Following Rumor Central

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How can a co-worker receive a copy of Rumor Central? 
MOSERS members are opted in to receive electronic notifications from us by default so my guess is your co-worker has changed his or her settings via the secure member area of our website. In order to receive electronic notifications from us when Rumor Central is updated, that box has to be checked. Your co-worker can follow these instructions to change the settings:
  • Log in to the secure member area from the MOSERS homepage (on the right hand side) using social security number or member ID and password.
  • On the member homepage, go to the Email Options link under the Update Personal Information tab on the left hand side.
  • Once there, click the boxes stating for which publications you’d like to receive electronic notification.

 Another option is to simply go to the Rumor Central blog and click the “join this site” button. If you add your email and follow the blog, you could be notified via a news feed of your choice too.

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Behind the Scenes at MOSERS - Part I

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MOSERS created a 4-part, “behind the scenes at your retirement system,” series of interactive website pieces, showing the faces of our staff and our members. It is titled “Envisioning Your Future with MOSERS.”

We hope you learn something new in this interactive series about your retirement system, our staff, or about defined benefit retirement plans in general.

Part I of IV

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HB 129 (State Retiree Incentive Program) and Holidays

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With the 2013 State Employee Retirement Incentive Program it shows that some holidays will be removed for state workers. Are they doing this to fund this incentive program?
It is correct that the introduced version of HB129 does eliminate three state holidays (Lincoln Day, Truman Day and Columbus Day). However, we cannot speculate about the sponsor’s intention with regard to using the savings to pay for the incentive program that is also introduced in the bill.

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Do Retirees Pay Taxes?

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I have a question about state taxes on retired state employees. Do Retired state employees pay state taxes?
Yes, retirement benefits are considered wages for tax purposes. Missouri income tax, as well as Federal income tax is withheld from retirees’ monthly benefit checks (where applicable). Retirees specify on their Substitute W-4P form withholding amounts. Without this form, MOSERS is required to withhold Federal taxes as if you are married and claiming three exemptions.        

As mentioned in the winter issue of RetireeNews, there is a public pension exemption that can be deducted from your retirement benefit, if you are eligible. Depending on a variety of factors (including, but not limited to, income, filing status, and age) you may be able to deduct a portion of your public retirement benefit on your Missouri tax return, to the extent the amounts are included in your federal adjusted gross income. MOSERS recommends you contact the Department of Revenue or a qualified tax advisor for additional information or answers to your specific questions about the public pension exemption.

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Investments and Incentive Compensation

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Investment officer for Missouri employee pension system gets bonus. Tell me that this is not true. Large bonus seems to be the thing now, but why give a person a bonus when they are just doing their job. I hope this is not true and some sense of responsibility is used for the care of our money in the retirement system for Mo. employees that have earned it the old fashion way. Thanks.
Our investment professionals earn more compensation when they earn a greater investment return for our members.  We set high expectations for the returns they must achieve. When they exceed those returns, they earn incentives. Simply “doing the job” would be making the market – and therefore less money would be generated for the Fund, meaning more money would be required by the state of Missouri to fund the retirement system. Exceptional performance is being number one and adding hundreds of millions of dollars to the value of the Fund up and above the market.

Contractually, incentive compensation is paid to the chief investment officer based on the Fund’s performance, relative to the performance of the benchmark. Performance over the benchmark adds millions of dollars in value to the system’s assets, net of all fees. For example, in FY2012, MOSERS’ investment return beat the one year and the five year investment benchmarks by 1%, generating $83 million in one year and $420 million in five years.  MOSERS’ net investment return for FY12 was 2.2%, generating a total of $158 million on behalf of our members and Missouri taxpayers. This income is net after all investment expenses are paid, including staff salaries, external fees, and operating costs.  If the system did not have the benefit of that added value, the projected contribution for FY14 alone would be $28 million more than the number that has been reported. For perspective, the system’s return for the related five year period ranked number one in the nation in the universe of pension plans covering state employees.

