September Board News
Independent Report Shows STRS Ohio Provides High Service Levels to Members at Below Average Cost
During the September meeting of the State Teachers Retirement Board, CEM Benchmarking shared the results of its annual Pension Administration Benchmarking Survey for fiscal year 2021 activity. The CEM survey benchmarked 43 retirement systems from the United States and Canada. The report showed STRS Ohio earned the second-highest service* level score among all participating retirement systems. STRS Ohio earned the top service level score for the following areas of business: pension payments, written pension estimates, member presentations, member statements and disaster recovery.
The survey also measures administrative costs per active member and annuitant. This measure showed that STRS Ohio’s costs were below the group’s average costs, and STRS Ohio’s costs have been decreasing over the past eight years, while peer costs have increased.
*The CEM report noted that service is defined from a member’s perspective. Higher service means more channels, faster turnaround times, more availability, more choice, more content and higher quality.
Board to Begin Search Process for Investment Consultant
The Retirement Board had an initial discussion and reviewed a proposed timeline for its investment consultant search that is slated to begin later this year. Current consultants, Callan LLC and Cliffwater LLC are under contract through June 2023. STRS Ohio is expected to issue a request for proposal (RFP) before the end of November 2022.
Fiduciary Performance Audit Recommendations Being Evaluated, Board to Get Update at November Meeting
STRS Ohio staff reviewed the process and findings from the Ohio Retirement Study Council-commissioned (ORSC) fiduciary performance audit that was completed earlier this year. The ORSC hired an independent firm, Funston Advisory Services, to conduct the audit as part of its regular oversight of Ohio’s five statewide public pension funds. Staff shared with the board the steps included in the fiduciary performance audit along with the high-level findings from the audit. The audit noted that the board has been effectively fulfilling its fiduciary duties and STRS Ohio is high performing and operationally excellent.
Funston made a number of recommendations for STRS Ohio, and the Retirement Board will begin discussions related to specific recommendations at its November Education & Planning Meeting. Funston’s audit report is available on the STRS Ohio website.
Board Reviews Defined Contribution Program
STRS Ohio launched its defined contribution program in 2001 when it introduced its Defined Contribution (DC) Plan and Combined (CO) Plan to members. New STRS Ohio members have 180 days to choose to participate in one of these two plans or the Defined Benefit (DB) Plan. Since inception of the program, 14% of new members have selected the DC or CO Plan. Members who choose one of these two plans have the opportunity to change plans during their fifth year of membership.
Participants in the DC Plan invest from among 17 choices managed by STRS Ohio. Participants in the CO Plan make their own investment choices for most of their 14% contribution rate, while a small portion (along with employer contributions) go into a defined benefit account that is managed by STRS Ohio.
Defined contribution assets now total about $2.17 billion, on behalf of nearly 26,000 accounts. Members in the DC Plan have the option to annuitize their account balance at retirement. Members in the CO Plan also have the option to annuitize the DC portion of their account at age 50 and can receive the defined benefit portion at age 60 (benefit is 1% of final average salary per year of service).
The Retirement Board approved 304 active and 72 inactive members for service retirement benefits.
Other STRS Ohio News
Actuarial valuations are underway
Demographic data and the actuary file for fiscal year 2022 have been sent to the board’s actuarial consultant, Cheiron, to conduct the annual pension and health care valuations. The valuation reports provide a snapshot of STRS Ohio’s funded status and are expected to be shared at the October board meeting.
Interesting facts from this year’s actuary file (as of June 30, 2022):
- Fiscal year data showed active members in the Defined Benefit and Combined Plans increased significantly from the prior year — far more than any other annual increase in the past 40 years.
- Total covered payroll increased by 5.4% from the prior year, outpacing the assumed payroll growth rate of 3.0%.
- The number of benefit recipients remained relatively stable compared to last year.
- STRS Ohio had 209 benefit recipients who are age 100 or older. Most are service retirees.
- The oldest STRS Ohio benefit recipient is 110 years old and retired in 1980.
- The member who has been receiving a benefit the longest began receiving a disability benefit in 1957 — 65 years ago.
- There are 16 active educators with 50 or more years of service and 247 active members with 40 or more years of service.