System Funding

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We have received some questions about MOSERS' funding related to the Buyout Program: 
I just read an article in the St Joseph News Press that states the Missouri pension system " is struggling " It then talks of the pension buyout program. Financially is the system struggling?
I saw in the editorials from the Kansas City and St Louis newspaper that MOSERS is funded only at 69%. What does this mean for the long term future of MOSERS
 As of June 30, 2016 (the close of the most recent fiscal year), MOSERS is 69.6% funded. That means that we have 69.6% of assets necessary to pay all accrued liability over the long term. Because we operate on a very long-term horizon (already analyzing and anticipating funding needs 30-50 years into the future). We will send a summary annual financial report for fiscal year 2017 to all members in December.

The MOSERS board has taken several actions to keep the retirement system solid and secure into the future. The board approved a proposal to reduce the system’s long-term liability by offering a voluntary lump-sum payment (rather than a monthly pension) to former state employees who will be eligible for a pension benefit at some point in the future. This is the Buyout Program the articles are referring to.

Also, unlike in other states, the Missouri General Assembly has consistently appropriated the full employer contribution to MOSERS as recommended by the plan’s actuary. The Governor signed House Bill 5 on June 30, 2017, which resulted in full funding of MOSERS at the contribution rate as certified by MOSERS Board of Trustees in September 2016.

You can find more information on Rumor Central about other related Board decisions and MOSERS' appropriation as well as additional details regarding MOSERS' funded status.


When Do I Receive My COLA?

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I was hired with the state in 1994 and currently fall under the MSEP. Will I receive my COLA each year on my anniversary date, or does this only apply if you do backdrop beyond your retirement?
 Yes, MOSERS calculates a cost-of-living adjustment each year for all general state employees. As a retired general state employee, you will receive a COLA each year on the anniversary of your retirement date, unless one of these exceptions applies to you:

Retirees who converted from MSEP to MSEP 2000 during the conversion window in 2000 have COLAs payable each year in July.
•         Retirees who elected a BackDROP* will have COLAs payable each year on the anniversary of their BackDROP date rather than on the anniversary of their retirement date.
•         MSEP 2011 members hired after January 1, 2018 who leave state employment prior to retirement eligibility, will receive their first COLA in retirement on the second anniversary of their retirement.

For more information, including how the COLA rate is calculated, and a helpful video, please see the COLA page on our website. This BackDROP graphic also illustrates the difference between BackDROP date and retirement date.

*BackDROP is available only to general state employees who are members of MSEP & MSEP 2000 and who work at least two years beyond normal retirement eligibility. 

Buyout Program

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Concerned about the retirement buyout coming up. I don't understand how its figured out, will they take in consideration how many years you will be actually in retirement, help with taxes if you cash out, financial advice. Also, when can we expect more of the information to come out. Thank you!
We are currently finalizing the list of members who are eligible for the Buyout Program and verifying all their information. We cannot yet answer any questions about eligibility or individual lump-sum amounts until we have mailed your letter. We will send letters about the Buyout Program to all eligible members by the end of September. This voluntary program will be offered to eligible former state employees who are vested in a MOSERS retirement plan.

Not Eligible: You are not eligible for the buyout if you are actively employed in a MOSERS or MPERS-covered position, already retired and receiving a MOSERS benefit, have applied for early retirement or will reach normal retirement eligibility with MOSERS prior to 12/1/2017. (See our Rumor Central post “Lump-Sum Payout?” for other reasons vested former state employees may not be eligible.)

If you are eligible, we will send you a personalized letter which will contain both the estimate of your one-time lump-sum amount (if you choose to elect the buyout) and also your future estimated normal retirement annuity/monthly benefit amount. If you do not choose to participate in the Buyout Program, we will contact you prior to retirement eligibility and provide information about the retirement application process.

The amount of the lump-sum payment will be 60% of the present value of your future normal retirement annuity. In order to estimate how long a member might live in retirement, we will use unisex mortality tables. The discount rate used to calculate the present value of your future normal retirement annuity is 7.50% (this is the amount we assume we will earn each year through our investments). All lump-sum payment amounts will be calculated as of October 1, 2017.

With regard to taxes,

If eligible, you should read the Special Tax Notice and consider discussing it with a qualified tax advisor to ensure you fully understand the tax implications of electing the buyout payment.
If eligible, you may take the lump-sum buyout payment as a cash payment, as a rollover to a qualified retirement plan, or as a combination cash and rollover distribution.
Any distribution not directly rolled over to a qualified retirement plan will be reported as taxable income in the year of payment. MOSERS is required to withhold 20% of the taxable portion of a cash distribution for federal income tax. If you are younger than age 59 1/2, an additional 10% early distribution federal tax penalty may apply.

