How Do Guaranteed Payments Work?

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Am very close to enrolling for my retirement Nov 1, 2014. Can you elaborate a bit on "guaranteed payments" ? Does that mean it will be paid to my estate in the event of my death until all payments are made ? or does it mean i would get set number of retirement checks and then benefit ceases?
 As the MOSERS member, you will receive payments each month for your life. The 60, 120 or 180 guaranteed payments refer to the minimum number of payments that will be made to you or to a beneficiary on your behalf. If you die PRIOR to receiving that number of payments, your beneficiary(ies) will receive whatever number of payments remain in the guaranteed period that you elected. At retirement, you must name a beneficiary or beneficiaries (person(s), trust, corporation, organization, charity, or your estate) to receive your final benefit payment from MOSERS and any remaining guaranteed payments (excluding any temporary benefit).

For example, if you elected Life Income with 60 Guaranteed Payments and lived for 24 months after retirement, your beneficiary(ies) would receive the 36 remaining payments. If you were to live 200 months beyond your retirement date, you would receive a payment each month for your life but, because payments would have been made in excess of the guarantee period, there would be no remaining payments to be paid to anyone else after your death (except the final payment for the month in which you die).

You should also be aware that, by electing a guaranteed payment option, your retirement benefit will be reduced. More information about the reduction factor can be found in the MSEP/MSEP 2000 General Employees’ Handbook and the MSEP 2011 General Employees’ Handbook on MOSERS’ website. You can generate your own retirement estimate that compares different payment options by going to the Secure Member Login and picking the Select a Date Estimate or you may request one from a benefit counselor by calling (800) 827-1063.

Retirement and Life Insurance

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When a person retires, does the state provide them with 5000.00 worth of life insurance? it seems I read that somewhere at some point, but haven't been able to find it lately.
Yes, as a MOSERS benefit-eligible member, if you retire directly from active service you will have $5,000 of basic life insurance provided at no cost to you. Regardless of whether you elect normal retirement (unreduced benefit) or early retirement (reduced benefit), as long as you retire within 60 days of leaving state employment, the state will continue to pay for $5,000 of basic life insurance. Coverage is automatic; no forms are required.

If you wish to retain more life insurance coverage, you have 60 days from the end of the month in which you leave state employment to make an election to convert the remaining basic life insurance to an individual policy through Standard Insurance Company. Additionally, if you were enrolled in optional life insurance coverage on your last working day, you may continue some or all of that coverage into retirement. If you retire under the “Rule of 80” (MSEP 2000), or “Rule of 90” (MSEP 2011), you may retain all of your optional life insurance coverage until age 62. At age 62, your coverage will automatically reduce to a maximum of $60,000. If you terminated (or did not have any) optional life insurance coverage through MOSERS at retirement, it cannot be reinstated or added after retirement.

You can find more information in the MOSERS Basic and Optional Life Insurance Handbook on our website.

Calculating Normal Eligibility

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Does the MOSERS website offer a member a way to determine what MOSERS has calculated as their normal retirement eligibility date?
Yes. You can create your own retirement estimate by logging into your secure Member Homepage. From the top menu, select Estimates, then Estimate Your Retirement Benefit. You will be shown your earliest eligibility date for normal retirement. If you would like to look at other options, you may enter an alternate retirement date below that.

Friday Top Five: Retirement Related News for 7/25/14

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From AGEnda: How Social Security Reforms Could Affect Employers

Social Security payroll taxes are a major expense for employers and employees alike. Each party now must pay 7.65 percent on the first $117,000 of covered wage earnings, with that amount split between Social Security (6.2 percent) and Medicare (1.45 percent, with the proceeds going to the Medicare trust fund that pays for hospital expenses under Part A of the program).

These taxes are nearly universal in private workplaces and, increasingly, in government jobs as well. It’s easy to see them as an immutable cost of business, which over time becomes a forgotten fixed cost. The same is true for employees, especially younger ones.

From USA Today: People of all ages investing more for retirement

People of all ages — even young people — are saving more for retirement by making bigger contributions than ever to Individual Retirement Accounts (IRAs), a Fidelity Investments study out today shows.

Average IRA contributions for tax year 2013 increased 5.7% over the previous year and reached $4,150, an all-time high. Average balances are up almost 10% over last year to $89,100.

Overall, average IRA contributions for investors in their 20s, 30s and 40s are up 3.9%, 6.7% and 6.2%, respectively.

From BenefitsPro: Average worker needs to save 15% to fund retirement

A typical household needs to save roughly 15 percent of their income annually to sustain their lifestyle into retirement, according to a brief from the Center for Retirement Research at Boston College.

Generally, workplace retirement savings plans should provide one-third of retirement income, according to the study. For lower income families, defined contribution or defined benefit plans should provide a quarter of all retirement income. Higher income families will need their retirement plans to provide about half of all retirement income.

From MarketWatch: 6 ways a new tax law benefits a sustainable retirement

Every now and then the Department of the Treasury and IRS surprise us with taxpayer-friendly legislation that addresses pervasive retirement income planning concerns.

One of the most anxiety-provoking subjects that frighten many people more than death is the possibility of outliving one's assets. Recognizing this issue, the Department of Labor, the IRS, and the Department of the Treasury began soliciting feedback in early 2010 about the possibility of including advanced-age lifetime-income options in retirement plans. To make a long story short, the Treasury and IRS finalized a regulation in the beginning of July that enables retirement plan participants to invest a portion of their plans in "longevity insurance."

From Wealth Management: IRA Contributions: The Perils of Procrastination

Individual Retirement Account contributions are getting larger - an encouraging sign of a recovering economy and improved habits among retirement savers.

But there is an "I" in IRA for a reason: investors are in charge of managing their accounts. And recent research by Vanguard finds that many of us are leaving returns on the table due to an all-too-human fault: procrastination in the timing of our contributions.


