Is the 5 Year Option for BackDROP Still Available?

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I have heard that there is no longer a 5 year option for backdrop. Is this true and if so why?
No that is not true. The BackDROP is available for members of the MSEP and the MSEP 2000. Members must work at least two years (with a 5 year maximum) beyond normal retirement eligibility to be eligible for BackDROP, and if applicable, elect BackDROP at retirement. BackDROP is not an option for members of the MSEP 2011. You can read more about the BackDROP on our website.

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What is the Amount Recieved in Retirement Based On?

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Is it true that the amount for your retirement is based on the amount you have made at the time of 80 and out.
The retirement benefit formula takes into account your total years of service, your final average pay (FAP) and a multiplier (depending on what plan you choose at retirement). FAP consists of your highest consecutive 36 months of pay, no matter where in your pay history that may happen to fall.

You can read more about your benefits on our website, and be sure to consult this Comparison of Retirement Plan Benefits. If you have specific questions, we encourage you to call one of our benefit counselors at any time during our regular business hours.
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What is BackDROP Based On?

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Is it true that the Backdrop amount is based on my highest three consecutive years of earnings?
Not necessarily. The retirement benefit formula takes into account your total service and final average pay (FAP). FAP consists of your highest consecutive 36 months of pay, no matter where in your pay history that may happen to fall. However, if you elect BackDROP (where eligible). the FAP is calculated as of your BackDROP date.

For more information regarding BackDROP, please view our BackDROP for General State Employees Brochure, which can be found at our website at the following link:

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Friday Top Five December 20 2013

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Please note: There will be no Friday Top Five next week, Friday, December 27. Happy Holidays from MOSERS.

The Friday Top Five: A collection of the top five news articles, blog posts, or other retirement related information from the past week.

From the Employee Benefit Research Institute (EBRI): How Much Would it Take? Achieving Retirement Income Equivalency between Final-Average-Pay Defined Benefit Plan Accruals and Voluntary Enrollment 401(k) Plans in the Private Sector

The Executive Summary states:

    • Previous EBRI research reported on a comparative analysis of future benefits from private-sector, voluntary enrollment (VE) 401(k) plans and stylized, final-average-pay defined benefit (DB) plans.

    • Rather than trying to reflect the real-world variation in DB accruals, the baseline analysis used the median accrual rate in the sample (1.5 percent of final compensation per year of participation) as the stylized value for the baseline counterfactual simulations.

    • The current research expands the previous research by computing that actual final-average DB accrual that would be required to provide an equal amount of retirement income at age 65 as would be produced by the annuitized value of the projected sum of the 401(k) and IRA rollover balances.

You can read the full report at the above link.

From the National Journal: Retire on $120 Grand? How About $30K?

In last week's FTF post, we reported on a new NIRS study called Race and Retirement in the United States. The research is still getting media coverage. Read this piece in the National Journal, which reports that "When it comes to retirement, many Americans are on shaky ground. But minorities in particular are much less likely than whites to work for an employer who offers a a 401(k) or a pension, a new analysis by the National Institute on Retirement Security shows."

From CNN Opinion: What Bled Detroit Dry? (It's Not Pensions)

From the article: "The dynamics at play in Detroit are the same dynamics creating the growing wealth gap and keeping our economy from making a lasting and sustainable economic recovery. While Wall Street and corporations profit handsomely from a city's decline, public workers—the city's middle class—have sacrificed time and again." Also, read David Sirota's commentary on Three Questions About the Motor City.

From Politico: Federal Workers' Pensions Targeted in Budget Deal

From the article: "Federal workers aren't the only public employees facing growing pension expenses. Such plans remain common for many state and local workers, and 30 states imposed higher pension costs on their employees between 2009 and 2012, according to a National Conference of State Legislatures survey."

From the Washington Post: Reform of Military Retiree Benefits is a Hard Battle for Federal Government

From the article: "The original budget agreement reached by Rep. Paul Ryan (R-Wis.), left, and Sen. Patty Murray (D-Wash.) calls for reducing annual cost-of-living (COLA) increases in retiree pay or some who served in the military. But retiree lobbying groups are fighting it."

The views expressed by the writers of these pieces are entirely their own and do not necessarily reflect the views of MOSERS. Print Friendly and PDF

Friday Top Five December 13 2013

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The Friday Top Five: A collection of the top five news articles, blog posts, or other retirement related information from the past week.

From The New Yorker: The Real Reason for Pensions

In the article, the recent decision by a federal judge that Detroit can "legally cut the pensions it has already promised to workers as part of its bankruptcy plan" is discussed.

Also from this excellent piece: "People often frame the discussion about public pensions in ethical terms. If you’re on the left, you might ask whether it is fair to halve the monthly payments due to a ninety-year-old man who spent his career as a civil servant. From the right, you might question whether it is right to keep paying pensions with funds you don’t actually have.

These are useful questions to consider, to be sure. But their answers might not have much bearing on the future of pensions. The keepers of government budgets are practical-minded people. From the Roman Empire until modern times, governments have established pensions because they served some useful purpose.

Over the past couple of years, the budgets of cities and states have been decimated: first, the real-estate collapse hurt property-tax revenues; then, federal and state economic-recovery funds dried up. Short of cash—and, in some rare cases, facing bankruptcy—cities have seen their motives shift. In the past, they felt it served them well to offer pensions to attract good workers. Now, they feel it serves them better to slash these pensions, which make up an average of five per cent of budgets, to cut costs. Should we be all that surprised?"

From The New York Times: Detroit Ruling on Bankruptcy Lifts Pension Protections

From the article: "In a ruling that could reverberate far beyond Detroit, a federal judge held on Tuesday that this battered city could formally enter bankruptcy and asserted that Detroit’s obligation to pay pensions in full was not untouchable." Includes a three-minute video.

From the National Institute on Retirement Security (NIRS): Race and Retirement Insecurity in the United States

From the release: "A new report calculates the severity of the U.S. retirement security racial divide. The analysis finds that every racial group faces significant risks, but people of color face particularly severe challenges in preparing for retirement. Americans of color are significantly less likely than whites to have an employer-sponsored retirement plan or an individual retirement account (IRA), which substantially drives down the level of retirement savings."

