Friday Top Five: Retirement Related News for 12/19/14

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Only a small percentage of retirees are directly affected by the new rule. But future legislation may lead to more pension cutbacks.

The last-minute deal to allow retiree pension benefit cuts as part of the federal spending bill for 2015 passed by Congress last week has set off shock waves in the U.S. retirement system.

Related -  Rumor Central’s Federal Pension Changes

The Missouri State Employees Retirement System (MOSERS) reported that someone gained "unauthorized access" to four members' accounts.

The hacker or hackers filled out online forms that required the use of the members' Social Security numbers, retirement identification numbers and passwords, according to news reports. Candy Smith, the retirement system’s communication and strategic planning coordinator, told the Jefferson City News Tribune attempts to get money were detected, and no money was released.

Almost 700 Missouri government retirees renewed their online access to account information Tuesday, the Missouri State Employees Retirement System (MOSERS) said.

“We did have 686 members who established a new password today and logged into their member homepage,” spokeswoman Candy Smith said Tuesday afternoon. “Staff were on the phones all day assisting members and are available Monday-Friday, from 7:30 a.m. to 4:30 p.m.”

Related -  Registration Process Update

The need for guaranteed income in retirement planning is crucial as the shift continues away from defined benefit to defined contribution plans, according to new research sponsored by Prudential Financial, Inc. (NYSE:PRU).

The findings of the latest National Retirement Risk Index (NRRI), published by The Center for Retirement Research (CRR) at Boston College, reveal households with access to a workplace retirement plan are less at risk of not being able to maintain their standard of living in retirement. In addition, the type of plan is also a key factor: 20 percent of households with a defined benefit plan through their current employer are at risk, while 53 percent with only a defined contribution plan are at risk. That compares to 68 percent with no plan at all.

Boone County will grant employment, retirement and survivor benefits to same-sex couples at the new year after a string of court cases chipped away at Missouri’s constitutional ban on homosexual unions.

“The county offers health insurance, dental and life insurance for married spouses regardless of the gender of the partners. As long as they have a valid marriage license, they are considered a spouse under our benefits plan,” Boone County Human Resources Director Jenna Redel-Reed said.

Returning Withdraws to Deferred Compensation Plans

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A previous Rumor Central answer says that retirees can keep their savings in the Deferred Comp plan, but after age 70 aren't we required to make annual withdrawals which are then taxed? Can those withdrawals be put back into another Deferred Comp plan?
Per IRS rules, you are not allowed to rollover any part of a required minimum distribution (RMD). The following is a detailed description of required minimum distributions from the State of Missouri Deferred Compensation Plan.

Required Minimum Distributions (RMDs)
Tax laws require you to begin annual withdrawals, known as Required Minimum Distributions (RMDs), from your retirement accounts in the year you reach age 70½, or when you retire, whichever is later. The State of Missouri Deferred Compensation Plan reviews your account each year to ensure that you are withdrawing the minimum amount required by law. If you do not withdraw enough to satisfy your RMD, the difference will be paid to you by December 31st. If this is the first year you are required to receive a distribution, you will be sent your RMD in March of the following year.

If you are receiving periodic payments, your payment schedule will continue unchanged. However, if you have requested payments equal to your RMD, the State of Missouri Deferred Compensation Plan will adjust your payment amount(s) so that your RMD is satisfied. This adjustment will take place every January or at the time you establish an RMD-only schedule.

If you are not receiving periodic payments, you may establish one at any time, but you are not required to do so. Your account will be reviewed annually to ensure compliance with the regulations and any remaining RMD will be distributed automatically.

How to Budget for the Holidays

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The holidays are upon us! Finances can add a lot of stress for families in the winter months, but you don’t have to turn into a Grinch! We’ve put together a list of 9 steps you can take to keep your gift-giving jolly this year.

1. Plan for Affordability, Not the Latest Craze

Too many holiday lists start by featuring the latest must-have items and gifts for all. Only after the holidays will some consider the important question: How will you pay for that? It’s a recipe to be broke.

Instead, make your holiday list by starting with the question – What can I afford? Choose gifts and make decisions based around that. After all, the holiday is only one day. You’ll thank yourself by starting your new year on a good note.

Start considering how much you’ll need for next year’s holidays and begin your new year with a savings pledge.

2. Have a List

A well thought-out gift will make more impact than a flash in the pan. Knowing what you want to give your loved ones may keep you on track and avoid impulse spending.

3. Do Online Research

A good way to check if your budget is realistic for what you intend to purchase is to do some online research before you hit the mall. Not only does it provide you a great way to gather ideas and market rates, you’ll also save time and energy by avoiding the mall simply for research purposes.

4. Go Simple on Unnecessary Items

There are a lot of items that aren’t needed during the holidays. Save your money and finite resources by not including them in your celebrations. Examples include:
  • Ribbons, bows, fancy tape, stickers, etc.
  • Holiday-specific tablecloths.
  • Massive money on outside lights – set your decorations on a timer or limit when you turn them on.

5. Make a Pact: No Unnecessary Gifts.

Don’t break your budget for unnecessary gifts! Consider skipping on gifts for coworkers and friends. You may find that they’ll be relieved not to have additional financial obligations.

6. Print Coupons/Vouchers and Hit Sales

Now the fun part! Doing your homework ahead of time will help you know the best price for items on your list! You can keep track of sales, coupons, and price patterns! Knowledge and a plan will also help curb impulse buying if you know you can get it cheaper in two weeks.

7. Kids Aren’t Retail Snobs

Hopefully, the young children in your life don’t value your love based on the price of your gifts, so don’t shell out big bucks unnecessarily! For example, if you know your toddler is more interested in the packaging than the gift, consider wrapping several boxes within themselves for the gift of an experience.