Remarriage and Survivor Benefits

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When a member dies and their wife gets her pension, and she remarries. Will she lose her pension she gets from her first husband.
No, the member’s spouse will not lose the survivor benefit. Survivor pension benefits are available for members who elected a joint & survivor benefit payment option at retirement. The benefit will be payable for the remainder of the surviving spouse’s lifetime, regardless of remarriage. (Different provisions apply if the member dies prior to retirement – see your member handbook.)
For more information about survivor benefits, please see the Survivors section of the MOSERS website.

Retirement Eligibility

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When Mosers says your retirement date, is it referring to DMH 80 & Out or your Social Security retirement age of 66 years?
Your MOSERS retirement eligibility is not connected to your social security retirement eligibility,

In regards to our BackDROP article on the website, your MOSERS normal retirement date is the date at which you can retire with an unreduced MOSERS benefit whether or not you elect the BackDROP (if you elect early retirement from MOSERS, your MOSERS benefit would be reduced). Once you reach your normal retirement date, you can retire from MOSERS any month thereafter and receive full MOSERS benefits. However, in order to be eligible for the BackDROP, you must continue working in a MOSERS benefit eligible position at least two years beyond your normal retirement date. The Rule of 80 (“80 & Out”) is one way to qualify for normal retirement for eligible members of the MSEP or MSEP 2000. It would be the “Rule of 90” for members of the MSEP 2011. The Rule of 80/90 is not the only way to reach MOSERS normal retirement eligibility. Below is a table showing other normal eligibility options. Whenever you have first attained both the age and service required, that is your first normal retirement eligibility date from MOSERS*. 

Normal Retirement Eligibility - Age and service required to receive an unreduced retirement benefit (DB)

MSEP

MSEP 2000

MSEP 2011

  • Age 65 and active with 4 years of service
  • Age 65 with 5 years of service
  • Age 60 with 15 years of service
  • “Rule of 80” - at least age 48 with age and service equaling 80 or more
  • Age 50 if first became eligible prior to Aug. 28, 2003
  • Age 62 with 5 years of service
  • “Rule of 80” - at least age 48* with age and service equaling 80 or more
*Age 50 if first became eligible prior to Aug. 28, 2003
  • Age 67 with 10 years of service
  • “Rule of 90” - at least age 55 with age and service equaling 90 or more


If you are uncertain of your plan membership, see “Which Plan Am I In?” or contact a MOSERS benefit counselor.

*Different provisions apply to legislators, statewide elected officials and judges.  Please see your member handbook for more information. 

Friday Top Five: Retirement Related News for 7/18/14

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From St. Louis Post Dispatch: Workers who neglect their retirement neglect their health, too

Warning: Failing to save for retirement may be hazardous to your health.

OK, that isn’t strictly true, but a cigarette-package-like warning might be the only way to get some nonsavers’ attention. And, according to a new study by two Washington University researchers, there really is a link between financial and physical health.

From Metrofocus: The State of Public Pensions in New York and New Jersey

Public pension payments often make up a huge portion of state budgets*. At the end of fiscal year 2013, New York State paid $9.5 billion into its pension funds – a little over seven percent of the total state budget. New York City paid $8.06 billion into its pension funds – more than 11 percent of the city’s total budget. For the upcoming fiscal year, New Jersey Governor Chris Christie decided to cut $887 million from the state’s required pension payment. It was a controversial move that was ruled constitutional by a New Jersey Superior Court judge because the governor was “backed into a corner.”

*Note: MOSERS’ appropriation for state employee pension funding is 1.2% of the Missouri state budget. The State of Missouri has consistently funded 100% of the annually required contribution (ARC) as determined by the system’s independent actuary.

From Forbes: Millennials Save For Retirement Earlier Than Baby Boomers, Survey Finds

All of those reports encouraging Millennials to start saving for retirement as soon as possible may be paying off, literally. According to the 15th Annual Transamerica Retirement Survey, performed by the nonprofit Transamerica Center for Retirement Studies, Millennials are an “emerging generation of retirement super savers,”  with 74% starting to save for retirement at an “unprecedented” median age of 22, or 5 years sooner than Gen Xers and a staggering 13 years sooner than Baby Boomers.

The survey focused on the retirement habits and trends of Baby Boomers, Gen X and Millennials who are currently working full- or part-time in a for-profit company of 10 or more people.

From AL.com: Defined-benefit pensions are not against liberty or the poor: guest opinion

Defined benefit pensions are not anti-poor, regardless of recent claims at AL.com by Scott Beaulier, director of the Manuel H. Johnson Center at Troy University.  In mid-May, Beaulier's organization released a study alleging that the Retirement Systems of Alabama faces a large funding gap that the state underestimates.  The center's report was countered by the RSA's chief lawyer in an argument depicting the Johnson Center report as "inaccurate and misleading."

The July issue of the RSA's monthly newsletter rebuts the Johnson Center claims regarding the retirement system.  However, it leaves unaddressed Beaulier's arguments that defined pension plans are anti-poor.  In his June 26 essay Beaulier argues that people with more education and income live longer than those with less.  Thus, longer-lived Alabamians draw larger benefits from defined benefit plans than do those with shorter lives.  This is hardly rocket science, as higher education and income are positively associated with prudent lifestyle decisions and opportunities.  One would think that most Alabamians support plans that reward prudence and healthy lifestyles.

From Forbes: Five Things Young People Get Wrong About Life In Retirement

It’s not uncommon to hear that ideas and concepts surrounding retirement are changing, but what’s interesting is that it hasn’t trickled down to younger generations who think retirement is a death sentence best served in a rocking chair.  Here are five examples to help young people change their perspective on life in retirement.