The study was covered in several major newspapers, including this piece from the Washington Post: Many blacks and Latinos have no retirement savings, study shows, this AARP blog post: Minorities Have Less in Retirement Savings, Survey Finds, and this from Forbes: America's Hidden Retirement Crisis Is Racial.

From Pension Dialog: Public Pension Divestment

From the post: "A divestment movement is marching across U.S. college campuses, borrowing tactics from the 1980s anti-apartheid campaign and using them against oil, gas and coal companies to fight climate change." The post includes a link to "a compilation of editorials and opinions from 2008, reflect[ing] such a moment. It offers a different perspective for policymakers on the purpose and potential adverse effects of divestment."

From Milliman: 2013 Pension Funding Study

Milliman is "a team of professionals ranging from actuaries to clinicians, technology specialists to plan administrators, [offering] unparalleled expertise in employee benefits, investment consulting, healthcare, life insurance and financial services, and property and casualty insurance."

According to Milliman, "This study covers the 100 U.S. public companies with the largest defined benefit pension assets for which a 2012 annual report was released by March 7, 2013."

The views expressed by the writers of these pieces are entirely their own and do not necessarily reflect the views of MOSERS. Print Friendly and PDF

Are There any Retirement Incentive Bills for the 2014 Session Yet?

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Are there any Retirement Incentive Bills being promoted at this time?
No, there are no retirement incentive bills that have been introduced for the upcoming 2014 legislative session at this time.

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Can I Get Back What I've Contributed to MOSERS if I'm in MSEP2011?

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I've been with the state for two years and five months now. Since I started after Jan, 2011, I've contributed a percentage of my paycheck to my retirement. If I quit, do I get that money?
Yes, you may choose to receive a refund of your member contributions. If you leave state employment prior to becoming vested (10 years), you are not entitled to a future retirement benefit. However, you may leave your contributions with MOSERS if you think you may return to state employment in the future. Please see “Your Refund Options” on page 4 of the Member Contributions Brochure for other options. Interest will not continue to accrue on your contributions if you terminate employment prior to becoming vested.

If you leave state employment after becoming vested, you will be eligible to receive a retirement benefit from MOSERS at some point in the future, once you meet both the age and service requirements. If you leave state employment prior to retirement, interest will accrue annually on your contributions until you withdraw the funds or reach normal retirement eligibility.

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Friday Top Five December 6 2013

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The Friday Top Five: A collection of the top five news articles, blog posts, or other retirement related information from the past week.

From the New York Times: Illinois Legislature Approves Retiree Benefit Cuts in Troubled Pension System

From the article: "With one of the nation’s worst-financed state employee pension systems — some $100 billion in arrears — Illinois has been the focus of intense attention across the country as states and municipalities struggle to come to grips with their own public pension problems. The compromise reached in Illinois, a staunchly blue state with a strong labor movement that had successfully resisted previous efforts to trim pensions, could provide a template for agreements elsewhere."

From the St. Louis Post-Dispatch: Illinois Governor Signs Pension Overhaul Into Law

From the article: "The new plan is expected to save the state roughly $160 billion over three decades and guarantees Illinois will make its full annual contribution to the pension funds. Legislative leaders have estimated the plan will reduce the current unfunded liability by about $21 billion and fully fund the retirement systems by 2044."

From the Detroit Free Press: Snyder Must Uphold State's Constitutional Protection of Detroit Pensions

From the editorial:

"It’s your state, Governor.

And that means Detroit’s problems are your problems.

Detroit emergency manager Kevyn Orr sees no way to restructure the city’s debts and liabilities without cutting pension benefits, and U.S. Bankruptcy Judge Steven Rhodes ruled Tuesday that the state’s constitutional protection for pensions doesn’t carry any weight in federal court.

But if the $3.5 billion Detroit owes its pension funds, and the payments it makes to retirees, is reduced, thousands of senior citizens will be left with depleted resources and few options.

It’s unacceptable."

From the St. Louis Post-Dispatch: Workers Expect to Save Less, Work Longer

From the article: "According to a survey published by benefits-consulting firm Mercerworkers over age 50 intend to contribute 18 percent less to their 401(k) plans this year. Workers of all ages expected to cut retirement contributions by 7.5 percent."

From the Center for Retirement Research at Boston College: Will the Rebound in Equities and Housing Save Retirement?

The brief’s key findings are:

  • The 2010 National Retirement Risk Index showed that 53 percent of households will not be able to maintain their standard of living in retirement.

  • But equity and house prices have both increased since then.

  • Interestingly, updating the asset values only reduces the Index to 50 percent because:

    • the rise in house prices has been relatively modest in real terms; and

    • the more robust growth in stocks mainly benefits the top third of households.

The views expressed by the writers of these pieces are entirely their own and do not necessarily reflect the views of MOSERS. Print Friendly and PDF

Friday Top Five November 29 2013

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Happy Thanksgiving Everyone!

The Friday Top Five: A collection of the top five news articles, blog posts, or other retirement related information from the past week.

From the New York Times: Expanding Social Security (Paul Krugman)

Krugman takes on "two bad arguments for cutting Social Security that you still hear a lot," and says that as a result of the failure of the shift to 401(k)s, "we’re looking at a looming retirement crisis, with tens of millions of Americans facing a sharp decline in living standards at the end of their working lives. For many, the only thing protecting them from abject penury will be Social Security."

From the Washington Post: Elizabeth Warren Wants to Spend More on Social Security. But She’s Not Thinking Big Enough!

From the post: "On the Senate floor on Monday (November 18), Elizabeth Warren delivered a speech arguing that Social Security should be expanded — not cut. In this, she joins a growing movement of Senate Democrats, including Tom Harkin, Mark Begich and Bernie Sanders. 'Social Security is incredibly effective, it is incredibly popular, and the calls for strengthening it are growing louder every day,' Warren said."

Says the author: "Social Security has been wildly successful at raising living standards for the elderly, even as other forms of retirement savings have grown shakier. We've gotten so used to thinking of our entitlement programs as problems to be solved, we're missing all the problems they can solve."

