The following report, prepared by Richard Williams, concentrates on issues confronting STRS. There is a separate article on this website in which news of OPERS is detailed.
The Ohio Council for Higher Education Retirees (OCHER) met on March 21. The most important news coming out of the meeting was about changes in the assumed rate of return on STRS investments and some new information about the STRS health-care fund.
As expected the consultants employed by the STRS Board have concluded that the assumptions underlying projected income and expenses for STRS are overly optimistic. The current assumed future return on investment has been 7.75%. The consultants are predicting that returns will be lower—in a range of 6.98% to 7.45%. The lower the assumed rate, the greater the impact on future pensions. On March 16, the Board approved a rate of 7.45%, at the high end of the range recommended by the consultants. Because of the assumed return affects the amount of future liabilities, the STRS Board must now decide what cuts to make at their April 20 meeting. The expectation is that they will vote to suspend completely or reduce to 1% the annual Cost of Living Adjustment [COLA).
With respect to health-care, STRS is looking at four plans to avoid the health-care fund being completely depleted within the next 20 years. The plan with the smallest cut, and the one likely to be adopted would freeze non-Medicare subsidies at the current level.
The OCHER Board also heard a presentation from the Director of the Ohio Retired Teachers Association (ORTA) about an organization called Protect Ohio Pensions (POP-5), which is encouraging retired teachers to join their organization. POP-5 is run by a former Director of Public Employees Retirees, Inc. (PERI) who is apparently using this organization as a means of raising money through dues primarily for his own benefit. The strong sentiment among OCHER members was that retiree groups should advise their members that they should not join POP-5 or send them dues.