Skip to main content

STRS Ohio Presents Pension Reform Proposal to House Subcommittee

Image
(FROM the STRS Ohio eUPDATE)

On Aug. 8, STRS Ohio executive director Mike Nehf told members of the House Health and Aging Subcommittee on Retirement and Pensions that the pension reform plan unanimously passed by the State Teachers Retirement Board in April is necessary to preserve the pension fund and that the board's action was taken to uphold its fiduciary duty to the members and retirees of the system. The House subcommittee has been holding hearings on pension legislation since mid-July and expects to take action on bills for all five Ohio retirement systems in September. 

Mr. Nehf's presentation acknowledged that STRS Ohio's pension proposal is supported by the Healthcare and Pension Advocates for STRS — a coalition that is comprised of groups of active members, retirees and employers. The STRS Ohio plan increases age and service requirements for retirement; calculates pensions on a lower, fixed formula; increases the period for determining final average salary; increases member contributions to the system; reduces the cost-of-living adjustment (COLA); defers the COLA for future retirees; and calls for no COLA to be added in fiscal year 2014.

The Ohio Senate passed pension reform bills in May, but the House chose to wait for the results of an independent study — commissioned by the Ohio Retirement Study Council (ORSC) — of the retirement systems' pension plan design changes. That report was presented to the ORSC on July 11 and recommended the adoption of the systems' plans. Mr. Nehf referred to the study in his remarks to the House subcommittee, noting that the report stated, "Although (STRS Ohio's) proposed 30-year plan does not quite satisfy the objectives of fully funding the unfunded actuarial liability over no longer than 30 years initially, health care benefits are expected to remain solvent indefinitely and the retirement system is projected to meet the 30-year requirement by 2016 and be 100% funded by 2041." 

Earlier in the hearing, Senate President Tom Niehaus (R-New Richmond) testified on behalf of himself and his legislative co-sponsor, Minority Leader Eric Kearney (D-Cincinnati) in support of the bills, saying, "I am proud that all five bills passed the Senate with overwhelming bipartisan support." Niehaus also recognized that the changes contained in the pension reform plans are not popular, but necessary. "I applaud the members of these plans for recognizing the economic necessity of accepting difficult choices in order to preserve their pensions and the opportunity to receive health care benefits," said Niehaus. 

Following his presentation, Mr. Nehf and senior members of his staff responded to several questions from subcommittee members that covered a wide range of topics, including investment strategies, comparisons between the current reform plan versus earlier proposals and the impact that the federal health care laws will have on the system's health care plan. 

Additional hearings are scheduled in August and early September. STRS Ohio will continue to use its website, newsletters and eUPDATE email news service to keep members and stakeholders informed about the progress of pension reform legislation.
By

Popular posts from this blog

March Board News

By
(The text below is reprinted from the news release by STRS)   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,
Read more

April Board News

By
(The text below is reprinted from the news release by STRS on 4/20/12.) Retirement Board Amends Plan to Strengthen the Financial Condition of the Pension Fund; Pension Design and Contribution Changes Approved The State Teachers Retirement Board voted to amend its plan to further strengthen the financial condition of the pension fund at its April meeting and hopes to see legislative action on its pension reform plan in the coming months. The board’s plan is projected to save about $13.3 billion in accrued liabilities, maintains a 1% employer contribution to STRS Ohio’s health care fund and does not include any increase in employer contributions. The board vote followed several months of discussion and study — including conducting an asset-liability study and a three-year actuarial experience review. All changes contained in the plan require legislative action by the Ohio General Assembly and the governor to be implemented. Components of the plan include: ·          Increase in
Read more

May Board News

By
(The text below is reprinted from the news release by STRS on 5/18/12.) Ohio Senate Passes Pension Reform Legislation; STRS Ohio Hopeful That House of Representatives Will Take Action Executive Director Michael Nehf reported at the May Retirement Board meeting that the Ohio Senate passed STRS Ohio’s long-awaited pension reform bill (Sub. Senate Bill 342) on May 16 by a 31–2 vote, paving the way for the House to hopefully take similar action yet this year. Retirement Board Chair Jim McGreevy expressed appreciation to the Senate and to the bill’s co-sponsors, Senate President Tom Niehaus (R-New Richmond) and Senate Minority Leader Eric Kearney (D-Cincinnati) for taking action on pension reform. McGreevy also complimented STRS Ohio stakeholders for their work in support of the bill. On May 8, the co-sponsors introduced four pension reform bills that were assigned to the Senate Insurance, Commerce and Labor Committee. In testimony that afternoon, Nehf told Committee members that the
Read more