To give members a heads-up so they will be watching for their letter, we will send a newsletter (by email and to home mailing addresses that we have on file) to eligible members with more information about the Buyout Program.

Changes to Rule of 90?

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 I WOULD LIKE TO KNOW IF THE "90 & OUT RULE" STILL APPLIES OR DID THE CHANGES GO BACK TO "80 & OUT"?
There are no changes to the Rule of 90/“90 & Out” for members of the MSEP 2011.

Members of MSEP 2011 will become eligible for normal retirement when they are age 67 and have 5 years of service OR under the “Rule of 90” which is when they are at least age 55 and their age and service equal 90 when they terminate/leave state employment.

Lump-Sum Payout?

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I have heard rumors of letters going out in September offering current retires a lump sum pay out on their retirement. Is this true?
No. Members who are already retired are not eligible for the Buyout Program. The Buyout Program is voluntary and allows vested former state employees (who meet all eligibility requirements) to elect to cash out their future monthly retirement benefit in exchange for a lump-sum payment now. We will mail a letter and application to eligible members during the month of September.

You are NOT eligible to participate in the Buyout Program if:

You have been employed by the State of Missouri at any time after June 30, 2017 in any position covered by MOSERS or MPERS.
You would have reached normal retirement age and are eligible to receive a normal retirement annuity from MOSERS before December 1, 2017 (this includes all current retirees).
You have applied for or you are receiving early retirement benefits from MOSERS.
You are a member of the Missouri State Employee Plan 2011 and are eligible for a refund of your employee contributions under section 104.1091, RSMo, and the amount of the refund would be greater than the amount of the buyout payment otherwise payable under the Buyout Program.
You left state employment between October 1, 1984 and September 1, 2002 and are eligible for a cash out of your future retirement annuity under section 104.335.6, RSMo.
You are subject to a Division of Benefit Order ("DBO") issued by a court under sections 104.312 or 104.1051, RSMo, during a divorce proceeding.

The Buyout Program was authorized under Senate Bill 62, which was enacted in 2017.

MSEP 2011 Retirement Eligiblity

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I have followed the MSEP 2011 and SB 62 discussion on Rumor Central with interest, even though I fall under MSEP 2000. One of the things some of my colleagues that have been hired since 1/1/11 have been discussing is the minimum retirement age. If I read your posts correctly, the only time a person can receive retirement benefits under MSEP 2011 is when they either reach age 67 or when they hit 90 and out after age 55. To reach 90 and out, as I understand it, a person 55 would need 35 years of service, correct? In other words, someone age 55 would have to start work at age 20 and stay in state employment for the next 35 years to be eligible. Otherwise anyone with less than that amount of service would have to wait until they're 67 or their service plus age is 90. It appears there's no "middle ground" under this provision. Am I missing something?
The criteria for normal retirement eligibility for MSEP 2011 members is:

• Age 67 with 10* yrs. of service or
• “Rule of 90” - at least age 55 with age and service equaling 90 or more. (Your example is correct: 55 + 35 = 90)

A member of  MSEP 2011 could elect early retirement, which is a reduced benefit amount.

Age 62 at the time of termination with 10* yrs. of service

(The base benefit will be reduced 1/2 of 1% (.005) for each month your age is younger than normal retirement/67.)

*Effective January 1, 2018, the vesting requirement will reduce from 10 years to 5 years of service for MSEP 2011 members actively employed ON or after January 1, 2018. 

SB 62 & Changes to MSEP 2011

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I was wondering if we are going to be switching back to 80 and out as well as back drop? I started about 3 years ago and do not have these benefits but was told we are to receive them again.
Other than to reduce the vesting period from 10 years to 5 years, the provisions of SB 62 have NO impact on members of MSEP 2011 who work in a MOSERS benefit-eligible position until they reach normal retirement eligibility.

Members of MSEP 2011 will become eligible for normal retirement when they are age 67 and have 5 years of service OR under the “Rule of 90” which is when they are at least age 55 and their age and service equal 90 when they terminate/leave state employment.

BackDROP is available only to general state employees who are members of MSEP & MSEP 2000 and who work at least two years beyond normal retirement eligibility.

For more information on vesting, see The Change from 10 to 5-Year Vesting for MSEP 2011 Members.