From the the the Ohio Council of Higher Education Retirees (OCHER) meeting of of March 27, 2018
Report from Richard Williams, WSURA's STRS representative to OCHER
The main news is the remarkable turnaround in the health-care stabilization fund.
Noteworthy is that while enrollment is down, the biggest decline was in non-Medical
enrollees for whom STRS pays a much higher subsidy. The percentage of non-
Medicare enrollees has decreased 26% in January 2015 to 17% in January 2018.
With the changes made last year that will cause premiums for under-65 enrollees to
increase substantially, more teachers are likely postponing their retirement until age 65.
The health-care fund also experienced better than expected claims and investment
returns. As a result the critical ratio of assets to liabilities (the funding ratio) increased
from 80% in January 2017 to 153% this year. If the assumptions about future increases
in health cares costs hold, the health-care fund should remain solvent beyond the
lifetime of all current members!
The other major question the STRS Board is dealing with is the decision about how
much risk to take in the portfolio of investments. Even though last year saw the
investment portfolio earn twice the assumed rate of return, this experience cannot be
expected every year in the future.
For the time being the STRS Board has adopted a
balanced approach that mixes common stock investments with bonds, real estate, and
private (hedge fund) investments that is expected to yield a lower return but also lower
volatility of fund returns year to year.
STRS retirees currently have the options of contributing to the classic Defined Benefit
plan or to a Defined Contribution plan (i.e. essentially a 403b plan). The Defined
Contribution plan continues to increase, now accounting for 16% of active participants.
FYI - A poll taken in October 2017 revealed that 93% of retiree households have at
least one source of income beyond the STRS pension. On average, STRS pensions
provide 58% of total household income.
Ohio State and Ohio University reported on activities of their respective retiree
organizations. The Ohio State Retirees Assn. has been moved from Human Resources
to the Alumni Assn. and have lost their $40,000 subsidy and the services of a paid staff
person. This loss has been partially made up by the Alumni Assn. covering about
$15,000 in payments for retiree activities and events.
Ohio University has between 50 and 60 members out of a possible 500 retired faculty.
An electronic kiosk with retiree names and current events is being constructed on the