STRS Ohio Posts +13.7% Total Fund Return in Fiscal Year 2013At the August meeting of the State Teachers Retirement Board, Investment Department staff reported that the total fund return for the year ending June 30, 2013, was +13.7%, and the market value of assets at fiscal year end was $68.0 billion. The strong return for fiscal year 2013 exceeded the fund’s assumed actuarial return of 7.75%.
All asset classes beat their benchmarks during the fiscal year except for domestic equities. The total fund return trailed the total fund benchmark for only the second time in the past 11 years.
STRS Ohio’s 2014 Investment Plan calls for only moderate growth in the capital markets in fiscal year 2014.
Fiscal 2013 0perating Expenses Total $4.7 Million Under Budget
Final figures for fiscal year 2013 show that STRS Ohio’s total operating expenditures were approximately $4.7 million less than budgeted for the year. Less than expected expenditures for salaries, communications, professional and technical services, and utilities accounted for much of the savings. Each month, STRS Ohio posts approved administrative expenses on its website.
The Retirement Board approved 2,992 active members and 187 inactive members for retirement.
Other STRS Ohio News
Summer Retirement Applications Increase Over 2012
Summer Service Retirement Application totals increased by 878 applications when compared to the same time last year. June retirement dates continue to outpace July retirement dates this year. Through July, STRS Ohio received 6,377 applications for June, July and August retirement dates compared to 5,499 at the end of July 2012.
Pension Valuation Preparation Begins
Preparation for the July 1, 2013, pension valuation has begun. For this fiscal year’s valuation, STRS Ohio will create new tools to help ensure the system provides quality data for its actuarial consultants. Since this will be the Segal Company’s first pension valuation of STRS Ohio, former processes and formats are being reviewed. Member and benefit recipient data files are expected to be provided to Segal by Labor Day weekend.
Projections to Aid in Developing Funding Policy
To benchmark STRS Ohio’s funding progress, Segal is preparing a year-by-year projection of the unfunded liability, funded ratio and amortization period over the next 10 to 15 years using the current economic and demographic assumptions. Actual valuation results in future years can then be compared to the forecast to determine whether funding is progressing as expected. Although individual years may be distorted by gains or losses, tracking projected experience to actual results over time will help identify whether STRS Ohio’s funding policy is working.
STRS Ohio’s total fund return was +13.7% for the year ending June 30, 2013. The market value of investment assets as of June 30 was $68.0 billion. The strong return for fiscal 2013 well exceeded the fund’s assumed actuarial return of 7.75%, but trailed the total fund benchmark return. This week, Bloomberg News reported that the median gain for public pension funds was +12.4% for the 12 months ending June 30.
All asset classes beat their benchmarks during fiscal year 2013 except for domestic equities. The S&P 500 Index reached record highs during the year, and STRS Ohio began to underweight the domestic equity portfolio to realize some of those gains and to guard against a market correction.
STRS Ohio’s 2014 Investment Plan calls for only moderate growth in the capital markets in fiscal year 2014. A copy of this plan is available on the STRS Ohio website.
The webmaster is responsible for the updates.