Vol. 38, No. 18

1-7-2009
By: Adam King

OPERS, STRS officials confident during downturn

Long-term strategies and goals mean funds can weather even severe storms

Ohio’s state pension retirement funds have the strength to stand up to the economic turmoil and continue business as usual, according to officials with both funds.

Mike Nehf, executive director of the State Teachers Retirement System of Ohio (STRS), said the fund’s current financial state also means retirees will keep receiving their monthly pension payments.

“We’re concerned as you would expect us to be, but we invest for the long term and continue to make investments with the long term in mind,” said Nehf. “The board continues to look at its asset allocation — the way it invests its money.

We’ll continue to have actuarial studies on employee and employer contributions to the system, and we’ll continue to report through our newsletters, Web site and during our board meetings our status each month.”

STRS, which covers Ohio State faculty, is using only a small portion of its assets to pay current pensions, which means it has time for the markets to come back up in order to cover future retirees, Nehf said.

The one area where STRS Ohio is feeling the crunch is in its health care program for retirees.  Just one-third of those in the program are non-Medicare recipients, but half of all claims come from that group. The health care program fund, which is separate from the pension fund, pays out $1.5 million per day for health care costs.

House Bill 315, currently up for consideration in the General Assembly, would draw another 2.5 percent of teachers’ salaries and 2.5 percent of employers’ contributions over a five-year period (0.5 percent per year), resulting in a $500 million annual injection. With that dedicated revenue stream, STRS Ohio said it can meet future health care costs on a long-term basis.

The Ohio Public Employees Retirement System, which covers every other state worker including OSU staff, said in a statement on its Web site that it will navigate through this storm as it has others in its 73-year history.

“Our fund is strong enough to weather these challenges in the financial market,” the statement read. “The pension funds for our 908,000 members are safe. The stability and financing of our pension system is solid.

“As a long-term investor, OPERS weathers the ups and downs in the market with a diversified portfolio spread over many asset classes and has a disciplined approach to investments.”

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