(The text below is reprinted from the news release by STRS on 9/12/11.) Earlier this month, the Buckeye Institute issued a misleading report entitled, "Taxpayers on the Hook: Taxpayer Contribution Rates for Ohio Government Pensions Outpace National Averages." The report claims STRS Ohio's 14% employer contribution rate is the ninth highest rate out of 34 states with similar teacher retirement programs. STRS Ohio employers do not contribute to Social Security by state law, making the STRS Ohio pension the only source of retirement income for Ohio's educators. In reality, STRS Ohio's employer contribution rate is below the national average when you factor in the Social Security contribution rate of 6.2% that 22 of those states make on behalf of their public educators. The report only listed the amount those states contribute to the state retirement system and failed to include the additional amount that is contributed to the Social Security program. | ||||||||||||||||||||||||
A more fair and accurate comparison would have noted that when the Social Security contribution is factored in, STRS Ohio's 14% employer contribution rate ranks 20th out of the 34 states in the report. Among the 12 states that do not participate in Social Security, STRS Ohio's rate ranks right in the middle: | ||||||||||||||||||||||||
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Of the remaining 22 states that contribute to both a public retirement system and Social Security on behalf of their public educators, 18 of those states contribute more than 14% in combined state retirement contributions and Social Security contributions. | ||||||||||||||||||||||||
The Buckeye Institute report suggests that 401(k)-style retirement plans are a better alternative for Ohio's public employees, but study after study shows that individuals enrolled in these plans are ill-prepared for retirement, as untrained, individual investors earn a significantly lower return than the professional money managers at public pension funds like STRS Ohio. It's clear that defined benefit plans offer a greater retirement benefit at a lower cost. | ||||||||||||||||||||||||
These continued and unwarranted attacks on Ohio's public pension funds and their defined benefit plans are sure to continue until the Ohio Legislature takes action on pension reform proposals that are currently on hold. Defined benefit pensions give members a retirement they can count on and stoke — rather than drain — Ohio's struggling economy. STRS Ohio paid more than $5.5 billion in benefits during fiscal year 2010, with much of that money staying right here in Ohio, being spent on goods and services throughout the state — and that's something all Ohioans should be thankful for. |
The text below is reprinted from the news release by STRS on 10/18/2013. You'll note the pension funding ratio improved to 66% but is still well below where it needs to be even after strong recent market returns and pension changes. Teachers don't be surprised if additional future changes in the form of benefit reductions of some form are required. --- Annual Actuarial Valuation Shows Improvement in STRS Ohio Funding; Consultant Provides Guidance on Funding Policy At its October meeting, the State Teachers Retirement Board received a report of the annual pension valuation results from its actuarial consultant, Segal Consulting. The report provides a “snapshot” of the actuarial position of the retirement fund as of July 1, 2013. This is the first valuation completed using the new benefit structure resulting from the passage of pension reform legislation last fall. Segal’s report this year shows the funding period for the pension fund decrea...