Retirement mandatory?

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Upon leaving state employment, is it mandatory to begin receiving retirement benefits at that time or can the retiree begin receiving benefits at a later date?
No, it is not mandatory, you may delay your retirement until age 70 and a half when IRS regulations require that you begin receiving your monthly retirement benefit. However we would like to point out that if you qualify for Normal (unreduced) retirement when you terminate employment and do not plan to return to work in a MOSERS covered position, there is no advantage in delaying receipt of your retirement benefits. As a matter of fact, you will lose any monthly benefit you would have received had you retired immediately upon leaving State employment.
If you anticipate coming back to State employment in a MOSERS covered position, you might wish to postpone your retirement until you leave State employment for good. The reason for this is that once you retire and commence receiving retirement benefits, additional MOSERS covered service at a later date will not change the original benefit amount. If you do retire under MOSERS but are reemployed, you could accrue an additional benefit (if you work at least 12 months) but it would only be based on your new service and pay and would not change the original benefit at all.
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State budget

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There are persistent rumors that there will be lay-offs, salary reductions, or demotions to save money due to the shortfall of the sales taxes. I know this isn't your area but do know that occasionally you try to find the answers for particularly troubling issues facing state workers. Would you please try to find out if there is any truth to this? There are a number of state workers who are very worried and because of the persistence of these rumors, there are some who are taking it quite seriously. It is also rumored that November 1 to December 1 will be the target dates for these actions.
I would appreciate your help as would many others.
Thank you.
We are hearing these same rumors but we do not have any information to either confirm or refute them. Consequently, we encourage individuals to contact their Human Resources office for additional information but realize that even they may not have definitive answers at this time to address your concerns either. (We are not attempting to dodge the question – we simply don’t know the answer.) Print Friendly and PDF


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Can my MOSERS benefit be garnished? If yes, can they take the whole check? Will the garnishment be the first deduction made (i.e., will I be billed for my medical).
Your MOSERS benefit cannot be garnished, except for the collection of child support and maintenance, bankruptcy, or an IRS levy.
Essentially the entire benefit can be withheld, except that MOSERS is required to issue all members a check for at least $1. The rest could be redirected according to court or IRS direction. The priorities for which deductions may be made are as follows:
¨ Federal and State income tax
¨ IRS levies
¨ Child support/maintenance
¨ Bankruptcy court orders
¨ Any voluntary deductions (medical, life insurance, etc.)
Depending on the amount withheld, you could be billed for any life insurance or medical premiums not covered by the balance of the benefit amount available to you.
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Financial condition of plan

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Is MOSERS currently under-funded? Are the current obligations greater than the resources available? Does this threaten the payment of future benefits?
The most important message for MOSERS members is that promised benefits are secure. According to the June 30, 2009, report from the System’s actuary, MOSERS has a funding ratio of 83%, based on the actuarial value of assets. The board, as required by law, certified the actuarially determined contribution rate that is necessary to cover the current liabilities of the plan administered by the system and move the system toward 100% funding over a period of future years.
The September 17th meeting of the MOSERS Board of Trustees received a certain amount of media coverage. We think that was due to the board’s scheduled vote regarding the state’s contribution rate that the general assembly will be requested to fund in the FY11 budget, which begins July 1, 2010. Each September the board certifies the state’s contribution rate that will become effective the following July. The rate certified this year was 13.81% of payroll for the fiscal year that starts July 1, 2010. That is up 1.06% from our current rate of 12.75%, and translates to an increase of approximately $20 million. While it is normal for the contribution rate to fluctuate from year to year, this was a larger change than would normally be expected but then the financial markets over the last year have not behaved as would normally be expected either.
Perhaps the most important takeaway from the most recent report of the system’s actuary is the conclusion which reads as follows:
Based on the results of the June 30, 2009 regular annual actuarial valuation, it is our opinion that the Missouri State Employees Retirement System continues to be in sound financial condition in accordance with actuarial principles of level percent-of-payroll financing.Given the recent tumultuous economic conditions and concerns about the effect on the state budget, we expect that there will continue to be news reports, as well as rumors and concerns circulating about the effect of these issues on the retirement system. We encourage you to visit the MOSERS website frequently to stay informed of issues and decisions that impact your retirement system.
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Contributions for retirement

