At its April 2017 meeting, the State Teachers Retirement Board made the difficult but necessary decision to reduce future cost-of-living adjustments (COLAs) to 0% to preserve the fiscal integrity of the retirement system. The reduction is effective July 1, 2017, for all benefit recipients regardless of their effective date of retirement. Current benefit recipients’ base benefit and past cost-of-living increases will not be affected by this change.
The COLA has a significant financial impact on the pension fund because it affects both current and future retirees. The board will evaluate — not later than the next five-year actuarial experience review — whether an upward adjustment of the cost-of-living increase is payable without materially impairing the financial strength of the retirement system. Ohio law grants the Retirement Board the authority to set the COLA. The board can choose to indefinitely suspend or reduce the COLA and can vote to restore the COLA when the pension fund is healthy enough to do so.
The board’s action to reduce the COLA is the culmination of many months of work with staff and consultants to get a detailed look at the financial status of the pension fund. The vote follows the March 2017 action to approve changes to the actuarial assumptions used to calculate pension liabilities. These new assumptions resulted in additional liabilities that took STRS Ohio outside the parameters established in the board’s funding policy and beyond the 30-year funding target in Ohio law. When adopting the assumption changes, the board recognized benefit plan design changes were necessary to preserve the fiscal integrity of the fund.
In April, the Retirement Board’s actuarial consultant, Segal Consulting, provided the board with updated financial projections that took into account the newly adopted actuarial assumptions. The system’s financial condition is most commonly expressed through the funded ratio and the funding period. The funded ratio is the fair value of assets compared to actuarial accrued liabilities; the funding period is the amount of time needed to reach a funded status of 100% assuming current contribution rates. Segal’s projections showed STRS Ohio’s funded ratio at 62.6% with a funding period of 57.7 years. Under this scenario, STRS Ohio would be required to present a plan to the legislature to reduce its funding period to 30 years or less.
Segal projects the board’s decision to reduce future COLAs will improve the system’s funded ratio to about 70.8% with a funding period of about 20 years if all economic and demographic assumptions are met. This would meet the benchmarks in the board’s funding policy, as well as the state of Ohio’s funding target.
STRS Ohio will send all members detailed information about the COLA reduction. If members have questions, please direct them to STRS Ohio’s Member Services Center toll-free at 888‑227‑7877.
Retirement eligibility will change on Aug. 1, 2017, in accordance with pension reform legislation that was passed by the Ohio Legislature in 2012 to strengthen the financial condition of the retirement system. Phased-in changes to retirement eligibility will continue through Aug. 1, 2026.
The chart below shows current retirement eligibility requirements as well as new requirements effective Aug. 1, 2017, through July 1, 2019.
|For Retirement Dates||Unreduced Benefit Minimum Age and Years of Service||Actuarially Reduced Benefit* Minimum Age and Years of Service|
|8/1/2015–7/1/2017||Any age and 31 yrs.; or age 65 and 5 yrs.||Any age and 30 yrs.; or age 55 and 26 yrs.; or age 60 and 5 yrs.|
|8/1/2017–7/1/2019||Any age and 32 yrs.; or age 65 and 5 yrs.||Any age and 30 yrs.; or age 55 and 27 yrs.; or age 60 and 5 yrs.|
*An actuarially reduced benefit reflects a reduction for each year that a member retires before meeting eligibility for an unreduced benefit.
STRS Ohio does not recommend employers prepare information for members considering retirement or counsel members in any way. If members have questions, please direct them to STRS Ohio’s Member Services Center toll-free at 888‑227‑7877.
The following Administrative Code Rules have been amended during the past 12 months. Employers should note a change to Administrative Code Rule 3307-3-04 related to backpostings. Specifically, if an employer has requested a membership determination from STRS Ohio and STRS Ohio determines membership is not required, any member and employer contributions already made on compensation earned during the current fiscal year will be returned to the party that remitted the payment of contributions.
To view an amended rule, click on the corresponding link below. You can also view a complete list of Administrative Code Rules in the Publications section of the employer website.
This year’s Comprehensive Annual Financial Report provides a detailed look at STRS Ohio’s investment activities, plus financial, actuarial and statistical information for fiscal year 2016 (July 1, 2015–June 30, 2016). View the 2016 Comprehensive Annual Financial Report. You can also call STRS Ohio’s Member Services Center toll-free at 888‑227‑7877 to request a copy.
All employers must submit an annual report by Friday, Aug. 4, 2017. This report lists all member contributions on compensation earned by STRS Ohio active members and reemployed retirees during the fiscal year (July 1, 2016–June 30, 2017), as well as service credit earned by active members.
