Trina Key Prufer defines an STRS scam for retirees and another scam for active teachers. Read on!

From Trina Key Prufer

October 2, 2023

It’s Not A Defined-Benefit Plan if the Benefit is NOT Defined

The STRS defined-benefit plan is an unsafe vehicle for retirement savings because the “benefit” is not defined at all… in fact, it changes just about every year. There is no stability to the plan because the payout is DEPENDENT on the financial ”integrity” of the plan… in other words, the plan has RISK… and lots of it…To be clear, it‘s OUR RISK, not STRS system risk.

How much risk? For teachers who retired prior to 2012, over a 20-30 year period, with STRS aiming for 100% system funding, that means losing anywhere from 25% - 50% of the payout promised, with the greatest monthly losses coming as we age, and are at our most vulnerable.

The very definition of a defined-benefit plan is employees knowing what the benefit will be so they can plan their lives accordingly. The gold standard for a defined-benefit plan design, in a non Social Security state, is about 70% replacement with a 3% automatic ( fixed-rate) cola. For those retired prior to 2012, that was the pension plan design we paid for, and was computed for each of us at the time of our retirement. That was the law. An example of what this looked like is at the end of this post.

It was the RESPONSIBILITY of STRS to DEFINE the EXACT elements in our defined-benefit. There is nothing new here… Standards and Best Practices in pension plans have been around for decades. That’s what makes Neville’s explanation of why he thinks it was ok to have removed the cola so reprehensible. He thinks we will buy into the lie that because the cola was adjusted (upwards as it turns out) in the past, any change is legal, even if it devastates retirees’ financial lives.

The 2012 STRS “reform” legislation hollowed out the very definition of a defined-benefit pension plan. It is NOT a defined-benefit plan at all. As written into the legislation, it is a scam for those of us who lost a significant portion of the payout. If previous promises and contracts mean nothing, there is no advantage to investing with STRS. If contributing 14% does not guarantee a payout worth that much, it is a scam for actives.

STRS - unsafe, unsound, unjust.