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I’ve heard that there is discussion taking place about changing the funding for the state employees pension plan. I have heard that the employee will be required to contribute a % of his/her salary to the retirement fund instead of the current method which is funded by the State. This sounds similar to the change implemented by the University of Missouri system. Is this being considered?
As a result of the economic downturn there are a number of rumors circulating about the future of our retirement plan. While the University of Missouri has modified their plan to now include employee contributions there has been no official discussion that we are aware of to do the same thing for MOSERS. Such a change would require a modification to the law. The next legislative session begins in January 2010. Bills for that session may be filed as early as December. As usual, MOSERS will monitor all relevant legislation and inform members accordingly should a bill pass or appear to be moving through the legislature. Print Friendly and PDF

Questions on medical benefits

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Over the last few weeks the number of inquiries submitted to Rumor Central concerning medical benefits has increased. Keep in mind that MOSERS does not administer medical benefits subsequently those issues should be directed to the Missouri Consolidated Health Care Plan. They can be reached at (800) 487-0771 or through their website at Print Friendly and PDF

Furloughs and Pay raises

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Rumor currently on the vine involves the possibility of giving state workers unpaid furloughs of like 4 to 8 hours per week to save money. Any truth? Also heard that federal stimulus money may be used for a late state employee pay raise?
Although MOSERS does not handle issues related to pay for state employees we have received several inquires on these issues. Subsequently we contacted the Office of Administration to make them aware of the rumors. Here is their response:
“There are currently no plans for furloughs. As for pay raises, the legislature did not appropriate funds for a pay increase for state employees for the current fiscal year (FY10). In addition, the federal stimulus funds are earmarked for very specific programs and cannot be used for employee pay raises, so they cannot be appropriated for a pay raise. The federal stabilization funds are more flexible, but are intended to stabilize existing state service costs. The stabilization funds will be needed during the next few years in order to avoid deep cuts to the state budget. Cuts will still be needed, but the stabilization funds will help lessen the level of cuts that must be made. Therefore, they are not available for a pay raise.
In FY 2009 revenue collections declined 6.9 percent from the previous year; this resulted in a $778 million shortfall in revenue collections. Current estimates are that FY 2010 revenue collections will be nearly $400 million short.”
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Is RC a blog?

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Why is “Rumor Central” classified a blog? Access has been restricted to the Questions and Answers section.
In 2007 we converted Rumor Central from static web content to a blog format using that technology to better organize the content and make it more user-friendly. Advantages of the blog format include:
  • Tags/labels and time/date stamps on each posting
  • The ability to sort and search content by subject and/or date
  • A continuous log of all questions and answers
This makes it much easier to navigate and search among the 440 + questions and answers for the topics that are of most interest to users.
Currently we don't allow comments from outside MOSERS to be posted to Rumor Central because the benefits we administer (retirement, life insurance and long-term disability insurance) are very technical in nature and governed by state statute. We are concerned that information posted by a user could be inaccurate or be misunderstood by other members.
You may find
a recent article about Rumor Central interesting. As mentioned in the article, we are always looking for ways to use the latest technology to enhance this and all the services we provide. Recently, we began including a web feedback option when we post news to our website. This allows members to inform us about their thoughts, feelings and questions on developing issues. Web users may include name and contact information if they would like to receive a response, or they may submit feedback anonymously. Print Friendly and PDF

Medical incentive

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Regarding your response to the question on 4/17/2009 in answer to the question about Medical incentive in House Bill 478, I have been tracking the progress of this bill closely and have corresponded with a number of legislators involved in this legislation. I received a response from one legislator that indicated the provisions of 105.684 RSMo might prevent the medical incentive from being implemented should it pass. What can you tell us about that statutory provision?
The statute you reference, 105.684 RSMo was signed into law in 2007. It reads, in part, as follows:
Notwithstanding any law to the contrary, no plan shall adopt or implement any
additional benefit increase, supplement, enhancement, lump sum benefit payments
to participants, or cost-of-living adjustment beyond current plan provisions in
effect prior to August 28, 2007, unless the plan's actuary determines that the
funded ratio prior to such adoption or implementation is at least eighty percent
and will not be less than seventy-five percent after such adoption or
Essentially what this means is that no retirement benefit enhancement may occur if the funding ratio of the system prior to adoption is not at least 80% and after adoption is not at least 75%. This provision is intended to protect retirement systems from the added costs associated with benefit increases when their funding status is not above these thresholds. In other words, if a system is struggling it wouldn’t make sense to add benefits which will further stress the financial stability of the plan.
This provision would not affect implementation of HCS 478 because the incentive pertains to retiree medical insurance, not retirement. From a retirement system perspective there is no benefit increase, consequently there is no cost to the system should this incentive be passed. All costs associated with HCS 478 will affect the Missouri Consolidated Health Care Plan which is not covered by the provisions of 105.684 RSMo. Print Friendly and PDF