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BackDROP and Death Before Retirement

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If I am working past my retirement date and am working on BackDROP, what happens if I die before I officially retire related to the BackDROP amount? I have read my spouse will get the 100% survivor rate but what happens to my BackDROP if I die before I get it?
Should you pass away while actively employed a survivor benefit may be paid to your eligible spouse. To be eligible, your surviving spouse must be married to you on your date of death. The monthly benefit for your spouse will be based on the benefit you have accrued as of your date of death and calculated according to the Joint & 100% Survivor Option. The survivor benefit will be paid monthly for the remainder of your spouse's lifetime.

At the time of retirement, you must elect the BackDROP option and a benefit payment option which determines if a benefit will be paid to anyone after your death.  Should you pass away prior to retirement, you have not elected BackDROP, therefore there is no distribution payable to a beneficiary.
For more information regarding survivor benefits, please review the “Survivor” section of our website:

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Past Retirement Incentive Bills

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Do you know how many times legislation has passed regarding a retirement incentive bill within the last 20 years?
In the last 20 years, there has been one retirement incentive bill that became law and that was in 2003.

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Friday Top Five Jan 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 Pension Dialog: 2009 All Over Again

There's a new study from the Pew Center on the States that relies on data from 2007-2010. In this blog post, PD calls them to task for using stale data that, unfortunately, could be used by state and local policy-makers. Since 2009, much has happened improve the state of public pensions. From the post:  "Pew’s interest in fostering understanding of public pensions through research is commendable. We’re not sure, however, that in this case, the research is helpful in either enhancing understanding or informing policymakers."

From the Social Security Administration: The Origins of the Retirement Age in Social Security

An interesting little archival piece from the Social Security Administration on the history of the retirement age.

From The Ten Most Common Misconceptions About Social Security

Tom Margenau sees misconceptions about Social Security every day from writing his blog Social Security and You. Here he outlines 10 of them. See also: The Five Nuttiest Rumors About Social Security

From USA Today: Boomers Reinvent Themselves in Retirement

From the article: "[T]here are now many different kinds of services available to help [retirees] navigate retirement, such as retirement coaches, elder life advisers and certified senior advisers. And there are free websites and books that also provide retirement tools and advice." There are links to several other retirement-related columns and articles included. There is also a short (2 min.) video about the challenges retirees face with regard to making their money last longer, as we benefit from better education, and longer lives. "It's a financial marathon, not a sprint."

From Daily Finance: Are Pension Return Assumptions Too Optimistic?

This references the same Pew Center on the States study - the one that uses outdated data -  that is referenced in the Pension Dialog post (#1 above). The question, are pension return assumptions too optimistic?, is addressed by Joseph Dear, chief investment officer of the California Public Employees' Retirement System (CalPERS), the nation's largest pension fund. In a  just over six-minute video, Dear offers a great explanation of how assumed rates of return for public pension systems are associated with risk, liabilities and contribution rates.

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

Misinformation Adds to Public Pension Plan Woes

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We're very pleased to share a guest blog post by Keith Brainard of the National Association of State Retirement Administrators, originally published in Pensions & Investments on  January 21, 2013.

If a public or corporate official distributes false financial information that serves as the basis for unwarranted action by others, they are guilty of either fraud or negligence depending on whether it was signed off on knowingly or carelessly. Why then are academics not held to the same level of accountability?

To cite one example, in an op-ed piece in the Dec. 10 Providence Journal, finance professor Joshua Rauh and assistant finance professor Robert Novy-Marx made the following statement:

“In Rhode Island, an anticipated annual return of 8.25% in pension investment has for the past decade come in at about one-third that rate, only 2.4%. This means that while the state's pension system already takes 10 cents out of every state tax dollar — and yet remains deep in the red — it's not nearly enough to pay off the promises.”

