Defined Benefit Plan
How Does It Work?
The Defined Benefit Plan is a comprehensive plan that provides benefits during your career and in retirement. Under the Defined Benefit Plan, your retirement income is determined by a calculation that uses:
- Your age,
- Your years of service, and
- The average of your three highest salary years (also referred to as final average salary or FAS).
Your benefits are created by three sources:
- Your contributions during your career — you currently contribute 10% of your annual salary.
- Your employer’s contributions during your career.
- Investment earnings resulting from those contributions.
Contribution rates are established by the State Teachers Retirement Board and are subject to change.
STRS Ohio maintains a diversified portfolio strategically allocated among stocks and fixed income, real estate, international and alternative investments. STRS Ohio investment professionals manage these funds so that benefits are there for you at retirement.
Plan Features to Consider
Benefits While Teaching
STRS Ohio provides comprehensive benefits and services beyond funding your monthly income during retirement. Some of these benefits become available after 1-1/2 years of service credit; others are available to you after five years of service credit.
Survivor Benefits
After you’ve earned 1-1/2 years of contributing service credit, your dependents qualify for survivor protection if you die. Annual benefits range from 25% to 60% of your final average salary. Survivors receiving this benefit also have access to optional health care coverage* through STRS Ohio.
Disability Protection
After you attain five years of service credit, you are eligible for monthly disability protection. Annual benefits range from 45% to 60% of your final average salary and you may have access to optional health care coverage* through STRS Ohio.
Service Credit Purchase
You may be eligible to purchase additional service credit for many types of past employment. This may increase your retirement benefit or enable you to retire early.
Portability
You may want to take your retirement assets with you if you leave Ohio public employment before retirement eligibility. While you can leave your account intact at STRS Ohio to qualify for future benefits, your STRS Ohio contributions plus interest can be refunded or rolled over to a traditional individual retirement account (IRA) or another qualified retirement plan. After five years of qualifying service credit, interest plus a 50% match on your contributions and interest is paid on funds withdrawn or transferred.
Benefits While Retired
You can retire at any age with 30 years of service, at age 55 with 25 years of service or at age 60 with five years of service. The benefit is reduced if you retire with less than 30 years or before age 65.
Retirement Income
Unreduced benefits are determined by multiplying your years of credited service by 2.2% of your final average salary for the first 30 years of service, plus 2.5% for the 31st year, 2.6% for the 32nd year, 2.7% for the 33rd year and so on, until 100% of the final average salary is reached.
With 35 or more years of contributing service, the first 31 years are multiplied by 2.5% of your final average salary; then the escalating formula described above is used.
If you retire with 30 years of service under the current formula, you will receive 66% of your final average salary as an annual retirement benefit. With 35 years, you will receive 88.5% of your final average salary.
Cost-of-living Adjustment (COLA)
You will receive a 3% cost-of-living increase each year, calculated on your original benefit.
Access to Optional Health Insurance *
You and your eligible dependents will have access to optional health care coverage in retirement through STRS Ohio provided you have 15 years of service credit. Optional dental and vision plans also are available. Contribution rates and eligibility for health care are established by the Retirement Board and are subject to change.
Death Benefit
Your survivors will receive a lump-sum payment of $1,000 at your death. You may purchase an additional $1,000 or $2,000 benefit when you retire.
Supplemental Benefits
When STRS Ohio investment returns exceed funding requirements, the Retirement Board may grant a supplemental benefit payment.
In Summary
With the STRS Ohio Defined Benefit Plan, you receive a monthly benefit payment in retirement based on service credit and final average salary — not prevailing market conditions — and access to health care coverage if you meet health care eligibility conditions. Benefits while you are teaching include survivor benefits and disability protection.
If you choose the Defined Benefit Plan now, your decision is permanent. You will not have an opportunity to change plans at a later date.
Click here to compare this plan with your other
STRS Ohio retirement plan options.
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