From USA Today's Editorial Board: Rein in Reckless Public Pensions: Our View

From the editorial: "A good bit of [NJ Governor Chris] Christie's appeal stems from a pension overhaul he engineered that pushes back retirement ages and requires workers to contribute more. Similarly, in Wisconsin, Republican Gov. Scott Walker faced down public-sector unions and survived a recall election. "Wisconsin's pension system is the only one in the country that is fully funded," Walker writes in his book Unintimidated, which [came out November 18].

And be sure to read the opposing view by David Sirota, Don't Demonize Public Pensions: Opposing View, in which he argues that "the budget problems of state and local governments have more to do with wasteful corporate subsidies than pensions. While states face an annual $25 billion pension shortfall over 30 years, they give away $120 billion a year in unjustifiable handouts. That includes the $80 billion that The New York Times reports that are given away in direct subsidies, and an additional $40 billion in corporate tax loopholes."

From the New York Times: The Payoff in Waiting to Collect Social Security

From the article: "If you delay collecting your benefits, which can be claimed anywhere from age 62 to 70, the money you leave on the table each year is basically a payment for a much higher stream of lifetime income. And that money will buy significantly more income, perhaps 50 percent more for a couple, than buying an annuity through a commercial insurer."

The views expressed by the writers of these pieces are entirely their own and do not necessarily reflect the views of MOSERS. Print Friendly and PDF

Does a Person Lose Money by Waiting to Retire?

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Does a person lose money by waiting until Jan. 1 to retire? Have heard that this happened to someone else at MSSU so they backed up their retirement to November in order not to lose any money. Please clarify. Thank you.
The BackDROP lump sum payment is equal to 90% of the retirement benefits earned by working beyond normal eligibility. Several factors go into calculating the distribution amount, including COLAs, service credit, salary, and the temporary benefit under the MSEP2000.

Generally, the longer you work, the higher your benefit and BackDROP. However, there are cases where working longer could decrease your BackDROP lump sum. The reason for the decrease could be due to a number of factors, among them, a lower COLA rate the year you retire as opposed to the previous year, or less or no temporary benefit calculated into the distribution if you are over 62 and electing the MSEP2000.

You can calculate estimates on our website using the "estimate my retirement" feature from our secure site, or contact a benefit counselor for a more detailed explanation.

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Friday Top Five November 22 2013

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The Friday Top Five: A collection of the top five news articles, blog posts, or other retirement related information from the past week.

From Pension Dialog: The Us vs. Them of Pensions

Our friends at PD offer two take-aways from recent "Us vs. Them" stories about pensions.

  1. "The first is that the current messages—whatever those messages are—are not getting traction..."

  2. "We should be doing much more to shift the retirement plan discussion from what everyone else is doing (i.e., cookie-cutter solutions crafted by non-practitioners) to what constitutes good retirement plan design based on field-tested experience."

From CNBC: How to Rescue Your Retirement at 55

What surprised the reporter, Elizabeth MacBride, the most was "the extent to which experts are really nervous about the state of Americans' retirement."

From Kiplinger: Fill the Gaps in Your Retirement Income

Alicia Munnell, director of the Center for Retirement Research at Boston College, answers questions from Kiplinger personal finance reporter Jane Bennett Clark.

From Senators Propose to End Defined Benefit Pensions for New Federal Employees

From the article: "Senators Richard Burr (R-NC), Tom Coburn (R-OK), and Saxby Chambliss (R-GA) have reintroduced legislation that would end the defined benefit pension portion of the Federal Employee Retirement System (FERS) for new federal government hires starting six months after enactment. Current federal government employees and retirees would not be impacted by the changes."

From the Congressional Budget Office (CBO): Options for Reducing the Deficit: 2014 to 2023

In an email of 11/19/13, The National Association of Retirement Administrators  (NASRA) explained it this way:

Several options would directly impact retirement, and include (but are not limited to) the following:

  • Expand Social Security Coverage to Newly Hired State and Local Government Employees

  • Further Limit Annual Contributions to DC Retirement Plans

  • Include Investment Income From Life Insurance and Annuities in Taxable Income

  • Tax Social Security Benefits in the Same Way That Distributions From Defined Benefit Pensions Are Taxed

  • Impose a Tax on Financial Transactions

  • Increase Federal Insurance Premiums for Private Pension Plans

  • Reduce the Amounts of Federal Pensions

  • Increase Federal Civilian Employees' Contributions to Their Pensions

  • Link Initial Social Security Benefits to Average Prices Instead of Average Earnings

  • Raise the Full Retirement Age for Social Security

  • Lengthen by Three Years the Computation Period for Social Security Benefits

  • Reduce Social Security Benefits for New Beneficiaries by 15 Percent

  • Use an Alternative Measure of Inflation to Index Social Security

  • Increase the Maximum Taxable Earnings for the Social Security Payroll Tax

  • Reduce Tax Preferences for Employment-Based Health Insurance

Other options of major concern to government plan sponsors include:

  • Eliminate the Deduction for State and Local Taxes

  • Eliminate the Tax Exemption for New Qualified Private Activity Bonds

  • Eliminate or Reduce Funding for Certain Grants to State and Local Governments

CBO notes that the options are "intended to reflect a range of possibilities, not a ranking of priorities or an exhaustive list."  Furthermore, the inclusion or exclusion of any particular option "does not imply endorsement or disapproval by CBO," and the report makes no recommendations.  Finally, the costs of any unfunded mandates that might be imposed on State and/or local governments by any of these options are unaddressed."

 The views expressed by the writers of these pieces are entirely their own and do not necessarily reflect the views of MOSERS. Print Friendly and PDF

Friday Top Five November 15 2013

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The Friday Top Five: A collection of the top five news articles, blog posts, or other retirement related information from the past week.

From The Squared Away Blog: Will Millennials Be Ready to Retire?

From the post: "Although it can be difficult to focus on a retirement that is still 40 years away, many young adults...try very hard to save.  But are they doing enough?  A lot of evidence suggests they’re not, either because they can’t afford to, refuse to, or don’t know what to do."

