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Ohio Pension Systems to Present Changes to Study Council
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Public pension plans are not immune to the economic downturn. Over the past year each state system has lost assets. WOSU reports the groups propose changes in plans in an effort to save money.
The five state public pension systems will present new plans to the Ohio Retirement Study Council next week. The changes come as each system has endured significant losses in assets. The recession is partly to blame.
Laura Ecklar speaks for the State Teachers Retirement System or STRS. She said while the economy played a large role in losses – STRS’ assets declined 24 percent from 2007 to 2008 – Ecklar said retirees are living longer, and that means more benefits have to be paid. The proposed changes STRS hopes to make will save almost $9 billion for future benefit payments.
“We foresee a shortfall. That at some point in this system’s future we would not have the assets to pay member benefits,” she said.
Some of the proposed changes include increasing member and employer contribution each by two-and-a-half percent. STRS members currently contribute ten percent of their salaries to the pension fund. Employers currently pay 14 percent. Other proposed changes are to retirement eligibility, the benefit formula and cost-of-living adjustments.
STRS has more than 440,0000 members, including about 126,000 retirees. Ecklar said there’s no one major proposed change. She said the changes affect all STRS members.
“They realized that it was going to take a combination of changes. There really was no one thing that they could do that would be practical,” Ecklar said.
The proposed changes ultimately require approval by the General Assembly and Governor Ted Strickland.