Strengthening the Financial Condition of the Retirement System
In 2012, the Ohio Legislature passed pension reform bills to improve the financial condition of all five Ohio pension systems, including STRS Ohio. Sub. Senate Bill 342 contained benefit plan changes to help bring the system to a 30-year funding period. The multifaceted plan became effective in 2013. Changes to STRS Ohio’s benefits include:
- Increasing the eligibility requirements for FULL retirement — with an unreduced benefit — to age 60 with 35 years of service or age 65 with five years of service by Aug. 1, 2026 (phase-in began Aug. 1, 2015).
- Increasing the eligibility requirements for EARLY retirement — with an actuarially reduced benefit — to a minimum 30 years of service or age 60 with five years of service by Aug. 1, 2023 (phase-in began Aug. 1, 2015).
- Increasing member contributions by 4% of compensation, phased in 1% per year effective July 1, 2013, through July 1, 2016.
- Change in benefit formula to 2.2% for all years of service, effective Aug. 1, 2015. The 35-year enhanced benefit formula was eliminated July 1, 2015.
- Changes the final average salary (FAS) calculation to the five highest years of earnings, effective Aug. 1, 2015.
- Reduces cost-of-living adjustment (COLA) to 2% for all retirees and delays COLA for all members retiring Aug. 1, 2013, or later for five years after effective retirement date.
- New members will have to work longer to be eligible for disability and survivor benefits.
Pension reform also grants the Retirement Board with authority to make future adjustments as the need or opportunity arises, depending on the retirement system’s funding progress.
In 2017, the board made the decision to reduce the cost-of-living increases granted on or after July 1, 2017, to 0% to preserve the fiscal integrity of the retirement system. As promised, after its experience review in 2022, the board reevaluated whether a COLA would be payable without materially impairing the fiscal integrity of the plan. In March 2022, the board approved a one-time 3% cost-of-living adjustment (COLA) to eligible benefit recipients effective July 1, 2022.
In March 2022, the board eliminated the age 60 requirement for retirement age and service eligibility that was set to take effect in 2026. The final change to the phased-in age and service requirements will be made Aug. 1, 2023, when 35 years of service will be required for an unreduced retirement.