STRS Ohio Funded Ratio and Investment Performance

What the Funded Ratio Tells You

A pension system's funded ratio compares the actuarial value of its assets with its actuarial accrued liability for pension benefits. A 100% ratio means assets equal that accrued liability under the plan's actuarial assumptions; it does not mean current assets cover benefits for service that members will earn in the future without further contributions. Most public pension systems in the United States operate below 100%, relying on ongoing contributions and investment returns to fund benefits.

STRS Ohio's funded ratio has fluctuated with market performance and policy changes over the past decade. The system manages its obligations through the Sustainable Benefit Plan framework, which gives the State Teachers Retirement Board the authority to adjust benefit parameters — eligibility thresholds, COLA amounts, health care subsidies — based on annual actuarial reviews of the fund's financial health.

For active members planning retirement, the funded ratio matters because it influences the board's decisions about future benefit adjustments. A declining funded ratio creates pressure to tighten eligibility, reduce COLA payments, or increase the health care cost-sharing burden on retirees. A healthy funded ratio supports the status quo or even allows benefit improvements.

How STRS Ohio Invests

As of June 30, 2025, STRS Ohio reported a fiduciary net position of $101.8 billion and a funded ratio based on the actuarial value of assets of 80.9%. It manages its investments through an in-house team, supplemented by external managers for certain asset classes. The portfolio spans domestic and international equities, fixed income, real estate, and alternative investments including private equity and hedge fund strategies.

The system targets a long-term assumed rate of return that the board uses for actuarial calculations. When actual investment returns exceed this assumption, the funded ratio improves. When returns fall short — as they do during market downturns — the gap between assets and liabilities widens, and the board may respond with benefit adjustments in subsequent years.

Investment performance reports are published quarterly and presented at public board meetings. Members can track returns through the STRS Ohio website's newsroom section. The system's performance is benchmarked against both a policy portfolio index and peer public pension funds.

Pension Reform and Board Actions

Ohio's pension systems underwent significant reform in 2012 with Senate Bill 342. Among its STRS Ohio changes, the law reduced the annual COLA and directed the Ohio Retirement Study Council to study the board's possible authority over contribution rates and retirement eligibility. Current law gives the STRS Board specific adjustment powers; for example, it may adjust service-retirement eligibility only when its actuary determines the change will not materially impair the system's fiscal integrity or is needed to preserve it.

Since 2012, the board has used this authority multiple times. The 32-year unreduced service requirement — originally scheduled to increase to higher thresholds over time — was most recently extended through May 1, 2035, maintaining current eligibility standards for active members planning retirements within that window. COLA payments were suspended for several years during the mid-2010s to preserve fund health, then reintroduced as an annual discretionary benefit tied to actuarial review.

Health care has been the most visibly affected benefit. STRS Ohio reduced subsidies, increased premiums, raised the minimum service credit requirement for health care eligibility, and adopted a long-term subsidy glidepath that gradually reduces the per-year-of-service subsidy through 2040. These changes reflect the board's effort to balance health care access against the fund's primary obligation to pay pension benefits.

What This Means for Members Near Retirement

Your earned pension benefit — calculated by the 2.2% formula applied to your service credit and Final Average Salary — is protected by Ohio law. The funded ratio does not reduce your formula-based benefit. What it does affect are the supplemental benefits layered on top: COLA increases, health care subsidies, and future eligibility standards for members who have not yet locked in their thresholds.

Members within five years of retirement should take comfort in the grandfathering provision: once you meet an eligibility standard (32 years for unreduced, 27 for reduced, or the age-based thresholds), that standard is locked in for you even if the board raises requirements for future members. The March 2026 extension through 2035 gives current active members a wide runway.

For COLA, the board decides annually based on actuarial conditions. There is no guarantee of any specific COLA in a given year. Retirement income planning should treat COLA as a potential supplement, not a guaranteed raise.

The STRS Ohio Retirement Guide explains how the Sustainable Benefit Plan framework affects each element of your retirement — eligibility, payout options, COLA, and health care — so you can plan around the rules as they stand rather than assumptions about future board actions.

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