80 & Out?

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I understand that the 80 and out rule no longer exists. Is it called the 90 and out rule now?
It depends on your retirement plan. General state employees who are in the MSEP or MSEP 2000 are eligible for normal retirement once their age and service equals the Rule of 80 (“80 and Out”). The minimum age requirement for employees first employed in a MOSERS benefit-eligible position prior to 01/01/2011 is age 48.

It is the Rule of 90 (“90 and Out”) for general state employees who are members of MSEP 2011- those first-employed in a MOSERS benefit-eligible position on or after 01/01/2011. The minimum age requirement for the Rule of 90 is age 55.

Keep in mind any of the following may affect your retirement eligibility: your retirement plan (MSEP, MSEP 2000, MSEP 2011, etc.), age, service, and if you retire directly from active employment versus leaving state government and waiting to retire. Contact a MOSERS benefit counselor to discuss your specific situation.

Social Security Retirement Benefits

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I retired with 80 and out. I will be 62 in October do I need to sign up for social security now?

 If we understand your question correctly, you are asking about timing your social security benefits with the end of your MOSERS temporary benefit* under the MSEP 2000. Your last temporary benefit from MOSERS will be paid at the end of the month in which you turn 62. MOSERS benefits are not automatically coordinated with social security, so you should contact the Social Security Administration to find out when you should apply and when you will get your first social security benefit payment so that you know and are prepared if there is a gap between payments.

We have a news article on our website that may also be helpful to you.

*The Temporary Benefit is a provision of the MSEP 2000 or MSEP 2011. It is not available in the MSEP and would not apply if you retire under MSEP 2000 or MSEP 2011 and are older than age 62 when you retire.

Final Average Pay

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Is our retirement benefit based on the 3 highest years of wages?
or the 3 highest years of wages before you hit 80 and out?
I keep hearing both, so not sure which is right.
The answer depends on if you elect BackDROP (if eligible); not when you hit “80 & Out”. 

If you are a general state employee, your retirement benefit is calculated using a three-part formula:

Final Average Pay (FAP)        x            credited service         x             a multiplier

FAP is determined using your highest 36 full consecutive months of pay when looking at your entire work history covered under MOSERS. Practically speaking, for most, that is their last three years, but not always.

The exception to this would occur under the BackDROP (if eligible). If you become eligible for and elect the BackDROP upon retirement, your highest 36 consecutive months would be determined from your MOSERS-covered work history prior to your BackDROP date. (Some people find BackDROP easier to understand if they think of the BackDROP period as being “cashed in” because salary and service during that period don’t count in the calculation of your monthly benefit amount.)

So, to reiterate, if you don’t elect BackDROP, your monthly benefit will be based on your highest 36 full consecutive months of pay, regardless of whether that is before or after you might hit “80 & Out”.  See page 20 of the MSEP/MSEP 2000 General Employees Retirement Handbook for an example and more detailed information. Also, keep in mind that “80 & Out” is not the only way to become eligible for retirement. For example, as a general state employee in MSEP 2000, you might become eligible for normal retirement at age 62 with 5 years of service before you would become eligible for “80 & Out”.  See Which plan am I in? with a list of plan provisions including criteria for normal retirement eligibility in each plan. 

Health Care Proposal?

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I recently heard there is a proposal being considered that would give retirees the opportunity to receive their full health care benefits through MCHCP at the same monthly premium they paid while working full time...true?
There was a healthcare retirement incentive (HB 1134) that was introduced in the 2016 legislative session, but it didn’t pass. The 2016 session ended on May 13th.  It would have to be reintroduced in the next legislative session which begins in January 2017 to be considered again.

Specific questions regarding health care benefits should be directed to your health care provider, which, for most state employees, is Missouri Consolidated Health Care Plan (MCHCP).

Pension Plan Investment Fees

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In the Wall Street Journal 5/14-15,2016 Cross Country article by Marc Levine states 33 state pension systems spent $6 billion on Asset Management fees in 2014, according to a 2015 study by Maryland Public Policy Institute. The 10 states that spent the most on fees- including New Jersey, Maryland, South Carolina, and Missouri-achieved a rate of return no higher than the states that spent the least. It doesn't state the amount spent by Missouri, but how can this be justified?
Thank you for the Rumor Central question. We spend time reviewing the various analysis of public pension plan investments. In this vein, we saw the report published by the Maryland Public Policy Institute (MPPI) and the article in the Wall Street Journal (WSJ) based on the MPPI analysis. We believe that the MPPI contains material misstatements that we would like to address.