These academics are well credentialed and are on the staff of highly respected institutions of higher education (the Stanford graduate school of business and the University of Rochester graduate school of business, respectively.) Given their backgrounds and positions, one would assume they are capable of basic research and are making their claims based on solid information.

The natural reaction to the red flag they have raised regarding Rhode Island's investment returns would be to demand immediate action. There is only one problem: What they reported is false. How do I know that? Information made public by the Rhode Island retirement office regarding its investment return for the past decade, prepared by an independent consultant, shows the Rhode Island pension fund's annualized return for the 10-year period ended last Sept. 30 was 8.3%, not 2.4%. In addition, since 2010, the Rhode Island retirement plans have used an anticipated annual return of 7.5%, not the 8.25% rate claimed by the professors.

This is not an isolated incident. In an earlier report, Mr. Rauh produced what were called “run-out dates” for public plans, which led readers to believe the dates listed were when the plans were expected to run out of money. The Pew Center for the States reported it that way, and a congressman cited the information on his website as proof positive of the need for the “reform” legislation he was proposing. Naturally, the run-out dates resulted in high degrees of anxiety among both plan participants and the sponsoring agencies, and no small effort was made to clarify and correct the record for policymakers and the media. More than a year after publication of this report, the Government Accountability Office included the following in a footnote in a report of its own:

“However, the (Rauh) study was based on the assumption that benefits earned to date would only be financed out of current plan assets and not from any future contributions. The projected exhaustion dates are thus not realistic estimates of when the funds might actually run out of money.”

Of course, by the time the GAO report was distributed the damage already had been done and the GAO report garnered almost no public attention. Was the misinformation in the Rauh report on this subject a function of negligence or fraud? I do not know the answer, but it seems reasonable to limit the range of possibilities to those alternatives, and to hold academia to the same standards as a public or corporate official, given the products of their “academic research” are likely to influence the actions of others.

Keith Brainard is the Georgetown, Texas-based research director of the National Association of State Retirement Administrators. Print Friendly and PDF

Friday Top Five Jan 18 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 Washington Post: 401(k) Breaches Undermining Retirement Security For Millions

In this article from the Washington Post, NIRS Executive Director Diane Oakley is quoted as saying when it comes to retirement security, "we're going from bad to worse." More and more Americans are borrowing against their retirement accounts to pay for things now, such as mortgages, credit card debt or other bills.

From the article: "Experts warn that when workers draw on their retirement accounts to pay current bills, they put themselves at greater risk of descending into poverty upon retirement, which would leave them dependent on government programs such as subsidized housing or food stamps. Nearly 6 million senior citizens were living in or near poverty in 2010, according to a Senate committee, a number expected to increase sharply over the coming decade after a long period of decline."

This link includes an interesting 3+ minute video on the topic.

From NBC Nightly News: Older Americans Dipping Into Retirement Funds to Pay Off Credit Cards

A new study from AARP called the Middle Class Security Project shows that "Americans age 50 and older are carrying an average of $8,278 in credit card debt, thousands more than younger people. In addition, nearly 18 percent of those nearing retirement said they are using their retirement funds to pay down credit card debt." Watch this NBC Nightly News video.

From USA Today: Retirees Face Their Own 'Fiscal Cliff'

This column calls for the need to reassess retirement savings plans in the face of potential cuts to Social Security and Medicare. Just a couple of the striking statistics offered in the story: 1) "3 out of 4 Americans near age 65 have less than $30,000 in retirement savings;" and 2) according to Teresa Ghilarducci, an economist at the New School for Social Research and author of "When I'm Sixty-Four: The Plot Against Pensions and the Plan to Save Them, "half of retirees are destined to live near poverty and will have to live on a food budget of about $5 a day." The article also suggests "reversing America's big shift from traditional pension to individual retirement accounts." NIRS Executive Director Diane Oakley is quoted here as well.