Credit for unused sick leave

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I have heard a rumor that the state might do away with applying our unused sick leave to our credible service at retirement. Presently for every 168 hours of unused sick leave, one month is added to our credible service. Is there any truth to this rumor?
 No, at this time no legislation has been introduced to eliminate the use of unused sick leave for retirement purposes. Print Friendly and PDF

Medical incentive in House Bill 478

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I’ve heard a rumor that if HB 478 passes that it will bankrupt the retirement system. Is that true?
That legislation would have no financial impact on the retirement system. HCS 478, a substitute to HB 478 was voted out of committee last week. In its present form, an eligible member retiring between February 2009 and January 2010 may continue their medical coverage at active rates for 5 years, or upon reaching eligibility for medicare, whichever comes first. In this form, HCS 478 would result in no additional cost to the retirement system whatsoever because there is no added benefit or change in eligibility requirements. The incentive only applies to those individuals already eligible to retire. Consequently, there would be no additional cost to the retirement system. There would be an added cost for the retiree medical coverage for benefits provided by the Missouri Consolidated Health Care Plan but that cost is unrelated to the retirement system. Print Friendly and PDF

BackDROP legislation

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I heard a rumor that the Legislature is talking about eliminating the BackDROP to encourage employees to retire earlier and eliminate FTE's/reduce payroll for state agencies. I haven't seen any bills filed to eliminate BackDROP, but I'm concerned about this, as I've just started into BackDROP and don't want to lose that option. What information do you have on this possibility?
This perhaps is the most common rumor we hear every year. While the legislature could choose to modify or eliminate the BackDROP option, there has been no legislation introduced to do either this session and, to our knowledge, it is not being discussed as a possibility. If any such legislation were introduced, we would certainly notify our members to be sure they were informed. Print Friendly and PDF

Rule of 80 change?

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Is there any truth to the rumor of a 70 or 75 and out, instead of 80 and out? If so, is it being considered with full benefits and backdrop? Any information will be appreciated.
The truth is it is a rumor. This question seems to come up every year on Rumor Central. Since the Rule of 80 was established in 1994, there has never been any legislation introduced to change it Print Friendly and PDF

State of Missouri Deferred Compensation Plan changes

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I’ve received information on the upcoming changes to the State of Missouri Deferred Compensation plan and it makes me nervous. Why is this change a good thing?
The purpose of the new plan design is to provide a more customer-focused deferred compensation plan with high quality, well diversified, cost conscious investment products that will work to the advantage of state employees and encourage them to save for their retirement years. These changes are causing some participants to worry and question why these changes are being made. It is important to understand these changes were developed by investment professionals after considerable research, including feedback from participants just like you.
So, how will these changes benefit participants? The new plan design:
  • Has lower fees
  • Is much simpler to understand
  • Provides real choices.
Many participants don’t understand and some don’t even know there are expenses associated with their deferred compensation account. The target date funds available under the new plan design reflect fees at a fraction of the cost associated with the funds in the present lineup. Expenses erode the return of your portfolio as reflected in the following chart.
The present fund lineup offers 31 funds. In that lineup there are 11 different large cap funds. How would you choose which one to use? The target date funds under the new plan design eliminate that confusion. These funds cover all the bases so you don’t have to attempt to put together a diversified portfolio from a long list of fund options that actually don’t offer much in the way of diversification potential. The funds making up the target date arrangements come from State Street Global Advisors, Vanguard, and Barclay’s Global Investors, all reputable organizations.
Maybe you are a hands-on investor wanting the flexibility of choosing your own funds? If so, you don’t have to use the default target date auto-pilot approach. Instead you can work through the self-directed brokerage (SDB) window. The SDB gives you access to most individual stocks and bonds, and over 9,000 mutual funds. The SDB under the new plan design

  • Has no annual fee (presently $50)
  • Stock trade charges will decrease from $24.95 to $14.95

There are a number of resources available to participants to address their questions about these changes. First, you may want to review the
New Plan Brochure. It offers an overview of the changes with a brief explanation. If you are interested in learning more regarding why these changes were developed, the Message to Plan Participants is the place to go. For specific responses to frequently asked questions, check out this FAQ.
A number of Plan Transition Meetings have been scheduled across the state for those wanting in person contact with a plan representative about these changes. Check out the
Plan Transition Meeting Schedule and make plans to attend a meeting in your area. Of course you can always access information about the present and new plan by contacting a Participant Service Representative at 1-800-392-0925, Monday –Friday, 7:00 a.m. to 7 p.m. Central Time. Print Friendly and PDF

Using Rumor Central

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I’ve heard a rumor but I’m sure if it’s already been addressed on Rumor Central. How can I find a previous posting?
Almost every week we receive Rumor Central inquiries on issues already posted. Finding previous postings is fairly simple once you get to the Rumor Central homepage. Click on CATEGORIES or All Topics from the CATEGORIES menu. From this page, you’ll find a list of all labels.

