Taxes & Temporary Benefit

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I retired under MSEP 2000, I will be turning age 62 in May of 2017. My question is: How do I reduce my deductions for state and federal taxes for the new retirement amount I will be receiving in June?
You may change your federal and Missouri state tax withholdings at any time by submitting a new Tax Withholding Authorization (Substitute W4-P) form. Simply log in to your Member Homepage on MOSERS’ website and go to the Forms menu. MOSERS has a federal tax calculator on our website to help estimate your withholdings:
https://www.mosers.org/Members/Calculators/Federal-Tax-Calculator.aspx 

MOSERS withholds state taxes only for Missouri residents. If you aren’t a Missouri resident in retirement, contact the appropriate state and local tax authorities to determine the taxability of your MOSERS benefit.

Note: This question is in reference to the expiration of the “Temporary Benefit”. Additional information is available on our website about the temporary benefit and related topics. We also have a number of Rumor Central posts on the temporary benefit for more background information.

Educational Seminars

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Is MOSERS still hosting informative seminars on retirement? I'd love to sit down in a small group or individually to ask some questions about saving for retirement. 
Yes! MOSERS still hosts PreRetirement seminars in various locations around the state from February through November. You can bring your spouse or a guest as well (registration required). These seminars are usually announced in mid-December for the next year and fill up fast. They focus on your eligibility for MOSERS retirement, calculating your benefit amount, differences between MSEP and MSEP 2000, BackDROP, COLAs, and life insurance. They also include presentations from MO Deferred Comp, Missouri Consolidated Health Care Plan (MCHCP), and Social Security.

MO Deferred Comp offers seminars and one-on-one consultations throughout the year for employees at all career stages. If you are an early or mid-career state employee, deferred comp has specifically designed educational opportunities, like Pocket Change and the Completing the Retirement Paycheck Puzzle seminar,  to help you learn more about saving for retirement. To find a seminar near you, visit modeferredcomp.org and click the yellow Event Registration button at the top of the page or call (800) 392-0925 to schedule a meeting with your local education specialist.

If you would like to schedule an individual appointment with a MOSERS benefit counselor, please call (800) 827-1063 or (573) 632-6100 and select option 2.

BackDROP & COLAs

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If you are over the age of 62, have completed 5 years of backdrop, and go out under the old MSEP plan, do you get the 4% COLA until you reach 65 yrs? The rumor is that once you reach age 62 the 4% COLA stops.
If you retire under the MSEP and were hired before August 28, 1997, you will receive a COLA of at least 4% each year (maximum 5%) until you reach your COLA cap. The COLA cap is when the sum of your COLAs equal 65% of your initial benefit amount. COLAs earned during the BackDROP period do count toward the 65% cap. In general, it takes approximately 12-13 years to reach the COLA cap. Then, your annual COLA will be equal to 80% of the percentage increase in the average Consumer Price Index (CPI) with a minimum of 0% and maximum of 5%.

The cost-of-living adjustment (COLA) for 2017 is 1.010%. This will be effective for MSEP retirees who have reached their 65% COLA cap or who were first hired on or after August 28th, 1997 and for members retired under MSEP 2000, regardless of date of hire. You can see a history of annual COLA rates on MOSERS’ website and also watch a short video on COLAs.

You may be confusing COLAs and the “Temporary Benefit”.  The temporary benefit is NOT available to members who retire under MSEP but IS available to members who are eligible for and retire under the Rule of 80/”80 & Out” in MSEP 2000. In addition to their base benefit, such members receive a temporary benefit until they reach age 62.  At age 62, the temporary benefit ends, but the base benefit continues for life.  You can compare plan provisions in the MSEP and MSEP 2000 Summary of Plan Provisions chart. Often members must weigh the value of the guaranteed minimum COLA in the MSEP against the value of the temporary benefit in MSEP 2000 to see which is best for them. You can use our Comparison Calculator to see how the dollar value of each adds up over time.

