HB 1139

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Regarding [House] Bill 1139, the Retirement Incentive, how long does it usually take to get through Veterans Affairs, Pensions and Urban Affairs? Bill was sent on 3/8. How will we know when they will address this issue?
You can follow the actions of this and all bills at the General Assembly’s website. We have no way of knowing when or if any bill will advance in committee. We do know that the percentage of bills that are actually Truly Agreed to and Finally Passed (TAFP) is relatively low compared to the number of bills filed. Should HB1139 pass and be signed into law by the governor, we will let members know.

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Pay Raises and HB 1139 - Not Related

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Is the raise that some state employees are getting in July tied to HB 1139?
No, the salary increase that has been proposed by the governor, and that is now making its way through the legislative process has nothing to do with HB1139. In addition to new legislative proposals like HB1139, each year appropriations bills are also considered.  Appropriations are required for the state to spend money.  The pay plan proposal is in HB2005 this year. There are many posting on Rumor Central about HB1139, and you can read those here.

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Question About Pay Raises

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When active employees receive a raise in pay, do retirees receive a raise as well?
No, active employee salary increases are not connected in any way to retirees. By law, retirees receive an annual cost-of-living adjustment (COLA) between 0-5%. Active state employees may periodically receive a COLA, subject to state appropriations. You can find more information about the retiree COLAs on our website.
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MOSERS Assets and Liabilities

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We have heard concerns regarding MOSERS' funded ratio. That concern is understandable given all of the local and national negative press regarding public employee retirement systems that we have seen since the “great recession” began in 2008.  The most important message I have is to assure you that your benefits are secure.

The financing of a retirement system is necessarily a long-term proposition.  Using relatively short periods that include fiscal year 2009 provides a useful analysis for those who wish to express negative comments regarding public employee retirement.  However, examination of a longer period paints a substantially different picture such as can be seen in the enclosed charts – one which illustrates the growth of the system’s assets and liabilities over the last 20 years and the other which illustrates changes in the system’s funded status over that period.

Liabilities have grown in a fairly consistent pattern over the last 20 years while there has been a slightly less clear year to year pattern in the growth of system assets, particularly over the last the years.  It is noteworthy that the most recent ten-year period included the great recession plus the tech bubble bursting at the beginning of the decade, both of which had very negative impacts on almost all investors. Despite that, over the years the funded ratio has fluctuated in the range of 80% to 100% which industry experts view as being indicative of financial strength.

The two most important factors in assuring that the plan is financially sound are that the contribution rates be based on reasonable assumptions about the future and that the contribution amounts computed by the actuary actually be contributed by the employer. The MOSERS’ actuary conducts an experience study every five years for the purpose of determining if any fine tuning to the assumptions is warranted – such an experience study will be presented to the MOSERS’ board of trustees in March.  Regarding contributions, without exception, the state has contributed the amounts recommended by the actuary.

It is also noteworthy that the future rate of growth in liabilities is expected to slow as more active employees become members of the 2011 plan that became effective for employees first hired after 2010.  This is due to the retirement ages being older, the vesting period being longer, and the elimination of subsidized service purchase provisions. Print Friendly and PDF

Deferred Compensation and FAP

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I contribute from my monthly paycheck to the Missouri Deferred Comp Plan (ICMA-RC) with pre-tax dollars. If I ceased those contributions for my final 36 months of state employment, thereby bumping up my monthly paycheck by that contribution, would that increase my MOSERS contribution? - since my paycheck would increase. 
No, ceasing your contributions to your Deferred Compensation account would not increase your MOSERS benefit at retirement. Final Average Pay (FAP) is one factor in the calculation of your base benefit. FAP is the average of your highest 36 consecutive months of gross compensation. This has nothing to do with what you choose to have taken out of your paycheck as a contribution into your Deferred Compensation account.
The State of Missouri Deferred Compensation Plan offers two catch-up provisions that allow participants to save beyond the maximum annual deferral limits established by the IRS. While you cannot use these provisions concurrently, they allow employees who are thinking about or nearing retirement to save additional funds for their retirement years. For more information, visit the Catch-up Provisions page on the State of Missouri Deferred Compensation Plan’s website.

