- Reducing STRS Ohio’s investment return assumption from its current rate of 7.75%. Using various studies and factors, Segal indicated a possible return range of 6.95% to 7.45% before settling on its recommendation of a 7.00% investment return assumption. Segal indicates this change would add as much as $8.8 billion to STRS Ohio’s accrued liabilities.
- Adopting mortality tables that account for increasing lifespans among benefit recipients. This change would recognize that benefit recipients are living longer and collecting benefits for longer than expected and this trend is expected to continue. Segal indicated this change to the mortality tables would add about $4.1 billion to STRS Ohio’s accrued liabilities.
- Reducing the inflation assumption to 2.50% from the current 2.75%.
In July 2014, the board discontinued the 1% employer allocation to the Health Care Fund in an effort to strengthen the financial condition of the pension fund. The projected life of the Health Care Fund now measures at about 20 years; however, depending on the strength of the financial markets, the amount of health care claims and whether additional funding is available, there is a chance the life of the fund could be 10 years or less. Projections show that the opportunity to designate funding for health care from employer contributions is unlikely in the next 20 years.