From PBS News Hour: Justin Fox on 'why retirement risks are best shared'

From the intro: "Justin Fox, the executive editor of the Harvard Business Review Group and author of "The Myth of the Rational Market" has studied the Dutch pension system extensively. He discusses what aspects of the system -- mandatory savings, annuitized payments, national pools -- might work in the United States." [video]

From ABC17 News (Mid-Missouri): SPECIAL REPORT: Public pensions are going through changes

You may have seen this report from ABC17 News in Columbia. Meredith Hoenes reports on the pension systems of the cities of Columbia and Jefferson City, as well as the Public School Retirement System of Missouri (PSRS).

No one from MOSERS was contacted for the story. The state of Missouri has never not fully funded the actuarial required contribution (ARC) to the fund. According to the actuary the reporter in the story talked to, Traci Christian of McCloud & Associates, the most important factor is "are they making the actuarially required contributions every year. That, in my opinion, has more to say about the long-term viability and solvency of the pension plan than the funded status." The answer, as far as MOSERS is concerned, is yes. You can read about the key facts regarding MOSERS funding here: MOSERS_Key_Facts_1013

From The WSJ's MarketWatch: You can still get a job with a pension

From the article: "To most new hires, the idea of being eligible for a pension probably seems as far-fetched as being asked to write memos on an IBM Selectric typewriter. But a new study shows that a fair number of companies still offer the traditional retirement plans — and aren’t planning to get rid of them any time soon."

From The Guardian: Detroit's decision to fend off bankruptcy: pay pensions or banks?

From the article, a quote from 68-year-old retiree Donald Smith: "All those years they were taking money out of my wages. I was never rich but I never thought it would come to this," he says. "There are times when I have to decide whether I am going to eat or get my medicine. This was supposed to be the American dream? It's a nightmare. I love America but we are being persecuted by our own elected officials."

 The views expressed by the writers of these pieces are entirely their own and do not necessarily reflect the views of MOSERS. Print Friendly and PDF

Friday Top Five November 8 2013

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The Friday Top Five: A collection of the top five news articles, blog posts, or other retirement related information from the past week.

From the Center for Retirement Research at Boston College: Gauging the Burden of Public Pensions on Cities

The brief’s key findings are:

  • Media stories suggest – especially since the bankruptcy of Detroit – that pensions are the major expense of American cities and could lead to widespread collapse.

  • A comprehensive measure of the cost burden considers how much city taxpayers pay for the pensions of city and county general government workers and teachers.

  • For a sample of 173 cities, these overall pension costs equal 7.9 percent of the total revenue base.

  • The cost burden ranges from 12.3 percent for the highest cost quintile to 2.7 percent for the lowest cost quintile.

From Deadline Detroit: Orr Revisits 'Sacrosanct' Pensions Pledge At Bankruptcy Trial

From the article: "Detroit's emergency manager says he "wasn't attempting to mislead anyone" earlier by saying vested public pensions are “sacrosanct” and "can't be touched" in this state, even though he proposed cutting retirees' checks just four days later."

From AARP: Life Reimagined

From the website: "Change is a part of life. Life Reimagined has been created to help you navigate change no matter what situation you find yourself in. We'll help you take the mystery out of change and discover your path to new possibilities."

From the WSJ's MarketWatch: 4 Big Predictions That Retirees Get Wrong

  • "R" Day

  • Free Time

  • Expensive expenses

  • Medicare

From Bloomberg: At 77 He Prepares Burgers Earning in Week His Former Hourly Wage

An amazing article highlighting the importance of saving for retirement: "It seems like another life. At the height of his corporate career, Tom Palome was pulling in a salary in the low six-figures and flying first class on business trips to Europe. Today, the 77-year-old former vice president of marketing for Oral-B juggles two part-time jobs: one as a $10-an-hour food demonstrator at Sam’s Club, the other flipping burgers and serving drinks at a golf club grill for slightly more than minimum wage."

 The views expressed by the writers of these pieces are entirely their own and do not necessarily reflect the views of MOSERS. Print Friendly and PDF

Pew/Arnold Trust Lobbying in Missouri

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PSRS and MRTA are warning their members about the lobbing of the Pew/Arnold Trust to change the Missouri defined benefit retirement programs. What is MOSERS doing/recommending?
We are aware of the Pew/Arnold effort, and are working with the Public School Retirement System of Missouri (PSRS) and the other public employee retirement systems on a detailed communication plan, and to ensure that MOSERS members, Missouri legislators, the media have accurate information about the defined benefit retirement plans in Missouri. 

Rest assured that your promised benefits are secure. MOSERS has the basic elements necessary to provide a sound income replacement to retirees and to help stimulate Missouri’s economy. Through a history of reasonable benefit levels, mandatory participation, consistent employer contributions, and professionally managed investments, MOSERS continues to be very viable in all respects.

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Travel Assistance and "Domestic Partnership"

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I received the following email:
FROM: Karen Meyer, Human Resource Director
SUBJECT: Travel Assistance Included As Part of Your MOSERS Basic Life Insurance
"A new Travel Assistance program is now available to active and retired members who have basic life insurance through MOSERS. You do not have to enroll in the program and there is no additional cost. You, family members including your spouse or domestic partner, and children through age 25, regardless of student or marital status, are automatically covered in the program."

I would like to know what is meant by domestic partner since the State of Missouri only recognizes marriage between a man and a woman.
The travel assistance program is provided nationally to various employers that provide life insurance coverage to their employees through Standard Insurance Company. Eligibility for the travel assistance program is determined by the agreement between the program’s provider and Standard Insurance Company. That agreement provides that a person who qualifies as a “spouse” or a “domestic partner” under the laws of the state where the person resides is eligible for the travel assistance program. Currently, Missouri law recognizes marriage only between a man and a woman and does not recognize domestic partnerships.

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Friday Top Five November 1 2013

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The Friday Top Five: A collection of the top five news articles, blog posts, or other retirement related information from the past week.

