Newsletters
Retirement Plan Reselection Period Nears for Eligible Members
Beginning in early 2010, nearly 2,500 Defined Contribution Plan and Combined Plan participants who are in their fifth year of membership will have the option to reselect their retirement plan. Those eligible for this reselection period were enrolled as new STRS Ohio members between July 1, 2005, and June 30, 2006.
These members will be notified of their reselection option in late December 2009. Then, four-to-six weeks later, they will receive personalized reselection materials that include individual account balances, plan options and enrollment instructions. Retirement plan choices will include STRS Ohio’s Defined Contribution Plan, Combined Plan or Defined Benefit Plan. The retirement plan selected at this time will be permanent.
It is important to note that eligible members who do not make a choice during the reselection period will, by law, move to the Defined Benefit Plan and will no longer have a Defined Contribution Plan or Combined Plan account to manage. To remain in their current plan, members must actively choose that plan during the enrollment period. Members who decide to switch from the plan they are currently enrolled in will convert their current account to their new retirement plan choice.
If you have questions regarding this reselection option or your eligibility for this choice, please call our Member Services Center toll-free at 1-888-227-7877.
Markets Begin to Recover From “Great Recession”
In its August report to the State Teachers Retirement Board, STRS Ohio Investments staff provided an update on economic conditions and the stock markets. The report said economic indicators reveal that the recession — the longest on record since World War II — ended during summer 2009. Improvements in housing and manufacturing, as well as a drop in new unemployment claims, have helped fuel the steady advance of the U.S. stock market since March 2009 when the S&P 500 Index dipped below 700.
The report looks for a slower than typical recovery from the recession, due in part to the fact that credit markets are still seeking solid footing following last year’s woes. In addition, state and local government spending has also been slowed; budgets are out of balance and either spending cuts or tax increases are likely.
In the private sector, companies anticipate a slow growing economy as well and don’t expect to need a great deal more workers in upcoming quarters. The unemployment rate will remain high and will continue to curb consumer spending that accounts for much of the nation’s real economic activity. With economic demand soft, the report concludes that conditions call for a sluggish recovery during the remainder of 2009.
Board Recommends Changes to Defined Benefit Plan
As part of its long-term contingency planning discussions, the State Teachers Retirement Board recommended several changes to the Defined Benefit Plan to ensure the plan’s long-term solvency. The recommendations were sent to the Ohio Retirement Study Council (ORSC) for review. The ORSC is the legislative oversight body for Ohio’s five public retirement plans. All of the board’s recommendations would require legislative action for implementation.
The recommended changes are detailed in your STRS Ohio News for Active Members newsletter, mailed to you in mid-October. The impact of any changes on STRS Ohio’s Defined Contribution Plan and Combined Plan isn’t yet known. STRS Ohio will continue to use its newsletters, including SmartTALK, as well as its Web site to keep you informed about important developments regarding your retirement plan.
Investor’s Corner
Annual Report
STRS Ohio’s Defined Contribution Investments Annual Report for fiscal year 2009 will be available in mid-November and will be mailed to all members participating in the Defined Contribution Plan or the Combined Plan. The report will also be available to view or print from the STRS Ohio Web site.
The annual report includes an economic overview that explains the forces that shaped the markets this past year; performance highlights and analysis
for each allocation choice; a breakdown of defined contribution holdings and percentage of total assets by allocation choice; and a disclosures section that features important rules and concepts as well as a glossary of frequently used investment terms.
Investment Choice Profile
This quarter’s SmartTALK profiles the STRS Russell 2000 Index Return.
The STRS Russell 2000 Index Return is an allocation choice designed to replicate the holdings and return of the Russell 2000 Index. It is comprised of approximately 2,000 U.S. companies selected for their small market capitalization and industry classifications. Companies in the information technology, financial services, industrials and health care sectors make up about 70% of the holdings. Top holdings as of June 30, 2009, include Palm Inc., Owens & Minor Inc., 3Com Corp., VistaPrint Limited and Piedmont Natural Gas Co. Inc. Intermediate and long-term performance figures for this allocation choice are provided on the Investment Performance Report.
Ask SmartTALK
My portfolio is diversified, yet I still lost value during the recession. Why?
As we climb out of the worst recession since World War II, we can see that it was truly a global recession — negatively impacting both international and domestic stocks. In addition, problems in the credit markets even derailed corporate bonds, which are often a safe haven from stocks. While it appears there was “no place to hide” during the most recent economic downturn, it’s good to remember that asset allocation and diversification is a time-tested strategy that most experts agree will work in the long run. It’s also important to regularly rebalance your portfolio to be sure you have the intended asset mix.