8. Set Price Limits and Spread the Cost Around

Setting price limits with friends and family is another helpful way to keep your budget. Some holiday traditions include gift games or Secret Santa, where each individual brings a single $5-10 gift. You can range from the thoughtful to the downright silly.

9. Delay the Holiday – Buy  During the January Sales

Many people know that retailers keep their prices high until after the main holiday and post-holiday gift card rushes are over. Consider getting large, costly purchases after the price drops in January.  It also allows you some time to spread the cost across both December and January paychecks so you won’t have to incur extra debt!

Federal Pension Changes

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the Governor of Kansas is cutting the State's contribution to their State employees pension system; can Missouri general Assembly, or the governor, do likewise? With the above, as well as Federal legislation regarding cutting other types of pensions, how concerned should we retirees be?
Your MOSERS benefits are secure. The recent federal pension changes do not apply to governmental pension plans like MOSERS. There are a few states that have announced cuts to actuarially determined contributions to their state employees’ retirement plans.  Unlike those states, the state of Missouri has consistently fully funded the amount determined by an independent actuary to be the contributions required to properly and responsibly fund the pension plan.  In addition to other negative ramifications, a decision to reduce contributions to MOSERS could potentially have a negative impact on the state’s bond rating, and thus increase the state’s cost of borrowing.

MOSERS has two sources of revenue:  1) Contributions by the employer (and employees in MSEP 2011), and 2) investment earnings. For the current fiscal year, the state’s contribution to MOSERS represents only 1.2% of the total state budget. Over the past 20 years, investment earnings have accounted for more than two-thirds of MOSERS revenues. See Key Facts Regarding Funding of the Missouri State Employees' Retirement System  and Not Your Average Pension Fund for additional information on this topic. The fact that the state has consistently made contributions on time and in full, combined with MOSERS above-average investment returns, saves money for the state, keeps contributions at a reasonable level, and strengthens the security of your benefit.

Sick Leave & the Rule of 80

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Why can't we use out time (sick and annual) toward our 80 and out. If members were allowed to use their time toward the 80 and out, what kind of impact would that have?
Annual leave is not used in calculating your retirement benefit. Any unused annual leave will be paid by the agency you work for. You may want to contact your payroll/personnel officer to determine their procedure for paying out unused annual leave.

You will receive one month of credited service for every 168 hours of unused sick leave reported to MOSERS by your employer at the time you leave your position. Your sick leave is used in calculating the amount of your retirement benefit, but cannot be used to determine eligibility. For example, if you have 336 hours of unused sick leave, you will receive credit for an additional 2 months of service (336/168=2) when your retirement benefit is calculated. This 2 months of sick leave will not get you 2 months closer to retirement however; as we cannot use it to calculate when you are eligible.

The plan design reflects the policy that retirement eligibility is based on age and actual service rendered. The statute states a member has to be eligible for retirement in order to receive the additional sick leave credit. There would be a cost to change that policy because we receive retirement contributions to fund the benefits based on actual salary only;  no retirement contributions are paid on sick leave and annual leave. 

2015 Legislation Rumors

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Have you heard of any legislation that would allow the reduction of our retirement amounts? I have read rumors to that effect.
MOSERS isn’t aware of any proposed legislation to that effect. The regular legislative session resumes in January of 2015, so we will monitor any retirement-related bills and continue to keep our members informed. You can follow the status of all public retirement bills on the Joint Committee on Public Retirement’s website at www.jcper.org.

You might also be thinking of the proposed federal retiree pension changes in the news lately. This issue wouldn’t affect state employees in Missouri.

Friday Top Five: Retirement Related News for 12/12/14

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From StL Today: Pension system for most county employees will recognize gay marriages

Another public retirement system in Missouri has expanded benefits to members' same-sex spouses.

The latest decision affects employees and retirees of the 111 county governments covered by the County Employees' Retirement Fund. The fund's board voted unanimously last week to recognize same-sex couples who were wed in states where such marriages are legal.

From News Tribune: State employees' online retirement system hacked

Missouri government retirees won’t be able to access their information online until Tuesday morning — thanks to someone who managed to gain “unauthorized access” to four MOSERS members’ home pages.

MOSERS — the Missouri State Employees Retirement System — sent about 81,000 emails, and another 20,000 letters, on Thursday to members, explaining the situation, which follows “four successful attempts beginning last month to fraudulently complete an online form for active members of MOSERS.”

From Inside Higher Ed: Academics Prepared for Retirement

The economic downturn appears to have pushed back the timeframe for many higher education employees to retire -- but when they ultimately do, they will be better prepared financially and otherwise than other Americans, a new survey suggests.

The survey, by the pension giant TIAA-CREF, asked a group of higher education professionals a set of questions about their retirement plans and preparation, and compared those findings with a similar survey of all Americans.

From NPR: That Nest Egg Needs To Last As Long As You Do. So How Do You Start?

Retirement for baby boomers will look different than it did for their parents — Americans are living longer, health care costs more, fewer people have pensions today, and many people facing retirement haven't saved much.

All of that makes managing the nest egg you do have even more vital. But many people need and want guidance on what they should do to make sure their retirement savings last.

From CNN: Ditch 'The Number' and find a realistic retirement savings goal

You'd never know it for all the attention "The Number" gets in retirement planning. But the fact is that the road to retirement has far too many twists and turns to pin down your savings effort to any single number -- magic or otherwise.

But that doesn't mean you shouldn't have some sort of target to help you get and stay on track toward a secure retirement. Research shows that people who have a goal are more than twice as likely to feel confident about accumulating the savings they'll need.