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Accumulated Sick Leave When Laid Off

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If a MOSERS eligible employee is laid off due to staff reductions, and is eligible for normal retirement, will the accumulated sick leave be lost if the employee registers for retirement after being laid off?
Annual leave is not used in calculating your retirement. Any unused annual leave will be paid by the agency for which you work.  You may want to contact your human resources representative to determine your agency's 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 two months of service (336/168=2) when your retirement benefit is calculated. This two months of sick leave will not get you two months closer to retirement, however, as we cannot use it to calculate when you are eligible. Unused sick leave is only credited if you are eligible to retire (early or normal) upon termination for MSEP and for MSEP 2000 you get credit as long as you are vested upon termination.

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When Leaving State Employment, Do You Lose Your Sick Leave?

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When leaving the company do you lose your sick time or can you get paid for it like your comp time?
Annual leave is not used in calculating your retirement. Any unused annual leave will be paid by the agency for which you work.  You may want to contact your human resources representative to determine your agency's 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 two months of service (336/168=2) when your retirement benefit is calculated. This two months of sick leave will not get you two months closer to retirement, however, as we cannot use it to calculate when you are eligible. Unused sick leave is only credited if you are eligible to retire (early or normal) upon termination for MSEP and for MSEP 2000 you get credit as long as you are vested upon termination.

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Life Insurance for Spouse

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When I retire if I do not have my spouse covered under my insurance plan, can I add him at a later date?
We assume you are asking about life insurance. If so, the answer is no, you may only provide spouse life insurance coverage while an active employee.  If you have spouse coverage as an active employee it will end upon your retirement. You can read more information in our Basic and Optional Life Insurance Handbook
If you are asking about health insurance, you'll need to contact the Missouri Consolidated Health Care Plan, as MOSERS does not administer health insurance. 
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Missouri Public Pension Exemption

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I understand from a friend that Missouri law has been changed whereby State taxes are not going to be taken out of 2012 State employee retirement checks. Is that correct?
We think you may be referring to the Missouri Public Pension Exemption. Also, back in January, we explained on our website that the IRS has announced updates to the 2012 Federal Tax Tables. Staff at MOSERS are not tax advisers, so we recommend you contact your tax consultant or the Missouri Department of Revenue for any specific questions you may have.
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Debit Card for MOSERS Benefits

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I was wondering if there would ever be a state debit card to put my benefits on?
The answer is “hopefully yes, soon”.  While we are at a 95% direct deposit rate among members, this is actually a goal that MOSERS has been working on this year. Social Security is requiring (in 2013) all members either have EBT (debit card) or EFT (direct deposit).  
We are in the process of getting focus group feedback on this idea.  Assuming the option is met with acceptance we will be moving forward with it.  However, in the meantime, if you want to purchase a card (several retail outlets have them – for example, Wal-Mart), we would be happy to load your monthly payment on it for you.
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MOSERS Unsustainable?

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Senator Crowell made a statement that State Pension / Retirement fund is unsustainable. Was that based on the Springfield News-Leader article
We are not aware of the statements made by Senator Crowell or the context in which they may have been made.   
We do know that the financial crisis of 2008 and the subsequent recession have led to escalating pension contribution requirements nationwide and many employers are questioning their ability to meet these demands. In the face of uncertain economic conditions, it is prudent to review the effect of budget constraints on public pensions. What is important to note is that MOSERS is ahead of the curve in this regard, and in 2010, legislation (sponsored by Senator Crowell) was enacted in an effort to ensure that the retirement benefits afforded to state employees would be sustainable and that our defined benefit culture would be preserved.  This legislation included provisions to increase the retirement eligibility age and vesting for new employees, and also required new employees to contribute 4% of their annual salary toward their retirement.   The long-term expectation is that these plan changes will result in a materially less costly plan, thus increasing the defined benefit plan’s sustainability for all state employees.  That being said, even with these changes, pensions and their economic viability continue to be a topic of debate.  

