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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