New Legislation – STRS

STRS (Senate Bill 342)

Retirement Eligibility:  Retirement with full benefits at age 65 with at least 5 years of service is maintained.  Otherwise, beginning in 2015, the years of service needed to retire with full benefits gradually increases from 30 years to 35 years.  After 2026, a member would need to have 35 years of service and be at least 60 years old for full benefits.

For early retirements, members could retire at age 60 with 5 years of service or with 30 years of service at any age.  However, members who choose to retire early would have their benefits actuarially reduced.

Contributions:  The Board-adopted plan calls for gradually increasing employee contributions from 10% to 14% of pay.

Cost-of-Living Allowance (COLA):  The bill would lower the COLA rate for current retirees from 3% to 2% and have a freeze on increases for FY 2014.  For future retirees (beginning August 2013), the COLA rate would also be 2%, but the first increase would come after 60 months of retirement.

Benefit Formula and Final Average Salary:  Beginning in 2015, the formula would be 2.2% for each year of service and final average salary would be calculated on five years of salary rather than three.  Those who are eligible to retire by July 1, 2015 but elect to continue working could receive no less of a base benefit than current law allows.