From the National Institute on Retirement Security (NIRS): Defined Benefit Pensions: Still the Best Bang for the Buck

From the release: "Recently, the TIAA-CREF Institute released a paper written by Josh McGee of the Laura and John Arnold Foundation (Arnold) and Paul Yakoboski of the Institute. Entitled Equivalent Cost for Equivalent Benefits: Primary DC Plans in the Public Sector, the paper questions the model used in A Better Bang for the Buck. Unfortunately, the Institute/Arnold paper relies exclusively on a flawed critique of the assumptions of the NIRS model. Moreover, it fails to offer a concrete cost analysis that supports their assertion that DC plans provide benefits at a cost equivalent to that of DB plans."

From Retirement - Your Plan for the Future recently unveiled a new Retirement website with sections on Financial Planning, Lifestyle, Healthcare and Travel. Check it out!

From PlanSponsor: Best and Worst States for Retirement

From the article: " ranked each of the 50 U.S. states by examining a variety of retirement-related factors in each state, including:

  • Senior population;

  • Economic factors, including cost of living, taxes and unemployment;

  • Violent and property crime rates;

  • Climate; and

  • Life expectancies at age 65."

FWIW, Missouri didn't make the top, or bottom, ten.

From the Employee Benefit Research Institute (EBRI): Review Cause

An Excerpt: "Retirement planning typically focuses on looking to ensure that your post-retirement income sources are adequate to replicate some percentage of your preretirement income level. Underlying that approach is the assumption that individuals incur roughly the same kind of expenses in retirement, although the amount, and proportionate share, of those expenses can certainly shift, particularly in areas such as health care. Indeed, while EBRI’s Retirement Security Projection Model®  (RSPM) and Retirement Readiness Rating have long incorporated the uninsured costs of post-retirement health care and long-term care, a few other  retirement projection models only recently acknowledge post-retirement health care costs as a discrete retirement savings need."

From HuffPost Post50: 5 Things Retirees Miss About Work

From the post: "Not having to work anymore can be great, but you might be surprised by what you will miss about work:

  • Social Interaction

  • Structured Days

  • Goals

  • Healthcare Benefits

  • Outsourcing Household Chores"

 The views expressed by the writers of these pieces are entirely their own and do not necessarily reflect the views of MOSERS. Print Friendly and PDF

KWOS Open Air Saturday with Hal Dulle

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On Saturday, October 12, 2013, Gary Findlay, executive director of MOSERS, was a guest on Hal Dulle's "Open Air Saturday" program on KWOS News Radio in Jefferson City.

Listen in as they discuss, among other things:
  • the state of the Missouri State Employees' Retirement System

  • the benefits of being long-term investors

  • dealing with and refuting fear-mongering and the distribution of misinformation

  • the State of Missouri Deferred Compensation Plan

  • what can be expected over the next few months


You can also follow News Radio 950 KWOS on Twitter. Print Friendly and PDF

Friday Top Five October 25 2013

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The Friday Top Five: A collection of the top five news articles, blog posts, or other retirement related information from the past week.

From PensionDialog: A MOOC That Mocks

This is a great post by our friends at PD about a new online course being offered at Stanford University on "the principles of financial economics" and how they can help people understand different retirement strategies. The last two courses, however, "flip from personal finance to...state and local finance, specifically public pensions, and include a group project assignment to analyze a state or local pension plan’s solvency." This post goes on to question this leap, and suggests that "perhaps Stanford should also advise students that if they truly want to understand government pensions, they should consult with a public pension plan professional."

From The Employee Benefit Research Institute (EBRI): Sooner or Later?

A timely blog post by Nevin Adams at EBRI regarding saving for retirement. He gives six reasons why "you—or those you care about—should save – and specifically save for retirement – now."

  • Because you don’t want to work forever.

  • Because living in retirement isn’t free – and it might cost more than you think.

  • Because you may not be able to work as long as you think.

  • Because working longer may not be enough.

  • Because you don’t know how long you will live.

  • Because the sooner you start, the easier it will be.

From CNNMoney: Many Middle-Class Americans Plan to Work Until They Die

From the article: "A growing percentage of middle-class Americans say they have saved so little for retirement that they expect to work into their 80s or even until they either get too sick or die, according to a recent [Wells Fargo] survey."

From the New York Times: Heated Start in the Trial on Detroit’s Fiscal Future

In a trial that started Wednesday, Detroit's bankruptcy pits the city against its unions and retirees.

From the St. Louis Beacon: ALEC Promotes Changes in Pensions as Part of 2014 Legislative Focus

Gary Findlay, executive director of MOSERS, is quoted in this piece about the legislative agenda for the American Legislative Exchange Council (ALEC). High on ALEC's 2014 agenda is proposed changes in public pensions.

 The views expressed by the writers of these pieces are entirely their own and do not necessarily reflect the views of MOSERS. Print Friendly and PDF

Withholding Tax Questions

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I don't understand the with-holding tax. Is it absolutely necessary to have tax withheld? Is there a dollar limit where the tax starts or is any amount subject to tax?
Your retirement benefits are subject to federal and state income tax if you reside in Missouri. During your retirement filing process, you can complete a "Substitute W-4P" which allows MOSERS to withhold taxes on your behalf. You may change your withholding election at any time during the year. If you do not choose a federal tax withholding option, MOSERS is required by law to withhold federal taxes as if you elected married with three allowances.

Your MOSERS benefit is impacted by the Public Pension Exemption. To review the implications of the Public Pension Exemption, please review our news archive:

We recommend contacting a tax advisor for more information.

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Friday Top Five October 11 2013

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The Friday Top Five: A collection of the top five news articles, blog posts, or other retirement related information from the past week.

From MarketWatch: Fed Shutdown and Your Retirement: Remain Calm

From the article: "Retirees and those saving for retirement may be worried about their investments, taxes and retirement plans as the federal government shutdown drags on, and lawmakers argue about extending the debt ceiling. But retirement advisers say you should take a deep breath and hold on."

From Pension Dialog: Closing Pension Plans in Bankruptcy

From the post: "When Detroit’s emergency manager was quoted proposing to close and freeze the city’s defined benefit (DB) plans effective December 31, putting defined contribution (DC) plans in their place, many observers perceived it to be a commonsense suggestion: cut the losses, stem the money drain.

But as discussed before, life is not so simple. There are costs and consequences of closing a traditional pension plan.