From MarketWatch: What’s ahead for Social Security in 2013

Social Security, the nation's retirement system, provides the majority of income for 65% of elderly beneficiaries, and it keeps about 14 million elderly people out of poverty. It could become a major part of the coming congressional debate over the deficit, though some think lawmakers may leave the debate over Social Security for another day. Also discussed is a potential adoption of a "chained CPI," which assumes that consumers react to rising prices by shifting their spending; they buy similar goods that are cheaper, and which we referenced in our Dec 28 2012 FTF. Also new from MarketWatch: MarketWatch Retirement.

From the Squared Away Blog: “Damn Right, I’ve Got the Blues”

This post is about new research by Lawrence Berger, an associate professor of social work at the University of Wisconsin-Madison, showing a connection between the amount of an individual's debt and the level of his or her depressive symptoms. You can watch the hour-long webinar of Berger discussing his research. You can also watch a wicked cool three-minute live clip of Buddy Guy singing the title song!

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

HB 129: Years-of-Service Incentive 2013

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House Bill 129, page 2, part 5(2) 104.406.1. says "who terminates employment on or after April 1, 2014, after reaching normal eligibility"; Can you tell me what is normal eligibility? Would that include someone already 2 years into backdrop? Thanks
The provisions of HB 129, known as the “2013 State Employee Retirement Incentive Program,” if enacted, are as follows:
  • Only those memberswho qualify for normal retirement at termination, who have at least 10 years of creditable service at termination, who terminate on or after April 1, 2014, and who retire May 1, June 1, or July 1, 2014, would qualify for the incentive.  Normal eligibility means a person is eligible to retire without a reduced benefit.
  • A member who is eligible for or becomes eligible for the BackDROP during the window may retire under the provisions of this bill. A member who retires May 1, June 1 or July 1, 2014 who qualifies for the BackDROP provision at retirement would, as usual, be able to elect the BackDROP. This would be completely independent of the proposed incentive. There is no relationship between HB 129 and the BackDROP provision.
  • Would provide a “years-of-service” benefit of $500 per year of service up to a maximum of 20 years (total of $10,000), payable in two equal annual installments (August 2014 and August 2015) 
  • Includes a provision that would prohibit anyone who received the proposed incentive from retiring and then returning to state service in anything other than a part time capacity
  • No elected official or member of the general assembly is eligible for the incentive
  • Departments will be allowed to fill vacated positions with 30% of personal service funds of the vacated positions
We encourage you to monitor legislation as it is introduced and moves through the legislative process by visiting the Missouri House of Representatives and Missouri Senate websites.

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Where can we find the amount of COLA for the MSEP option?
Cost-of-living adjustment information for all Plans administered by MOSERS can be found on our website at this link. COLA information for 2013 will be available next week.

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Friday Top Five Jan 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 Kiplinger: Social Security Expands Online Services

Social Security beneficiaries and Supplemental Security Income (SSI) recipients can now access their benefit verification letter, payment history, and earnings record instantly using their online account - their "my Social Security" account. Social Security beneficiaries also can change their address and start or change direct deposit information online.

From Pension Dialog: Paying for Retirement

This blog post calls attention to the fact that most state and local employees are required to contribute a certain percentage of their salary toward their pensions to help pay for them, and highlights a recent issue brief from the National Association of State Retirement Administrators (NASRA) that lists the contribution rates of many public plans by state.

From the St. Louis Post-Dispatch: Get Ready For a Leaner Retirement

This story from the Personal Finance section of the SLPD suggests we get prepared now to live leaner during our retirement. Political cliffhangers on Social Security and Medicare may have only just begun.

From the Chicago Tribune: [Illinois'] Pension-Mess Primer: How it Got Here, Why it Now Has State's Attention and the Tens of Billions it Will Cost

This is a long piece but well worth the read, its length fitting to an issue so long in the making.

From Institutional Investor: Rhode Island Treasurer Defies Conventional Pension Wisdom

In this even longer piece, Imogen Rose-Smith of Institutional Investor discusses how Rhode Island Treasurer Gina Raimondo demonstrates "how tough pension reforms can pay fiscal and political dividends."

