State Teachers Retirement System of Ohio

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eUPDATES for Employers

Several Changes Take Effect in July and August

June 18, 2015

Updated June 25, 2015

Since the time this eUPDATE for employers was issued, the Retirement Board voted to amend its April 2015 action that increased the mitigating rate. The board action means the mitigating rate for DC Plan and ARP participants will remain for now at 4.5%. See the eUpdate titled, Mitigating Rate Will Remain 4.5% for details.

The changes outlined below will take effect in the weeks ahead. A revised copy of the Employers Manual reflecting these changes and other updates will be available on our website on July 1. We recommend updating any paper copies of the Employers Manual at that time. If you have questions about these changes, please contact the Employer Reporting Department toll-free at 888‑535‑4050 or send an email to [email protected]. Additional information is available in the Pension Legislation section of our website.

As a reminder, please do not attempt to counsel members. Instead, refer them to STRS Ohio’s Member Services Center toll-free at 888‑227‑7877.

July 1, 2015

  • Member contribution rate increases to 13% for work performed on or after July 1, 2015. Ensure your payroll system can accommodate the additional 1% in member contributions and withhold contributions at two different rates depending on the fiscal year in which the compensation is earned:

    — 12% if earned by June 30, 2015 (accrued contributions); or


    — 13% if earned on or after July 1, 2015.



    Remember, backpostings and account adjustments processed after July 1 will need to be made at the contribution rate in effect at the time the amounts were earned. Click here for more information about the rate increase and its effect on payroll reporting.
  • Employer pickup plan updates are due. Please review your current pickup plan documentation. If you adopted a plan at the contribution “rate in effect,” your plan will automatically be updated to include the 1% increase in member contributions. No additional paperwork needs to be filed with STRS Ohio unless you decide to modify the pickup plans currently in place. If you adopted a plan with specific percentages, you must amend it to account for the 1% increase in member contributions. To update your plan, submit a Notification for Employer Pickup of Employee Contributions form with a certified copy of the board resolution effective July 1, 2015. Click here for details about amending your pickup plans.

    In addition, you must ensure contributions are withheld at the correct contribution rate and program your payroll system accordingly to account for additional pickup-on-pickup contributions. Refer to Pages 4–5 of the most recent newsletter for employers for information about pickup-on-pickup calculations.
  • The mitigating rate is planned to increase to 5% (from 4.5%). The mitigating rate, established by law, is a portion of the employer contribution used by the retirement system to offset the negative impact of participation in the Defined Contribution Plan and alternative retirement plans (ARPs). Beginning July 1, 2015, STRS Ohio is scheduled to receive 5% of the 14% employer contributions and the member’s account will receive the remaining 9%. The mitigating rate is planned to increase an additional .5% next year on July 1, 2016. However, legislation was recently introduced that may affect the mitigating rate. If there is a change to this phased-in rate increase as a result of legislation, employers will be notified in a future eUPDATE for employers.

Aug. 1, 2015

  • Age and service requirements for retirement eligibility change. For details, visit the Pension Legislation section of our website and click on “Preparing for July 1, 2015 & Beyond.”
  • New final average salary (FAS) calculation begins. FAS will be the average of the member’s five highest years of earnings.
  • Retirement benefit formula changes to 2.2% for all years of service.

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