Legislators Approve Ohio Pension Reform
The reform includes amendments approved by the State Teachers Retirement System (STRS) of Ohio in April (see “STRS Ohio to Strengthen Financial Condition”). Provisions in Sub. Senate Bill 342 are projected to save $11.6 billion in accrued liabilities and will allow STRS Ohio to maintain a 1% employer contribution to its health care fund.
The bill increases age and service requirements for retirement; calculates pensions with a lower, fixed formula; increases the period for determining final average salary; increases member contributions to the system; reduces the cost-of-living adjustment (COLA); defers the COLA for future retirees; and calls for no COLA to be added in fiscal year 2014. Under these provisions, STRS Ohio is projected to meet the 30-year funding requirement by 2016, if all actuarial assumptions are met.
The bill also provides the Retirement Board the authority to make future adjustments to the member contribution rate, retirement age and service requirements, and the COLA as the need or opportunity arises, and depending on the funding progress. In addition, eligibility for survivor and disability benefits increased to five and 10 years, respectively, for all new hires.