All plan provisions are based on state law. We understand they are rather complicated and we are available to help explain further over the phone or during and in-person appointment. We can also help you compare benefit estimates based on different termination dates. View our Contact Us page to reach a MOSERS benefit counselor.

Possible Vesting Legislation?

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I've heard a rumor that the 10 year minimum to qualify for retirement benefits may go back to 5 years. Is this true? 
There is proposed legislation to do so. If passed by the General Assembly and approved by the Governor, House Bill 729 &/or Senate Bill 333 will reduce the vesting period from 10 years of service to 5 years of service for current and future active members of MSEP 2011 (those members first employed in a MOSERS or MPERS benefit-eligible position on or after January 1, 2011).

The legislature is on break this week, but House Bill 729 is scheduled for a hearing on March 29th in the Rules—Administrative Oversight committee. The Senate Committee Substitute for SB 333 is on the Formal Calendar - Senate Bills for Perfection.

For additional information, see a previous Rumor Central post on HB 729 from March 15.

Employer & Employee Contributions to MOSERS

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Where is the money that employees and employers pay into the MOSERS retirement fund deposited and invested? 
All funds are held in trust to pay benefits and administer the pension fund. Member contributions are tracked by person while employer contributions are pooled. Funds needed to pay benefit payments and current bills are held in a local bank account while all other funds are invested to produce the primary source of revenue for the pension system.

The MOSERS investment portfolio is diversified across a myriad of asset classes and investment strategies to mitigate the potential impact of negative economic circumstances. The Total Fund Allocation chart below reflects the actual percentage of the total investment portfolio by specific asset class at June 30, 2016. This asset allocation is built on the belief that diversification is critical in achieving consistent, high, long-term, risk-adjusted investment returns. Please see the Investments section of our annual report and the Asset Allocation page of our website for additional information.


Total Fund Allocation  Policy vs. Actual (As a Percentage of the Total Fund) 



Annual Leave Limit?

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Is there a limit on the number of vacation hours I can be paid for upon retiring?
Your human resources representative/the HR office where you work can tell you about your agency's policies and procedures for paying out unused annual leave. Unused vacation time/annual leave has no impact on your MOSERS retirement benefits and MOSERS is not involved in the payout process.

FY18 Funding for MOSERS

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 This week, we received the following questions from different members:
I read an article in the newspaper discussing how some legislators are not wanting to fully fund MOSERS retirement in the new budget. If that were to happen, what implications does/could that have for employees who have already retired or who are close to retirement? Also, would that create the possibility that retirement benefits for MO state employees could be cut in the future as they have been for retirees in certain municipalities with underfunded retirement plans.

My husband said he viewed a newscast that said that the MO Retirement fund has a shortfall of $45 million. Is that true? If so what affect will that have on our retirement?

Today on KY3 noon news, I caught a sentence only, re: MO State Employee Pension fund being under funded. Republican Leg is suggesting even less funding? Since this pension is the majority of my retirement income, what did I really hear? I'm am concerned!

In light of the budget crisis and the shortfall in the pension fund, are state retirees at risk of having their pension amount cut or losing the pension entirely? I would appreciate a heads-up in case I need to start looking for employment.
As we do each year, MOSERS submitted its Fiscal Year 2018 (FY18) budget request to the State. In the initial phase of the budget process, the House Budget Committee chose to not fully fund the amount that was determined by the actuary and certified by the MOSERS Board. Our budget request is still pending in the House. Once the full House has finalized its version, the Senate will weigh in with its budget recommendations. If the legislature decides to not fully fund MOSERS’ FY18 budget request, it will have no immediate impact on benefit payments to retirees, however, a pattern of inadequate funding certainly could have negative long-term consequences for the retirement system.

For additional information, see this Rumor Central post from February, Appropriation for Pension Funding, and our Key Facts about MOSERS’ funding principles.