The School Employees Retirement System of Ohio has announced several important updates in 2025, ranging from a cost-of-living adjustment (COLA) for retirees to new investment commitments and changes in compensation rules. For active members, retirees, and school districts across the state, these developments highlight how the pension system is adapting to economic conditions and ensuring its long-term stability.
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2.5% COLA Approved for 2026
The Board of the School Employees Retirement System of Ohio approved a 2.5% cost-of-living adjustment for 2026. This decision was tied to the Consumer Price Index for Urban Wage Earners (CPI-W), which guides the maximum annual increase.
- Retirees who meet eligibility requirements will receive this adjustment.
- The 2.5% increase is the maximum permitted under current rules.
- The adjustment is designed to help offset inflation and protect retiree purchasing power.
This move reassures retirees that their benefits will maintain value in an environment where living costs remain elevated.
Investment Growth and Asset Strategy
The health of the School Employees Retirement System of Ohio depends heavily on its investment performance.
Strong Returns
- For the fiscal year ending June 30, 2025, SERS reported a return of over 11%, exceeding benchmarks.
- Total assets under management are now more than $20 billion.
- Long-term results remain in the top quartile compared to other pension systems.
New Allocations
- In 2025, SERS committed $75 million to a private debt fund.
- This shift indicates a growing strategy to diversify portfolios and capture higher returns from alternative investments.
- Private debt carries more risk but can provide stability and income across economic cycles.
These investment strategies show how the system balances growth with security to ensure promised benefits are sustainable.
Redefined Compensation Rules Effective July 2025
Beginning July 1, 2025, SERS will enforce a new definition of compensation for retirement calculations.
- Certain allowances and types of pay may no longer be included in pensionable earnings.
- Members approaching retirement should carefully review how this affects their final average salary.
- Employers must ensure proper reporting to remain in compliance.
This change is significant for anyone planning to retire soon, as it may impact benefit calculations directly.
Governance and Board Elections
The School Employees Retirement System of Ohio continues to emphasize transparent governance.
- Board elections in early 2025 filled two employee-member seats, with terms running through 2029.
- Oversight from state offices ensured transparency during ballot counts.
- Updated employer statements and surcharge reports provide more accurate financial tracking for schools.
Strong governance structures are essential to protecting members’ benefits and ensuring financial health of the fund.
Financial Strength and Funding Status
The financial condition of the School Employees Retirement System of Ohio remains solid:
- The system reports a funding ratio of approximately 79%, keeping it above the 70% benchmark.
- Employer contributions flow entirely into the pension fund instead of being diverted to health care.
- Administrative expenses remain transparent, with detailed reports available for review.
This level of funding stability ensures that benefit obligations can be met while maintaining flexibility for future improvements.
Why These Changes Matter for Members
The 2025 updates impact all categories of stakeholders:
- Retirees benefit from the COLA increase, ensuring more stable income.
- Active employees need to understand the new compensation definitions to properly plan for retirement.
- Employers must adjust reporting practices to align with revised definitions.
- Future retirees will see the effects of investment strategies on long-term pension stability.
What to Watch in 2026 and Beyond
Looking forward, members should monitor:
- Impact of new compensation rules on retirement benefit calculations.
- Private debt performance, which will reveal whether these investments meet expected yield.
- Future COLA adjustments, which will continue to be influenced by inflation trends.
- Board decisions, as governance plays a direct role in policy and investment outcomes.
- Legislative updates, since Ohio pension laws can affect contribution rates or benefit structures.
Frequently Asked Questions (FAQ)
Q: Who is eligible for the 2026 COLA?
Retirees who meet system rules for eligibility and waiting periods will receive the 2.5% increase.
Q: Will the new definition of compensation reduce my retirement benefits?
It may for some members, depending on how their pay is structured. Reviewing your final average salary calculation is recommended.
Q: Why did SERS invest in private debt?
Private debt can provide higher income and diversification, though it comes with more risk compared to traditional investments.
In conclusion, the School Employees Retirement System of Ohio is demonstrating resilience through its 2025 updates. By raising COLA, refining compensation definitions, and investing in new strategies, the system continues to serve both current retirees and future retirees. These changes underline the importance of staying informed and engaged as the system evolves.
What do you think about these changes to Ohio’s school employee retirement system? Share your views and join the discussion below.
Disclaimer:
This article is for informational purposes only and should not be taken as legal, tax, or financial advice. Please consult a professional for personalized guidance regarding pension planning or retirement decisions.