Long-Term Disability Insurance

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At what age does Long Term Disability [insurance] stop? 
The state's disability program is only available to members until they reach full retirement age.

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A Year in the Life of MOSERS' Institutional Investments

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FY13 Market Summary

The markets entered the fiscal year with low expectations arising from a slowing U.S. economy, a difficult U.S. fiscal position, inflamed societies in the Middle East and Europe, and a historically large debt problem in the European Union. Following the U.S. Presidential election, attention turned to the Fiscal Cliff – a set of events that would both raise taxes and reduce government spending simultaneously.  Meanwhile, on the other side of the world, Cyprus was threatening to reignite the European debt crisis that the European Central Bank (ECB) had fought so hard to contain.

In the face of all this uncertainty, stocks, credit and commodities increased, real estate was relatively unchanged and interest rates went down.  Given all the uncertainty it was surprising that risk assets continued their upward trend.  Much of the confidence needed to see through the negatives came from the global central banks.  Early in the first half, the ECB committed to outright monetary transactions – the European version of quantitative easing.  This action helped to lower yields and fiscal stress in the European block countries.  Not long after the ECB’s proclamation, the Federal Reserve entered the home mortgage market by buying $40 billion per month of agency mortgage-backed debt in an effort to save the nascent housing recovery.  Then by December, in an effort to offset the effects of a possible debt ceiling and Fiscal Cliff, the Fed increased bond purchases to $85 billion per month, split $45 billion in government debt, and $40 billion in agency mortgage-backed debt.  Not to be left out of the party, Japan’s Prime Minister announced a massive effort to weaken the yen and increase inflation through, among other things, massive money printing and central bank support for bank loans.

Entering the last quarter (April –June 2013) the markets were ebullient and the momentum increased in most assets with commodities being a notable exception.  However, interest rates had begun to rise on rumors the Federal Reserve was considering reducing the size of their bond purchase program.  By mid-June these rumors were confirmed by Chairman Bernanke, causing an escalation in the rate at which interest rates increased through the end of June.  Early in the quarter risk assets performed well, however, following Bernanke’s speech investors got worried about the impacts of higher interest rates on economic growth and risk assets turned negative.  In the end, the losses in June were enough to cause most risk assets to post a negative quarter while at the same time U.S. Treasuries lost money.  For several years running there had been a strong negative relationship between equities and U.S. Treasuries.  When equities rose, Treasuries fell and visa-versa.  The last quarter of fiscal year 2013 saw this trend reverse with both stocks and bonds printing negative returns.

In summary, this year can be separated into a ten month period of rewarding risk taking and a two month period of heightened uncertainty and losses on all assets.  For the first ten months of the fiscal year risk markets enjoyed the fruits of the central banker’s liquidity efforts.  If markets are a party, liquidity is the life of that party and the central bankers had plenty to share.  By the end of the fiscal year, the risk markets were confronted with the real notion that these liquidity programs would end, thereby prompting an adjustment in market expectations.  Exactly how the market’s expectations adjust and how much liquidity the central bankers withdraw is likely to define much of the next 12 month period.  As for now, though, people who owned more risk than less in the one-year period from July 2012 to June 2013 were happy they did.

Seth Kelly is the Managing Director - Beta Balanced Strategies at MOSERS Print Friendly and PDF

Not Your Average Pension Fund

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We’ve said it before, and we’ll say it again. MOSERS is not your average public pension fund. With the FY14 Missouri state budget just recently begun, we thought it would be a good opportunity to graphically show how much of the total state budget is allocated to MOSERS and demonstrate the system’s public value.

As the graphic demonstrates, only 1.13%, or $323.3 million, is allocated to MOSERS in FY14, out of a $25.5 billion budget.

So why should you care? Missouri gets a lot of public value from its investment in MOSERS. The ability for the state as an employer to offer employees a solid, secure, defined benefit pension plan, like MOSERS, helps the state recruit and retain valuable and dedicated employees. Our defined benefit plan provides a benefit based on career employees’ service to the state of Missouri, and their skills and value to their agencies. After a career in public service, members receive a modest benefit for life, assisting, along with personal savings and social security, our members in maintaining a relatively stable standard of living during a dignified retirement. This lessons the burden on the cost of social assistance programs, and most of our members remain in Missouri during retirement, spending their dollars here, helping to support the state and local economies.

MOSERS is not experiencing the problems in funding, liabilities, or credibility some other states are experiencing. The State of Missouri, without exception, has always funded the annually required contribution (ARC) at 100%. In other words, the view that this pension system should never sustain a shortfall in actuarially determined contributions has been systematically endorsed at all levels of authority over the years. The decisions made over the years by the MOSERS Board, the governor, the legislators, and MOSERS staff, have put MOSERS in a strong financial position. Our long-term investment strategies are designed to keep the plan affordable to the state and to keep promised benefits secure.

