That STRS mysterious -3.35%
From John Curry
August 31, 2021
That mysterious -3.35% that showed up behind the tremendous 14% figure that active teachers have deducted from their paychecks for their retirement contributions to STRS. WHAT IS THAT -3.35%??????
Well, thanks to a fellow Watchdog, we have it explained to us. Below is what they had to say about the "Normal Cost" column:
"Normal Cost" is the percentage of a teachers salary needed to provide total lifetime pension benefits using current formulas and career lengths.
For actives, who are paying too much and working too long for too little and are charged 14% of their income in contributions, while they only receive a benefit worth 10.65%. This is why the -3.35% shows up in the "Employer Contribution" column, because even though the Employer is also contributing 14% to STRS, none of those contributions are being used for the benefit of active teachers. Please note that Ohio STRS is the only pension plan, of all 87 listed in this study, that has a negative employer "Normal Cost." This means current teachers are paying one-dollar for a retirement benefit that is only worth seventy-six cents.
For retirees, STRS has broken their promise by stealing their COLA, which is part of their already paid for and earned pension. Without a COLA retirees will lose between 30% and 40% of their promised lifetime pension income.
Finally, nearly all of this pension manipulation which has occurred since 2012, has been caused by the STRS's lowering the "Discount Rate" from 8%, to 7.75%, to 7.45% and now 7% over the last decade. These changes increased our debt by over 25 billion dollars. With a stated goal of becoming 100% funded, along with this added debt, STRS has made this goal twice as hard as it was 10-years ago. STRS Management believes that their goal is more important than fulfilling their fiduciary obligation for your financial welfare.
posted by Kathie Bracy at 10:05 PM
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