Greetings ORTA Faithful!
Many members of our organization have received good news regarding the passage of the Social Security Fairness Act. This legislation marked the end of decades of unfair treatment for all public pension benefit recipients. ORTA engaged in this fight several years ago and, along with many other organizations and individuals, pushed this legislation across the finish line. What this means for public pension recipients is that the money that they contributed into social security over the course of their lifetime would not be penalized due to the person’s service as a teacher, policemen, or other public employee. I have received several questions about how an STRS retiree can check the status of their social security. I am not an expert; however, I was able to sign up at www.ssa.gov and I am now receiving the full amount of my benefit.
I attended the most recent STRS board meeting and was impressed with the board’s ability to function. Much of the friction between the board members and the STRS staff seemed to be reduced. One of the most important duties of the STRS board is asset allocation. This is the determination of where our funds will be invested. For example, how much money will be invested in equities, how much in fixed income, how much in real estate and so on. Over the years, consultants hired by STRS have steered the investment choices with their advice. The discussions are spirited and, I assume, provide the board with the necessary information to make wise decisions about our investments.
What is important to understand is that our pension depends on investment returns to pay our benefits. If you recall STRS collects about $3 billion in contributions from individuals and employers but pays about $7 billion each year. That means that the first $4 billion earned through investments is already spent. That is the reason that the STRS board is so careful when deciding matters such as COLA or length of service.
Because the income from contributions at STRS fall far short of the expenses paid to retirees, ORTA has been vociferous in its position that an increase in the employer contribution rate is essential to stabilize the STRS pension system. Currently, STRS has the highest employee contribution rate in the country for all pension systems that are non-social security states. On the other hand, the employer rate paid into STRS is the lowest in the country. Our active educators pay far more for their pension than other educators around the country while our employers pay the least. In fact, the employer rate is less than ½ of the rate paid by other employers around the country.
STRS is currently searching for a permanent Executive Director. This search is the most important decision that the board will make. ORTA’s hope is that they will find a person that is committed to the membership and less committed to the staff at STRS.
Dr. Robin Rayfield, Executive Director, ORTA
Greetings, ORTA members!
I want to follow up on last month’s article in the ORTA Annual Newsletter titled “Senate Bill 69-Legislators, Pay Attention.” This article can be found on the ORTA website if you haven’t had the opportunity to read it.
Senate Bill 69 is often called placeholder legislation because its substance has yet to be determined. The Bill will allow the Ohio Retirement Study Council (ORSC), the legislative body that represents the Ohio Legislators on matters of Ohio’s five pension systems, to put before the General Assembly changes that require legislative action to help improve each pension system. ORTA had a concern that we wanted to address, which centered on how significantly the Ohio STRS Employer Contribution lags other national pension systems similar to ours. STRS consultants often point out that our pension system needs to make up a cash flow problem of nearly 3.8 billion dollars through investments due to insufficient Employer Contributions.
ORTA has sent the “Senate Bill 69” article to all nine members of the ORSC with a cover letter. In the cover letter, ORTA asked for a meeting with representatives of the ORSC to explore ways to work together so we can best help our members. ORTA is eager to dialogue with the legislative body that oversees our pension to hear their suggestion for a pathway forward to restoring lost benefits.
Thirteen years ago, legislation was submitted to the ORSC that reduced expected benefits by over 11 billion dollars. Since January 2013, approximately 51,500 retirees have died without seeing the inflation protection they planned for. If you would like to help ORTA state the need for teachers to retire with inflation protection, you can help. Please share how difficult it is to retire without inflation protection and how it has impacted your retirement. You can email to publications@orta.org and share your story. We’ll keep you posted.
Dean Dennis, Chair ORTA Executive Committee