Alternative retirement plan mitigating rate changes to take effect July 1 | UToledo News

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Alternative retirement plan mitigating rate changes to take effect July 1

Employees who have voluntarily selected to participate in an alternative retirement plan (ARP) should note that effective July 1, the following changes will be made to mitigating rates:

The mitigating rate is a portion of the employer contributions paid by university employers on behalf of their employees who have chosen not to join the Ohio Public Employees Retirement System (OPERS) or State Teachers Retirement System (STRS), and is intended to offset the financial impact of the loss of their contributions.

The OPERS mitigating rate has remained unchanged since 2009. This rate will increase July 1 and will apply to all OPERS/ARP participants.

STRS recently announced the mitigating rate for the ARP, and STRS Defined Contribution Plan (STRS-DC) will decrease from 4.5 percent to 4.47 percent effective July 1.

The mitigating rate reflects university contributions that are directed to STRS instead of the ARP or STRS-DC in order to offset the negative impact to STRS funding liabilities created by the existence of the ARP and STRS-DC. As a result of this decrease, contributions to the ARP and STRS-DC for participants will increase by 0.03 percent.

Ohio House Bill 520 established a formula for calculating the percentage of an ARP participant’s compensation, funded by the employer contributions, which must be paid to OPERS or STRS by a college or university.

The ARP mitigating contribution rate applies only to contributions effective with the ARP election, not to any OPERS or STRS balances transferred to an ARP vendor. Refunds of ARP mitigating contributions submitted in error will appear as a credit on your ARP employer account summary; they will not be refunded in the form of a check.

Once an ARP is selected, it is irrevocable while an employee remains employed with the same college or university. If an employee changes employers or there is a one-year break in service and they return to the same college or university, employees have the opportunity to select OPERS or STRS membership.

Questions about the new mitigating rate and ARP should be directed to OPERS at 800.777.7377 or STRS at 888.227.7877.

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