From GoLocal (Providence, RI): Rhode Island Pension Battle: Who are the Players?

This is a short commentary, with a slide show of key players in the R.I Pension Battle, including General Treasurer Gina Raimondo, Forbes columnist and President of Benchmark Financial Edward Siedle, and Rolling Stone journalist Matt Taibbi, among others.

From CNBC: ‘Treading Water': Saving for Retirement is Harder

Many Americans who are trying to save for retirement are "under tremendous budget pressures" and "woefully unprepared" for their retirement.

From AARP: Shutdown Delays Announcement of Social Security COLA

From the article: "The Social Security Administration was scheduled to announce the annual COLA adjustment on Oct. 16, but it can’t do so because it won’t have an inflation report for September from the Labor Department."

 The views expressed by the writers of these pieces are entirely their own and do not necessarily reflect the views of MOSERS. Print Friendly and PDF

2013 COLA

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Hello, Is it known what the COLA increase will be for our pensions?
The 2013 COLA for retirees of the MSEP is 4% (for MSEP retirees hired prior to 8/28/97 who have not met their COLA cap). The COLA for retirees of the MSEP 2000 is 1.655% (for MSEP retirees hired on or after 8/28/97; MSEP retirees who have met their COLA cap; MSEP 2000 retirees)

Please see our COLA page on our website for more information.

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Coffee Breaks

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Wondering when a retirement meeting will be held in this area? Rolla Mo. 65401
Thank you for your interest in MOSERS’ post-retirement Coffee Break meetings. While we do have sessions in Jefferson City, Springfield, Kansas City, Cape Girardeau and various other locations, we do not have any scheduled in Rolla. We try to cover the state as much as possible, but budget limitations require that we pick locations that have the largest concentrations of retired members. You are welcome to attend any of the other sessions if that is possible for you. Find out more about post-retirement Coffee Breaks on the MOSERS  website. We will post the 2014 schedule in December or January.  These Coffee Breaks allow us to reach out to our retirees, give you a chance to have face-to-face communication with MOSERS staff, and provide you with the opportunity to interact with other state retirees in your area.

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Windfall Elimination Provision

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I heard about the federal Windfall Elimination Provision that a person receives a pension will have his/her social security benefits reduced. I am in MOSERS. When I retire, will my SS benefits be reduced?
No.  Your MOSERS pension benefit will not trigger the Windfall Elimination Provision (WEP) According to the Social Security Administration, “If you work for an employer who does not withhold social security taxes from your salary (emphasis added), such as a government agency or an employer in another country, any pension you get based on that work may reduce your social security benefits.” In Missouri, those positions are most generally certified teachers or uniformed police officers or firefighters.  As a MOSERS member, your employer does withhold social security taxes from your salary. You would only be affected by the WEP if you earned a pension from other employment and did not pay social security taxes while in that position. You can find more information about the WEP here.

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Security of Your MOSERS Benefit

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I have heard that there is some politician that wants the legislature to be separated from regular state employees and that he wants to do away with our pensions. This was brought up at an A.R.M.S.E. meeting.
Rest assured; your MOSERS pension benefits are secure. Two of MOSERS benefits staff members and the executive director did attend all or part of the ARMSE meeting, but we did not present to the ARMSE members about the issue you have raised.  Certainly, public pension plans have been under attack in various media and academic reports, so we understand why you may be concerned. The benefits provided to retirees are obligations of the State of Missouri. The law stipulates that no alteration, amendment, or repeal of the MOSERS law shall affect the then-existing rights of retirees. Additionally, Missouri has consistently fully funded the amount determined by independent actuaries to properly and responsibly fund the pension plan.

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Life Insurance in Retirement

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How would a retiree qualify for life insurance? Did I miss something by taking an early retirement? Is it too late to enroll? What are the rules governing life insurance for retirees? i could not find answers to these questions on your website. Thanks
In order to qualify for life insurance as a retiree, you must have been an eligible employee while actively employed. Then, regardless of whether you elect normal retirement (unreduced benefit) or early retirement (reduced benefit), as long as you retire within 60 days of leaving state employment, the state will continue to pay for $5,000 of basic life insurance. Additionally, if you were enrolled in optional life insurance coverage on your last working day, you may continue some if not all of that coverage into retirement. You can find more information in the MOSERS Basic and Optional Life Insurance Handbook on our website. Print Friendly and PDF

Friday Top Five September 27 2013

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The Friday Top Five: A collection of the top five news articles, blog posts, or other retirement related information from the past week.

From the Squared Away blog: Social Security Claiming and Psychology

From the post: "It’s common for people to begin collecting their Social Security benefits soon after they turn 62, ignoring the financial planners and retirement experts urging them to postpone and increase the size of their monthly checks.

A new study has uncovered four powerful psychological traits that influence this decision: the individual’s expected longevity, his fear of loss, whether he perceives the Social Security system as fair, and patience."

From the National Association of State Retirement Administrators: NASRA has a new website!

From the new page: "Welcome to the newly redesigned We are working to bring NASRA-related research on public retirement systems, as well as supporting resources and information, together in one site. As you explore the content, let us know via email what you think."

From Government Executive: The Retirement Wave You Didn’t See Coming

From the article: "You’ve likely heard of the impending government retirement wave.  For a decade, agency leaders have been monitoring their workforce demographics with increasing concern. Low attrition rates combined with less hiring have produced a static employee base that grows older with each passing year."

From The Center for Retirement Research at Boston College: How Sensitive Is Public Pension Funding to Investment Returns?

The brief’s key findings are:

  • To assess the sensitivity of pension funding to investment returns, the analysis projects funded ratios through 2042 for large public plans using:

    • a stochastic model of year-to-year returns; and

    • a median real return of 4.45 percent, the average used by plans in 2012.

  • The baseline results show that the funded ratio for the 50th-percentile outcome does not reach 100 percent because:

    • plans pay only 80 percent of annual required contributions (ARC); and

    • amortization approaches produce inadequate contributions.

  • Paying 100 percent of the ARC and using more robust funding approaches leads to near full funding by the end of the period.

  • However, even under these more favorable scenarios, the variability of returns still poses risks of funding shortfalls.