Please check the Annual Reporting Resource Center on our website in early June for instructions and other information to assist you with the annual reporting process. Live webinars on calculating service credit and annual reporting troubleshooting will also be offered in mid-May and June, respectively. View program descriptions and registration information.
Like last year, annual reports can be submitted electronically via ESS or secure file upload. If you submit your report using ESS, your personalized report will be available July 1. No extensions will be granted to the deadline, so please plan to have staff available to complete the report or coordinate its submission to STRS Ohio.
You may be asked to verify service credit and/or accrued contributions for members after your annual report or summer payroll reports have been processed. If verification is required, you will be notified when service credit verification and accrued verification reports are available for completion in ESS. Online tutorials are available to assist you with completing these reports. A live webinar also will be offered in late August to assist you with the post annual reporting process. You will receive a registration email with details in early August.
Thank you for your efforts to complete the required annual reporting processes on time. This information is necessary to update member accounts and prepare actuarial information. If you have questions about annual reporting, please contact your employer advisor.
In April you received an eUPDATE requesting your school’s pay dates for the upcoming fiscal year. If you haven’t yet submitted your pay dates, please complete the Pay Date Calendar and send it to STRS Ohio using secure file upload by June 9. Knowing your school’s pay dates helps us track the submission of payroll reports and allows us to alert you when we haven’t received an expected report.
Additionally, if you haven’t already done so, please submit your salary schedules for 2016–2017 and 2017–2018 (if available). This information is necessary for STRS Ohio to accurately determine benefits, specifically if a member’s final average salary is limited by Ohio law. View more information about submitting salary schedules.
An upgrade to Employer Self Service (ESS) is tentatively scheduled for early 2018. The upgrade not only affects ESS, but also the internal pension processing system used by STRS Ohio associates. While change is inevitable in the world of technology, this is only an upgrade to the current system — not new software. Most ESS applications will function similar to the current version, but may have a different look and feel.
To help you prepare for the upgrade, we will be offering several training sessions and live webinar demonstrations. All online tutorials will be updated as well. You will receive an email when the implementation date is finalized along with information on ESS training opportunities.
We understand STRS Ohio reporting is just one of the many important duties you are responsible for managing. Thank you for your time and effort to help ensure our members’ accounts and benefits are accurate.
During the 2015–2016 fiscal year, 229 employers with at least 10 new hires, including reemployed retirees, submitted the required employment notification on or before the 10-day deadline. We appreciate your diligence and dedication! Within this group, 37 employers submitted more than 40 employment notifications without a single delinquency. We are pleased to recognize the following employers for this accomplishment. Kettering City Schools deserves special recognition for reporting all 128 employment notifications on time. Congratulations!
Each year the Internal Revenue Service places limits on the amount of compensation on which contributions can be remitted for STRS Ohio members. Any payment to a member that exceeds the compensation limit is excluded from compensation for retirement purposes. The 2017–2018 compensation limits for Defined Benefit and Combined Plan members are:
The IRS has not yet released 2017–2018 limits for Defined Contribution Plan members. (The current amount is $229,787.) View a complete list of annual compensation limits.
Compensation limits are presented for your information only. STRS Ohio does not require you to track the retirement plans your employees participate in. We will monitor contributions and compensation for each STRS Ohio member and notify you if contributions reported are within $2,500 of the limit or exceed the maximum contributions allowed by the IRS. If limits are exceeded, we will refund excess contributions and ask you to stop submitting contributions for affected members through the end of the fiscal year. If you have questions about compensation limits, please call the Employer Reporting Department toll-free at 888‑535‑4050.
We have some great programs planned for you, including three new live webinars. Check out the offerings below! You will receive an email from STRS Ohio Employer Education when registration for each event is available.
This fall, STRS Ohio will offer both parts of our Reporting Basics workshop. The morning session, Part 1, will cover beginning of the school year topics such as membership, reemployment, compensation and payroll reporting. The afternoon session, Part 2, will focus on calculating service credit, annual reporting, retirement reporting and account withdrawal.
You can register for the entire day for comprehensive training on STRS Ohio processes and procedures or choose only one session for a refresher on specific topics. We recommend new personnel attend the entire day and experienced personnel attend either the morning or afternoon session based on your needs. Registration begins July 10.
Registration is open. View a program description and registration information.
Registration is open. View a program description and registration information.
Registration begins Aug. 7.
No further contributions should be made for these individuals. Administrative Code Rule 3307-3-04 addresses how contributions will be handled after a membership determination has been made. Specifically, the rule stipulates if an employer has requested a membership determination from STRS Ohio and STRS Ohio determines membership is not required, any member and employer contributions already made on compensation earned during the current fiscal year will be returned to the party that remitted the payment of contributions.
For more information on the membership determination process for contracted services, see the Contracted Services Membership Determination fact sheet.