This list will point you to prior postings on particular topics. For example, you would click on Rule of 80 to see all postings related to that topic. If that approach doesn’t work, you can use the Search feature next to the FAQ button. To use this function effectively you will need a key word to find related postings. For example, you could insert BackDROP and the search engine will list all postings referencing the BackDROP. Using these tools may allow you to resolve or answer your question in a more timely manner, plus it will mean less redundancy on Rumor Central. Print Friendly and PDF

Retirement incentive

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I heard that the State may be offering the retirement incentive again, as in 2003, of five years of health benefits at active employee rates. Deal...or no deal?
House Bill 478 was officially introduced on January 28th. This bill proposes a retirement incentive similar to the one passed in 2003. Essentially the proposal, as introduced, would allow eligible employees who elect to retire between February 1 and August 1 to continue medical coverage at active rather than retiree rates for a period of five years or until eligible for Medicare, whichever comes first.
We received several Rumor Central questions asking whether or not we think this bill will pass. There is no way for us (or anyone else) to determine if this legislation will become law. Like all legislation this bill would have to be passed by both the House and Senate and be signed by the Governor before becoming law. If the bill does pass, rest assured that MOSERS will contact eligible employees. In the meantime, you can track this legislation at the
Missouri General Assembly’s website. The Missouri Consolidated Health Care Plan (MCHCP) administers the medical, dental, and vision coverage for eligible state employees. Any questions regarding legislation affecting those benefits should be directed to MCHCP at (800)487-0771. Print Friendly and PDF

BackDROP distributions

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How many individuals received a backdrop payment in 2007 and 2008 and what was the total amount paid in backdrop payments by MOSERs in 2007 and 2008?
For 2007 MOSERS distributed approximately $483 million in total benefit payments. BackDROP payments for that period were just over $50 million with 665 members electing that payment option. In 2008 MOSERS distributed approximately $519 million in total benefit payments. BackDROP payments for that period were nearly $56 million with 715 members electing that payment option. In other words, just a little over 10% of the total payout each year was attributable to the BackDROP
The BackDROP is a payment option that provides a way for members to receive part of their benefit as a lump sum payment at retirement. To be eligible for the BackDROP the member must work at least two years beyond their normal retirement eligibility date. By electing the BackDROP option, the monthly benefit payable at retirement is based on the benefit a member would have been receiving had they left employment and retired on an earlier date, referred to as the BackDROP date. In addition, the member receives a lump sum payment equal to 90% of the Life Income Annuity amount they would have received during the BackDROP period if they had retired on the BackDROP date.
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Investment returns

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The Columbia Daily Tribune reported Sunday, February 1, 2009, that Missouri's biggest public employees pension funds plunged more than $11 billion last year.
At what level did this $11B drop effect MOSERS retirement assets?
Specifically how much did MOSERS assets drop and what is the current level of assets in relation to prior 2008?
The article referenced the following pension plans – MOSERS (state employees), PSRS/PEERS (Public School), MPERS (Highway Department and Patrol), LAGERS (local government), and the MU (university) systems. In total the value of the assets of these five pension plans dropped by $11 billion during calendar 2008. MOSERS portion of that total was $1.8 billion.
MOSERS’ one-year investment return was -23.9% well ahead of the U.S. stock market which experienced its third worst year in more than a century. As a point of reference, the S&P 500 (a widely used benchmark for U.S. stocks) finished the year at -37.0%. While we are disappointed with our short-term decline in value, it is important to keep in mind that MOSERS is a long-term investor. Including the losses in 2008 our 5-year returns remain in the positive category and our efforts to outpace our benchmarks have been very successful. For example in 2008 our actual performance exceeded our benchmarks by over $300 million and over the 5-year period we have generated an additional $597 million.
MOSERS is a "defined benefit" plan and, as such, the retirement benefit amount is not impacted by financial market volatility.
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Rumors of another retirement incentive