From The National Institute on Retirement Security: The Retirement Savings Crisis: Is It Worse Than We Think?

A new study from NIRS "finds retirement savings are dangerously low, and the U.S. retirement savings deficit is between $6.8 and $14.0 trillion."

 The views expressed by the writers of these pieces are entirely their own and do not necessarily reflect the views of MOSERS. Print Friendly and PDF

Cafeteria Plan and Retirees

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Cafeteria Plan - I realize that the federal government will not allow retirees to run their insurance premiums through the cafeteria plan as active employees do. However, it would be most helpful to state retirees to be able to set aside money via the cafeteria plan (as current employees do) in order to pay for out of pocket expenses toward medical insurance co-pays, vision and dental expenses as other states do. [W]hy can't legislators enact legislation to allow retirees to participate as fully as possible in the cafeteria plan?
Cafeteria plans, also called flexible savings accounts (FSA), are governed by federal regulations that restrict participants to employees only, which is why those benefits are unavailable to retirees. Since these plans are authorized and controlled by federal laws/regulations, the state cannot expand coverage to include retirees.

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Friday Top Five September 13 2013

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The Friday Top Five: A collection of the top five news articles, blog posts, or other retirement related information from the past week.

From Pension Dialog: Is There Always Truth in Numbers?

In this post, PS again calls to task State Budget Solutions, and its report "Promises Made, Promises Broken - The Betrayal of Pensioners and Taxpayers," for "grossly inflat[ing] unfunded state pension liabilities." PD goes on to suggest that "understanding what numbers are being used and why is thus essential." This is a great post. You should read it.

From aiCIO: The Politics of Pensions

From the article: "A study of state lawmakers’ voting records from 1999 through 2011 has determined that Democrats and Republicans heavily supported expanding pension benefits until 2009. During the first three years of the data set, 34 states passed bills boosting liabilities, while just a single state—South Dakota—reduced benefits. But the financial crisis brought an end to both this largesse and political consensus, the researchers found."

Also From aiCIO: MOSERS, Exelon, AIMCo, BP Vie for aiCIO’s Industry Innovation Awards

MOSERS' CIO Rick Dahl and his investments team are nominated as a finalist in aiCIO's 2013 Industry Innovation Awards, in the Public Pension Plan Below $15 Billion category. Winners will be announced on December 9, 2013.

From the Too Much Blog: Remember When People Had Pensions?

This is a blog post on a recent report by the Economic Policy Institute (EPI) called the Retirement Inequality Chartbook. From the post: '“Retirement insecurity,” write the two authors of the new EPI study, economists Monique Morrissey and Natalie Sabadish, “has worsened for most Americans as retirement wealth has become more unequal.”'

From MarketWatch's Encore Blog: Do 401(k)s Add to Economic Inequality?

Here's another take on the recent report (mentioned above) by the EPI. From the post: "The EPI is a think-tank that puts a big emphasis on lower- and middle-class economic issues and has strong relationships with organized labor. The report, by economists Monique Morrissey and Natalie Sabadish, advances the broader argument that the migration of retirement plans away from pensions and toward 401(k)s has undermined middle-income people’s retirements."

Please note that there will be no FTF on 9/20/13.

The views expressed by the writers of these pieces are entirely their own and do not necessarily reflect the views of MOSERS. Print Friendly and PDF

COLAs in the Current Economy

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Is it true that Cost of Living raises for pensions of 4% have been happening every year, even in this bad economy?
Cost of living adjustments (COLAs) for those retirees who retired under the MSEP, who were hired prior to 8/28/97, and who have not met their COLA cap receive a 4% COLA each year. Those retirees who retired under the MSEP, who were hired on or after 8/28/97, who have met their COLA cap, and MSEP 2000 retirees receive an annual COLA that is based on 80% of the percentage increase in the average CPI from one year to the next. Typically COLA caps are met within 12-13 years. You can read more about COLAs on our website.

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Do I Contribute 4% to MOSERS?

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I was hired before the pension contribution change. If I change jobs now to another department of the state, will my retirement funds go with me to the new department? Will my pension still be 100% funded by the State or will I have to contribute 4%? Thank you
The 4% employee contribution applies only to those who were first hired in a benefit-eligible position on or after January 1, 2011. If you began work in a MOSERS benefit-eligible position before January 1, 2011, you do not have to contribute the 4%. You can read more about which plan you are in on our website.

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Does Home Daycare Count Toward Credited Service?

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I was told that if you had a Missouri licensed child daycare home that this would count towards your credit hours worked. Is this true? Thanks for your assistance.
No this is not true. We record your service as it is reported to us by your employing agency. You will only receive service credit for periods that your employer reports you worked in a benefit-eligible position.
Temporary and part-time positions are not usually benefit-eligible, and are not generally counted as service credit for retirement purposes.

A self-employed day care would not be considered state employment as you will not be paid by the state or employed by a state department. Rather, you will be paid by the parent of the children for whom you provide care.

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Marriage Equality and MOSERS Benefits

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I was legally married in Iowa in 2009, a state where marriage equality is legal. My marriage, however, is not recognized in Missouri. I plan to retire within the next year or so. Given the possibility of my marriage being recognized nationwide at some point, would I then be given the option to switch my “Life Income Annuity” to a “Joint & 50% Survivor” or “Joint & 100% Survivor” benefit? What if I choose to retire under the plans that provide 120 or 180 guaranteed payments; could I switch these to a “Joint & 50% Survivor” or “Joint & 100% Survivor” benefit? 
We have no way to determine what options may be available in the future should Missouri eventually recognize your marriage. If your marriage is ultimately recognized in Missouri, MOSERS would make every effort to notify all members of the change of their options at that time.

Please understand that we realize that this response does not provide the specificity that you are seeking. However, it would be irresponsible for us to attempt to provide answers regarding your future options based on speculation regarding potential court decisions or legislative changes.

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Friday Top Five September 6 2013

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The Friday Top Five: A collection of the top five news articles, blog posts, or other retirement related information from the past week.

