At its October meeting, the State Teachers Retirement Board received a report of the annual pension valuation results from its actuarial consultant, Segal Consulting. The report provides a “snapshot” of the actuarial position of the retirement fund as of July 1, 2014. Segal’s report this year shows the funding period for the pension fund — the amount of time needed to pay off any unfunded liability — decreased to 29.5 years from 40.2 years, and the funded ratio improved to 69.3% from 66.3%.
Better than expected investment returns were the primary driver for the funding improvement. Other significant notes from this year’s actuarial valuation report include:
•The unfunded actuarial accrued liability decreased to $29.5 billion from $31.8 billion — this represents the difference between STRS Ohio’s actuarial value of assets and the actuarial accrued liabilities.
•STRS Ohio paid about $6.7 billion in benefits during the fiscal year.
•The pension fund has a net $5.2 billion in unrecognized gains being deferred to future years. STRS Ohio uses a common actuarial technique called “smoothing” to spread investment market volatility over four-year periods. This method helps pension funds recognize investment returns for a given year over a four-year window rather than a one-year “spike.”
•Contributing payroll decreased by 0.4%, and the number of active members decreased slightly.