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

MOSERS Executive Director Gary Findlay Awarded Lifetime AchievementAward

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Gary Findlay, executive director of MOSERS, has been awarded the 2012 Money Management Letter Lifetime Achievement Award. This Institutional Investor News award is considered be the standard setter for excellence in the financial services industry.

The announcement, made January 4, 2013, reads in part, “In the 18 years since Findlay became director, MOSERS assets have compounded at an annualized rate of 9% net of fees, outperforming the fund's benchmark by 1.2% annually. When compared to other public funds across the country, this performance places MOSERS among the very best. A recent study of 10-year results conducted by consulting firm Cliffwater & Associates found that MOSERS' returns were the highest among its peers for the decade.”

“It’s been an interesting lifetime with the most interesting part being the last 18 years here,” said Findlay. “I now consider the years leading up to 1994 as being preparation for what has happened since 1994. Almost all of the opportunities to play a part in policy development at the national level happened since then. Not mentioned were the Year 2000 plan, a new culture, a new focus, almost all of which stemmed from being alert to opportunities and capitalizing on them. Critical to all of this was attracting and retaining the right people and being willing to take calculated risks, which most public pension organizations are not willing to do.”

The full article can be read at the Money Management Intelligence website. Print Friendly and PDF

Friday Top Five Jan 4 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 at the Wall Street Journal: Five Lessons From My Parents’ Retirement

Joseph Masterson, named "most influential person in the 401(k) industry in 2012," offers his best advice for preparing for a secure retirement. First on his list? "Pursue a traditional (defined benefit) pension plan - aggressively." We like that advice.

Also From MarketWatch: Resolve to Focus on Retirement Planning

Some good advice as we start the new year.

From The Squared Away Blog: Happy Retirement?

This post is about the fact that while many people identify saving for retirement as their top financial priority, people are not saving enough. The post includes a video ("The Great Recession and Retirement Security") with Karen Smith of the Urban Institute who discusses a reason Americans are not prepared for retirement - the Great Recession and unemployment. “The drop in real wages has the biggest effect on retirement savings and income. When wages fall, we earn less, we save less, and we lose the investment returns on those lost savings.”

From NASRA: An Issue Brief - Employee Contributions to Public Pension Funds

From the Brief: "In the wake of the 2008-09 market decline, employee contribution rates in many states have increased. This issue brief examines employee contribution plan designs, policies and recent trends." Missouri became one of those states when MSEP2011 was passed, requiring a 4% contribution from employees hired in a benefit-eligible position for the first time on or after January 1, 2011.

The Brief includes an appendix showing retirement plans by state, the employee contribution rate, and whether or not those employees are covered by Social Security.

From AARP: Don't Be Fooled - Social Security Not to Blame for Budget Woes

From the AARP Blog, this post suggests that while there is a need for a debate about Social Security, it should be the right kind of debate, "focus[ing] on retirement security for older Americans today and young people who will need retirement security in the future."

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

Concerning Retirement and Health Insurance Coverage

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Concerning retirement and health insurance coverage: what would be the best time of the month to retire as it relates to prolonging my State Health insurance coverage?
The Missouri State Employees’ Retirement System (MOSERS) administers retirement, long-term disability and life insurance benefits for our members. Health care is managed by the Missouri Consolidated Health Care Plan (MCHCP).

Regarding the timing of your retirement, members of MOSERS are allowed to retire only on the first of each month. However, the contribution toward your health care premium is based on your years of service with the state at retirement. It is calculated by using the number of full years of service multiplied by 2.5 percent. The maximum contribution cannot exceed 65 percent. For additional information about your health care, MCHCP can be reached at

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1099-Rs to be Mailed in Late January

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When will the tax statements be ready?
1099-Rs are mailed in late January. Here is a link to an article about this in our most recent edition of RetireeNews. Once the 1099-Rs have been mailed, they will also be accessible online in the secure member area of our website. Print Friendly and PDF