Investment Board

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I am very concerned about SB1050 which, as I understand it, would transfer management of MOSERS investments to a private company. In light of recent history, and the financial implosion of many Wall Street investment firms due to unsafe or risky investments, it seems extremely unwise, particularly at this time, for the legislature to be considering turning over the future of the state of Missouri's retirees to such a firm. I do not see any mention of this bill on the MOSERS web site. If this bill were to pass what is MOSERS position on how it would affect the security of MOSERS assets?
We appreciate your concern about this issue and want to assure you that if SB1050 does pass, in its current form, the impact on MOSERS members would be neutral or positive.
The intent of SB1050 would be that the same dedicated, experienced team of financial professionals that now manage MOSERS’ investments would continue to manage MOSERS assets and also take responsibility for managing the assets of the Missouri Department of Transportation and Highway Patrol Employees’ Retirement System (MPERS) and possibly other small Missouri pension systems. A few important things to know:

  • The MPERS board is in favor of SB1050.
  • MPERS provides retirement benefits to approximately 17,000 MoDOT and Highway Patrol employees and has assets of approximately $1.3 billion. (For perspective, MOSERS serves approximately 100,000 members and manages a $6.8 billion trust fund).
  • With MOSERS’ strong track record of investment performance, it is estimated that the passage of SB1050 could save the state an estimated $149 million in the next five years while enhancing the retirement benefit security of highway patrol officers and highway workers.
  • Since MPERS is a relatively small retirement system, the investment professionals could assume management of the combined assets and still remain nimble enough to continue to position the investments for optimal returns. (The legislation expressly precludes two of the state’s larger retirement systems, the Public School and Education Employee Retirement Systems of Missouri (PSRS/PEERS) with assets of approximately $27 billion, and the Local Government Employees’ Retirement System (LAGERS) with assets of approximately $3.5 billion from participating.)
  • The bill’s sponsor has proposed substitute language, included in SS for SB 714, that changes the structure from a private trust company to a state retirement investment board structure. The same level of transparency and oversight that currently exists for MOSERS would be assured with a new investment board.
  • This model of a separate investment board is in place and works well in a number of other states.
  • It would create a specialized board of financial experts to focus on investment issues, while the MOSERS and MPERS boards would concentrate on operations of their respective retirement systems.
  • MPERS and MOSERS would continue to administer member benefits separately. Essentially, assets would be pooled for investment purposes but accounted for separately and each system would maintain responsibility for their own benefit obligations.
To summarize, combining the management of MOSERS’ and MPERS’ trust fund investments should produce higher overall returns, save the state money, and enhance the retirement benefit security of state employees.
Providing benefit security and outstanding customer service for our members have historically been and will continue to be our primary objectives regardless of the operational structure.
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