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Is Department of Conservation under MOSERS? Is so, how can they offer an early retirement to them and not to all state employees?
Department of Conservation employees are covered by MOSERS for retirement benefits. Since a 1936 Missouri constitutional amendment, Conservation has been governed by a Governor appointed Commission that has authority over department operations.
The program that the department is offering is not an early retirement benefit but is what they are calling a Voluntary Payroll Reduction Program (VPRP). The individuals that qualify for the VPRP will only be those who are already eligible to retire under MOSERS criteria. For those eligible who agree to retire by a specific date, the department will increase the amount that would otherwise be paid toward their retiree medical insurance premiums for a period of time.
Department of Conservation employees and retirees are not covered by the Missouri Consolidated Health Care Plan but rather are covered by a health care program established by the Conservation Commission.
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Retirement in the news

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I read an article on CNN that said Missouri was one of the states losing money in investments in the retirement system. What does this mean to us as state employees?
Bloomberg News, CNN and Yahoo News recently published an article
that mentioned MOSERS.
The overall point of the article is that the current financial market downturn is causing some pension plans to look at their benefit structures and consider changes for newly hired employees. Before that could happen in Missouri, legislative changes would have to be introduced and approved by the General Assembly and the Governor. No such legislation has been introduced related to MOSERS.
MOSERS is only mentioned in the article regarding one investment made in 2006. The specific investment amounted to three tenths of one percent 0.3% of our total fund at the time and losses resulting from that invest have had no impact on the security of your MOSERS benefit. MOSERS has intentionally built a broadly diversified investment portfolio as a tool to weather through market volatility like we are experiencing currently. As compared to our benchmark (an index of financial market performance), MOSERS’ portfolio has done well. At the end of the fiscal year 08, our annual positive return of 1.6% outperformed our market benchmark by 2.8%, resulting in an extra $224 million above what would have been earned had the decision been made to invest the entire portfolio in our benchmark (index funds).
Outperforming the market benchmark during these times of extreme market downturn doesn’t mean that our absolute return is always positive. What it does reflect is that our investment professionals are skilled at building a portfolio with a good mix of risk/return to generate long-term results that continue to place MOSERS investment performance in the top 5% of all large public pension funds and outperform passively managed index funds.
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Investor Fraud (update)

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Early this week, we were notified by one of our external investment managers that they had made an investment in one of the feeder funds that had invested with Bernard L. Madoff Investment Securities. MOSERS exposure to Madoff securities amounts to less than one tenth of one percent (.06%) of our total fund, and any losses resulting from the investment will in no way impact the security of your MOSERS benefit. As stewards of the fund, MOSERS takes this alleged fraud very seriously and we will aggressively pursue all reasonable means to recover trust fund assets.

Monday, December 22, 2008 
Investor Fraud

Were any of our retirement funds invested with Madoff?

No, MOSERS had no exposure to Bernard L. Madoff Investment Securities in our investment funds, which has recently been in the headlines for alleged investor fraud. Print Friendly and PDF

Pension qualifications for Missouri Pension Exemption

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Am I correct to assume that benefits paid by MOSERS are considered to be from "public sources," for the purpose of the Missouri Pension Exemption, but that disbursements paid by Missouri Deferred Compensation are considered "private sources?"
You are correct. The benefits paid by MOSERS are considered to be from a “public pension” and qualify for consideration under the Missouri Pension Exemption (state income tax exemption). The State of Missouri Deferred Compensation plan on the other hand is “your money” (ie private in a sense) and not considered to be from a “public pension.” Consequently, deferred compensation plan distributions do not qualify for consideration under the Missouri Pension Exemption.
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Rumors of another retirement incentive

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It has been reported by some Conservation employees that there is a retirement incentive for them. The proposal is: any employee within 15 months of retirement date may go ahead and retire with the state paying 80% of the insurance cost for 7 years. Is there any truth to this? If so, will this be offered to any other state employees?
The Department of Conservation has informed us of their plan for a Voluntary Payroll Reduction Program (VPRP) for eligible employees. It is our understanding that eligible employees include those that qualify for retirement (early or normal) between March 1, 2009, and June 30, 2010. If these individuals retire during that time, the department will pay for 80% of their retiree medical premium for a period of seven years. Conservation provided similar incentives in FY99, FY02, and FY03.
The legislative session convened on Jan. 7 and no legislation has been filed for any type of retirement incentive for other state employees. If that were to occur, MOSERS would post information regarding the particular provisions and status of any such legislation.
If you have specific questions about the Conservation plan, you should contact their human resource office directly.
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