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Alternative Retirement Plan
Alternative Retirement Plans (ARPs), provided by your employer through a private vendor, are comparable to the STRS Ohio Defined Contribution Plan. In general,
your retirement income is based on the performance of investment choices you
select for the contributions made by you and your employer. You may allocate
your contributions among various investment options provided by the ARP vendor.
Retirement, survivor and disability benefits are generally limited to the value
of your account. Access to STRS Ohio optional health care coverage upon retirement is
not provided.
Each ARP vendor operates independently so plan structure, benefits and fees
may vary. For more information about the different ARP choices available, talk
to your HR representative or the vendor.
Comparison With an Alternative Retirement Plan
With both the STRS Ohio Defined Contribution Plan and an ARP, you have control over your retirement account. However, several major differences exist between these two defined contribution options.
Reselection Option
If you choose the STRS Ohio Defined Contribution Plan now, you will have a second and final opportunity to choose a plan during your fifth year of membership. At that time, you can choose to remain in the same plan or transfer to one of the other two STRS Ohio plans. If you choose an ARP now, your decision will be final — unless you change employers.
Competitive Fees
When you review the administrative costs for the STRS Ohio investment choices, you will see that they compare favorably with the fees charged by the ARPs. And, if you choose the STRS Total Guaranteed Return Choice, you pay no asset management fees, only a quarterly account maintenance fee.
Account Withdrawal Value
Members with less than one year of membership in the STRS Ohio Defined Contribution Plan receive their contributions, plus any gains or losses on those contributions if they withdraw their account. However, after one year of membership, members receive both their contributions and allocated employer contributions, plus any gains or losses on those contributions. ARPs vary regarding when a participant can receive the employer contributions, with some plans requiring as many as five years of membership.
STRS Total Guaranteed Return Choice
Generally in a defined contribution plan, the participant bears all investment risk for his or her account. However, with the STRS Total Guaranteed Return Choice, the risk of loss is borne by STRS Ohio, not you. If you choose this investment option, your defined contribution account will be credited with the guaranteed rate of interest, even if the underlying investments should actually decrease in value. In exchange for this protection, you must “lock-in” your contributions made during the year until the end of a five-year term. The various restrictions placed on participation in this choice are designed to minimize potential losses which, in turn, enable STRS Ohio to offer a higher guaranteed rate of interest. If you are considering a fixed-return investment offered by an ARP, be sure to compare its rate of interest with this investment choice.
Retirement Board Commitment to STRS Ohio Members
As an STRS Ohio member, you will participate in electing board members who, like you, believe that Ohio’s educators deserve comprehensive benefits and quality service from their retirement system during their careers and in retirement. While STRS Ohio associates handle the day-to-day operations of the retirement system, it is the Retirement Board that provides the direction, fiduciary oversight and policies that enable STRS Ohio to fulfill its goal of helping assure financial security for current and future retirees. Board members devote thousands of volunteer hours in service to STRS Ohio.
Timetable for making you decision.
ARP vendor list.
Compare this plan with your other
STRS Ohio retirement plan options.
You
will also want to review your projected retirement benefits using
the DB, DC & Combined Plan Comparison Calculator.
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