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NYT Article re: MOSERS and Risky Investments

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I read today in the NY Times that MOSERS has put 49% of our money in risky alternative investments such as hedge funds, private equity and real estate. Missouri is ordinarily middle of the road in most nationwide statistics, so why does our pension fund have the second highest share (49%) of risky investments in the nation? When the average for the ten funds with the lowest share of risk made close to what Missouri made, I simply don’t understand the risk taking investment choices. Have we forgotten 2008 so quickly? Please explain the rationale. I thought our fund was in good shape for the future. Is that incorrect? Does the board believe we need to be so aggressive and take such risks because the board believes we will not have enough money to pay our retirees in the future? I can see no other valid reason for such risk taking and high fees.
Like you, we were also alarmed by the report in the New York Times this week.  Our alarm stemmed from their presentation of information in a manner that was very likely to mislead readers regarding both our risk management initiatives and our net investment returns (with the net being what remains after all expenses are paid).  
During the great recession (mid 2008 through early 2009) the investors who suffered the most were those that had their funds invested in traditional stock and bond portfolios. Early in the decade of the 2000’s we further diversified the structure of the MOSERS portfolio by expanding our investments in alternative assets such as timber, commodities, private equity, hedge funds and real estate. It is a certainty that we will experience market cycles where one or more asset classes will be out of favor. By more broadly diversifying the system’s investments, we were able to cushion the blow of the severe downturn (which saw stocks lose over 50% of their value) and were also well positioned to recover nicely during the months that followed.
The diversification mentioned has worked very well in terms of results. For the 5-, 10-, and 15-year periods ended June 30, 2011, which capture a range of market environments, MOSERS’ investment performance ranked in the top five percent among statewide public pension funds nationally, after taking all fees into account.
With respect to fees, our goal is to spend as little as necessary to secure the services of the best-of-the- best money managers. While it is easy to focus on just the fees paid, the key here is to evaluate the end result based on what is earned after all fees are paid – that is, how much did we net?  For example, MOSERS’ net investments return for the 5-year period ended June 30, 2011 was 6.2%. The net investment return on a traditional portfolio of 60% stocks and 40% bonds without alternative investments for that same 5-year period would have been 4.3% net.  While the fees for this low cost strategy would have been below what MOSERS paid, the net return was considerably lower.  In fact,  MOSERS 6.2% return, net of all fees, earned the system $820 million more during that time frame than would have been the case with the low cost 60/40 portfolio.
The one aggressive element in the management of the MOSERS portfolio is that we do aggressively pursue the best risk adjusted net of fees long-term returns available through a well-diversified portfolio of stocks, bonds and alternative asset classes. The numbers, net of all expenses, speak to the success of this strategy with the end result being added retirement income security for our members while keeping overall costs to the taxpayers well below what would be the case if the additional net returns had not been achieved.

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Base Benefit Formula by Plan

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What is the basic formula for retirement benefits? I believe I heard once that it is the average of the highest 3 years of salary times the months of employment times 1.5% of your monthly salary (for your monthly benefit). Is this correct?
In the Missouri State Employees Plan (MSEP) the base benefit formula is .016 x Final Average Pay x Service.

In the Missouri State Employees Plan 2000 (MSEP 2000) the base benefit formula is .017 x Final Average Pay x Service.

In the Missouri State Employees Plan 2011 (MSEP 2011) the base benefit formula is .017 x Final Average Pay x Service .

There is also a temporary benefit applied to your benefit if you retire under the rule of 80 (MSEP 2000) or rule of 90 (MSEP 2011). The temporary benefit formula is .008 x Final Average Pay x Service. Final Average Pay is defined as the average of your highest 36 consecutive months of compensation.

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Reemployment After Retirement (1,040 Hour Rule)

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I am an H&I retiree and have been working under the 1040 hour rule for 3 years. I am almost out of hours, which will not accrue again until mid-May. What happens if this one time I exceed the 1040 hour limit? Would it affect my retirement or would there be any kind of penalty? I have heard 1) that the 1040 hours is a statutorily limit and there is no flexibility and I have heard 2) it is not statutory, it's just agency policy with some flexibility. I don't want to do anything to jeopardize my retirement, but want to support the agency in meeting these deadlines. 
As long as your employer has determined that your position is not eligible for benefits you can receive your retirement benefit and work.  The basis for what makes a position eligible or not for retirement under MOSERS is derived in statute (i.e. often called the 1040 hour rule).  There are many Rumor Central posts on this topic that might be helpful to you.
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