board News

Solvency Period for Health Care Fund Drops to 15 Years; Board Exploring Options to Preserve Plan

At the March meeting of the State Teachers Retirement Board, Paul Snyder, deputy executive director — Finance and chief financial officer, presented results of Segal Consulting’s annual actuarial valuation of the Health Care Fund. The report shows the funded ratio for the Health Care Fund dropped to 63% from 74% last year. This means STRS Ohio has 63 cents on hand for every dollar needed to continue the current plan indefinitely. The valuation projects the Health Care Fund to remain solvent until 2031, a decrease of four years from last year’s valuation — and a decrease of 33 years from the 2014 valuation. The projected 15-year solvency period is an estimate ­— in actuarial terms, there is a 50% confidence level that the Health Care Fund has at least 15 years of solvency. Depending on the strength of financial markets, the amount of health care claims and whether additional funding is avai…
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STRS Ohio February Board News

Board Reviews Recommendations From Experience Study, Weighs Impact on Financial Condition At the February meeting of the State Teachers Retirement Board, staff summarized the results of the experience study recently completed by the board’s actuarial consultant, Segal Consulting. An experience study is completed every five years to help the system make accurate economic and demographic assumptions used to measure the financial condition of the pension fund. The economic assumptions include the rates of inflation, salary increases, overall payroll growth and the investment return on assets. Demographic assumptions include the number of retirements, disability inceptions, withdrawals from the system and deaths among active members and benefit recipients.

The results of the study showed that STRS Ohio should consider adjustments in several key areas that will have an overall negative impact on the system’s funding status. Segal’s recommendations included: lowering STRS Ohio’s investment …

STRS Ohio January Board News

Study Indicates Need for Benefit Plan Design Changes to Meet State Funding Requirements During its 2017 education and planning meeting, the State Teachers Retirement Board received the results of actuarial consultant Segal Consulting’s five-year experience study. The study compares the system’s economic and demographic assumptions to STRS Ohio’s actual experience from the past five years. The study results led Segal to recommend several changes to STRS Ohio’s assumptions. These changes are projected to significantly increase STRS Ohio’s total accrued liabilities and extend STRS Ohio’s funding period well beyond the state of Ohio’s 30-year funding requirement. The pension fund would then be required to present a plan to reduce its funding period to 30 years or less. The experience review measures economic assumptions (inflation, salary increases, overall payroll growth and investment return on assets) and demographic assumptions (retirements, disability inceptions, withdrawals and the …

December Board News

(The text below is reprinted from the news release by STRS on December 16, 2016)
Preliminary Results of Five-Year Experience Review Indicate Possible Need for Benefit Plan Design Changes

At the December meeting of the State Teachers Retirement Board, actuarial consultant Segal Consulting presented the preliminary results of the experience study it is conducting for STRS Ohio. An experience study is typically completed every five years to compare the system’s economic and demographic assumptions to the actual experience. The economic assumptions include the rate of inflation, salary increases, overall payroll growth and the investment return on assets. Demographic measures include retirements, disability inceptions, withdrawals and the number of deaths among active members and benefit recipients. Segal reviews past experience and tries to determine trends to help set long-term assumptions for the future. Segal’s role is to make appropriate “best estimate” recommendations to the board f…

November Board News

(The text below is reprinted from the news release by STRS) Board Reviews Pension Funding Status and Weighs Next Steps
At the November meeting of the State Teachers Retirement Board, STRS Ohio staff provided a recap of the annual pension valuation results and related funding data. The board received the pension fund’s annual valuation report in October that points to funding challenges ahead. The report showed STRS Ohio’s funding period — the amount of time needed to pay off the system’s unfunded liability — stands at 26.6 years, and the funded ratio is 69.6%. The pension fund has a net $2.8 billion in deferred investment losses that will be recognized over the next three years because investment returns were below the assumed return of 7.75% during the past two fiscal years. The valuation report also showed that the fund is seeing slower than anticipated growth in covered payroll and that benefit recipients are living longer and collecting benefits for longer than expected.

The Retir…

October Board News

(The text below is reprinted from the news release by STRS) Annual Pension Valuation Shows Modest Improvement, But Indicates Challenges Ahead During the October meeting of the State Teachers Retirement Board, actuarial consultant Segal Consulting presented its July 1, 2016, report of the annual pension valuation results. The valuation report measures two sets of assumptions — demographic and economic — against the retirement system’s actual experience from the past year. Demographic measures include retirements, disability inceptions, withdrawals and mortality (the number of deaths among active members and benefit recipients). Economic measures include the rate of inflation, return on assets, salary increases and payroll growth. This year’s report shows the funding period — the amount of time needed to pay off the system’s unfunded liability — decreased to 26.6 years from 28.4 years, and the funded ratio increased slightly to 69.6% from 69.3%. During the presentation, Segal shared tha…

September Board News

Retirement Board Continues Detailed Review of Health Care Program
The State Teachers Retirement Board dedicated a significant portion of its September meeting to the STRS Ohio Health Care Program. Earlier this year, the board identified health care funding challenges as a key area of focus for 2016–17. The presentations at the September meeting included the results of member and retiree surveys, a report on how other states provide health care coverage for retired teachers and how STRS Ohio’s plan compares to the market. STRS Ohio’s health care program covers nearly 130,000 individuals and paid $673 million in benefits during fiscal year 2015. The Health Care Fund is valued on a calendar year basis, and as of Jan. 1, 2016, its balance was $3.26 billion; however, there is currently no dedicated source of funds for the health care program. STRS Ohio no longer allocates 1% of the 14% employer contribution to the Health Care Fund because these funds are needed to strengthen the pension fu…