For instance, the WSJ article says “…Missouri…achieved a rate of return no higher than the states that spent the least.” This analysis was based on a 5-year rate of return ending 6/30/2014. In reality, MOSERS returned 13.2% (net of all fees and expenses) for the 5-year-period ending 6/30/14 vs. the median return of 12.7% for the “Bottom 10 Wall Street Fee Ratio States” as highlighted in the 2015 MPPI study. In other words, after all fees and expenses were paid, MOSERS still outperformed the 5-year median return reported for the 10 cheapest fee states. This simply says that we have outperformed the lower fee plans over the same 5-year period; contrary to the conclusions they have written. In our investigation, we could not discern where the MPPI research and WSJ article found their return information.

Additionally, MOSERS has a long-standing, national reputation for consistently disclosing all management and incentive fees associated with its external investment managers. Unfortunately, not all public pension plans adhere to the same philosophy of transparency and thoroughness as MOSERS. MOSERS has made a practice of full fee disclosure since 2002. As a matter of fact, Pew Institute recently issued a report that recognized MOSERS’ fee reporting standard as among the highest in the pension industry. However, when this disclosure difference is not accounted for, it makes the Maryland Public Policy Institute’s findings incomplete and misleading.

Inconsistent and opaque fee reporting activities make it difficult to compare pension plan fee structures in an “apples to apples” manner, especially the incentives paid to external investment managers, which many plans don’t disclose at all. This wide disparity in disclosure makes many pension plans appear to have lower fees relative to MOSERS when, in actuality, our fees may be comparable. For example, there are several funds in the MPPI analysis that, like MOSERS, invest a significant portion of their assets in alternative investments. 

Alternative investments, generally, are associated with high management fees and a share of the profit generated. The fact that these other funds share similar size allocations to these high-fee areas, but the analysis implies MOSERS has dramatically higher fees is misleading. The truth is, as discussed in the Pew Report, those funds aren’t disclosing a significant portion of their fees in their annual reports. If MPPI had the correct fee information, we believe it would have changed their conclusion as it relates to MOSERS.

In reference to the Wall Street Journal’s political “mischief” findings, it’s important to note that, while a number of MOSERS’ trustees do hold political office, our board is not responsible for day-to-day investment decisions. Instead, investment decisions are made by a dedicated, professional investment staff with the aid of independent consultants where necessary. The investment program at MOSERS is guided by a comprehensive set of investment beliefs that are aligned with MOSERS’ overall portfolio objectives. Fees are a critical risk consideration when it comes to future investment results and weigh heavily in the criteria established to make investments. However, fees are but one of the many variables investment staff considers when evaluating a possible investment. 

Thank you again for the question and your interest in MOSERS' investment activity. As a retired member of the system and recipient of a monthly benefit payment, we wholeheartedly understand your reservations when reading an article like this one. Rest assured that MOSERS is making every effort to minimize fees where possible and will continue to adhere to its guiding principles of preserving the long-term corpus of the fund, maximizing total return within prudent risk parameters, and acting in the exclusive interest of the members of the system.

Retiree Health Care Premiums

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Is it true that if I have 30 years of service with the state of Missouri when I retired I would only need to pay half of my health insurance coverage?
The state’s contribution toward retiree health care premiums is based on years of service. The state’s contribution (also referred to as a subsidy) is 2.5% for each FULL year of service. The maximum subsidy is 65% (up to 26 years). It is based on the PPO 600 Plan.

Keep in mind that retiree health care premiums are higher than those of active state employees. For example, if your retiree health care premium is $800 and you received the maximum subsidy (65%), your portion of your premium would be $280 (35%). Specific questions regarding health care benefits should be directed to your health care provider, which, for most state employees, is Missouri Consolidated Health Care Plan (MCHCP).

BackDROP Going Away?

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This morning I was told by a state employee that the backdrop benefit would be going away in January. If true, does this apply to new hires and state employees who are already vested will not be effected? 
We are not aware of any proposals to change or stop the BackDROP for members (general state employees) of the MSEP or MSEP 2000. However, members of MSEP 2011 (those first employed in a MOSERS benefit-eligible position on or after January 1, 2011) are not eligible for the BackDROP.
Any change to the BackDROP would require a change in the law, and the 2016 legislative session ends on May 13th.  As always, we will keep our members up to date through our website, newsletters and social media if there is any news on retirement-related legislation.