From The National Institute on Retirement Security (NIRS): Retirement Lessons from Australia, Canada, and the Netherlands

"The goal of the research is to assess the level of security and risk provided by each country’s retirement system through the layers of income replacement provided by government, employer, and individual programs. In addition, this paper highlights key issues and lessons for consideration by U.S. policymakers and stakeholders."

From The Washington Post's Wonkblog: 401(k)s Are Replacing Pensions. That’s Making Inequality Worse.

Lots of interesting and informative charts in this post.

From The Wall Street Journal's Encore Blog: The Costs of End-of-Life Care

"End-of-life care isn't a pleasant topic to address. It's made more daunting by the unexpected turns in our physical and mental health as we age."

From HuffPost Business: Thanks, Diana Nyad -- for Proving Persistence Pays

From the post: "Don't give up. Diana Nyad's lesson in persistence is particularly applicable to all those who are approaching retirement age and figure it's "too late"! Nyad is 64 -- the age when many are considering taking early Social Security. But she didn't give up her goals, or let age deter her. And swimming from Cuba to Florida is a lot more difficult than working a few more years to build your savings reserve."

From The New York Times: Gay and Married Couples in New Land of Taxation

From the article: "Gay couples can now plan for how their financial lives will change when it comes to federal taxes, even though big questions remain about benefits like Social Security and veterans’ benefits. The ruling applies to a broad range of tax rules where marriage comes into play, and some will result in major savings. Some couples will no longer have to pay thousands of dollars in taxes on the value of their spouse’s health insurance, something their opposite-sex peers did not have to pay. Individuals can inherit a spouse’s retirement account and other assets without any extra tax implications. Nonworking spouses will be able to open an I.R.A. on their spouse’s earnings record. And the list goes on."

The views expressed by the writers of these pieces are entirely their own and do not necessarily reflect the views of MOSERS. Print Friendly and PDF

Friday Top Five August 30 2013

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The Friday Top Five: A collection of the top five news articles, blog posts, or other retirement related information from the past week.

From the MOSERS team: Pension Advance Scam

Retirees should be aware of a new scam that offers cash in return for your pension checks. These offers are essentially high-interest loans being masked as "advances" on your pension. The pension advance companies tend to target military veterans and public sector retirees, offering quick cash to get out of debt, but obscuring the terms of the loan and the long-term repercussions. Read more on the MOSERS website.

From The Washington Post: Wave of Retirements Hitting Federal Workforce

According to this article, with budgets being cut, employees being furloughed, and low morale, many federal workers who kept working through the recession are now retiring.

From the Center for Retirement Research at Boston College: How Has the Financial Crisis Affected the Consumption of Retirees?

The brief’s key findings are:

  • The impact of the financial crisis on the consumption of retirees depends on how much they have in financial assets, how they invest, and their reliance on assets for consumption.

  • The crisis had little effect on those 40 percent with very small amounts of financial assets and the top 5 percent with very large amounts.

  • In contrast, the broad middle class did experience declines in consumption:

    • At one extreme, households that invested in short-term deposits and tried to live off the interest saw significant declines.

    • At the other extreme, investors in balanced portfolios who gradually drew down their wealth lost more modest amounts.

  • Most middle-class households, though, combine some behavioral aspects from the two extremes, so the impact on their consumption lies in between.

From The St. Louis Post-Dispatch: Possible Pension Fix Could Save Illinois $145B

From the article: "A bipartisan panel tasked with solving Illinois' multibillion-dollar pension crisis is considering a framework that would save the state about $145 billion over 30 years, largely by ending automatic 3 percent cost-of-living increases for retirees."

From The Guardian: Older, Healthier and Working: Britons Say No To Retirement

From the article: "By 2030 there will be a 50% rise in those aged over 65. And a growing number of [them] want to carry on in [their] jobs. This will demand huge changes in [their] attitudes to age and work."

The views expressed by the writers of these pieces are entirely their own and do not necessarily reflect the views of MOSERS. Print Friendly and PDF

Lobbyists In MOSERS?

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Is Missouri one of the 20 states where private lobbyists are reported to receive public pensions and state health care benefits? If so, why, and can this be stopped?
No, we have no such participants in MOSERS.

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What is BackDROP?

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What exactly is back drop and how does it work, can't find anything on web site that explains it.

On our website, under the Members tab, the second link is to our section on BackDROP. The BackDROP option may be an option available at retirement to general state employees in the Missouri State Employees’ Plan (MSEP) and the Missouri State Employees’ Plan 2000 (MSEP 2000). The BackDROP option is not available to members of the MSEP 2011. For members of MSEP and MSEP 2000, this option provides a way for you to receive a lump sum payment at retirement in addition to your ongoing monthly benefit. You can read all about it at this link. I hope this is helpful to you. Should you have other questions, we encourage you to contact one of our Benefit Counselors at your convenience at 573-632-6100 or 800-827-1063.

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MSEP 2011 Members, State Match to Deferred Comp

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Do new hires coming in now get a pension? Do they get a match on their 401k?
Members hired for the first time on or after January 1, 2011 are in the MSEP 2011. This is simply a different tier in the MSEP 2000 and they are entitled to a defined benefit once they meet the eligibility requirements. Members of this plan must contribute 4% of their salary, however, they still receive a guaranteed benefit upon retirement.

The state match on the State of Missouri Deferred Compensation Plan has been suspended for all employees, regardless of what MOSERS plan they are in.

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Resignation Letter and Retirement

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Is a two week resignation letter required when you retire?
A two-week notice to your employer is generally considered an appropriate amount of time, however that is up to you. Consider, however, that when you are ready to retire, you may need more than two weeks to complete the process. You must submit your Application for Retirement to MOSERS at least 31 days in advance. We, in turn, will need additional data from your employer in order to calculate your retirement benefit. While the "industry standard" for resigning a position is two weeks, we encourage you to work with your employer as soon as possible to ensure your retirement benefits can be processed timely.
In order to retire, you can follow our two-step retirement process found on our website. We also encourage you to contact one of our benefit counselors at your convenience to discuss your particular circumstances. You can call or stop by our office at any time during our regular working hours:

907 Wildwood Dr. 
Jefferson City , MO

(573) 632-6100 
(800) 827-1063

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