Finally, as the graphic illustrates, the majority of MOSERS’ funding is not from taxpayers, but rather our better than average, long-term investment returns.

Not Your Average Pension Fund Print Friendly and PDF

Friday Top Five July 26 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 aiCIO: Rant! California, You Aren’t Broke Because of CalPERS’ Conference Travel

aiCIO's editor-in-chief Kip McDaniel is on a rant about the perceived "problem" of CalPERS' travel expenditures. From the post: "My quick math suggests that for CalPERS, this amounts to 0.00055% of their portfolio assets under management. It's similar for CalSTRS. So here's a suggestion: California, your financial difficulties did not originate from, or will be solved by, less due diligence and conference travel at your state pension funds."

From AARPBlog: States Step Up for Retirement Security

This article highlights measures being taken in Oregon to help workers save for retirement, and also mentions innovations happening in California, Massachusetts, and Washington. The article cites the following:

  • Three-quarters of Americans age 55-64 had less than $30,000 in their retirement accounts as of 2010.

  • And, more than 70 million American workers do not have any type of employer-sponsored retirement plan.

From the Squared Away Blog: The Aging Mind and Money

From the post: "With Americans living longer and an estimated 10,000 baby boomers turning 65 every day, a spate of fresh research has examined how and whether older brains can handle the challenges of modern financial life.  But what the researchers have found out so far about the aging mind and money is somewhat of a mixed bag."

From Bloomberg: Pension Deficits Get Renewed Scrutiny Post-Detroit Filing

From the article: "The bankruptcy of Detroit, which may cut retirement benefits of 30,000 current and former city workers, is causing investors to scrutinize billion-dollar shortfalls in government pensions in other parts of the country."

From MarketWatch: Will your pension disappear, post-Detroit?

“Now more than ever, it is incumbent upon Americans to take increased responsibility for their personal financial well-being,” [Richard] Schroder [president of Anova Consulting Group, a Brookline, Mass., market research and consulting firm focused on the retirement-services space] said. “At one point or another, most of us have been given the advice to ‘not put all our eggs in one basket,’ and the same concept applies to retirement.”

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 Benefits Are Secure

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Tonight, NBC national news listed Missouri as one of the states with underfunded pension plans. I would like assurance that MOSERS is funded sufficiently to continue to pay me and other retired people until I have died and my spouse dies.
Rest assured, your MOSERS benefits are secure. We are unfamiliar with the NBC news story to which you refer, but we can tell you that MOSERS remains a well-funded, stable public pension system, and promised benefits are safe and secure. Unlike some other states, the state of Missouri has consistently fully funded the amount determined by independent actuaries to be the contributions required to properly and responsibly fund the pension plan.

Your MOSERS retirement benefit will not run out before you die. Your MOSERS pension, a defined benefit (DB) plan, is paid for life. No matter how long you live, what retirement options you take, whether or not you take BackDROP (if applicable), no matter who your survivors or beneficiaries are, you will receive a benefit every month for the rest of your life.

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HB129

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Do you see an incentive on the health care cost (insurance cost) for future retirees to retire next year? Was anything proposed in legislation?
HB 129 – a “Years-of-Service” incentive bill that was proposed during the 2013 legislative session, did not pass. The last action taken on the bill was that is was referred to the House Rules Committee on 4/23/13. You can read what provisions were in the introduced version of the bill here. And you can read other Rumor Central posts regarding the bill at this link. We have no way of knowing what might be introduced in the coming 2014 legislative session, but as always, we will keep members informed of anything that might affect their retirement benefits.

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Friday Top Five July 19 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 Detroit Free Press: Editorial-How Detroit Came to Betray its Retirees

From the article: "As emergency manager Kevyn Orr mulls how to restructure Detroit’s pension costs and even considers altering payouts, it’s more important than ever to be clear about how the city’s pension funds got into this fiscal mess: Decades of mismanagement and bad practices, coupled with catastrophic market declines, have altered the pensions from a reliable way to assure retirees’ futures into a massive financial burden."

From the Center for Retirement Research at Boston College: How Does Women Working Affect Social Security Replacement Rates?


The brief’s key findings are:


    • For married households, the amount of pre-retirement income replaced by Social Security depends on the labor force activity of both spouses.

      • At the high-end, couples with a non-working spouse get the replacement rate from the worker’s benefit and from a spousal benefit.

      • At the low-end, couples with two working spouses and identical earnings get the same replacement rate as an individual worker.

      • In the middle, couples see their replacement rate fall as the lower earner’s wages rise.

    • As women go to work, replacement rates decline.

      • They have dropped from 47 percent for those born early in the Depression to 42 percent for Early Boomers.

      • By the time that Generation Xers retire, replacement rates are projected to fall by an additional 5 percentage points.

    • In addition to women working, Social Security’s rising Full Retirement Age has also contributed to falling replacement rates.


From Huffington Post: Aging Well-22 Tips To Help You Age Brilliantly

This is a fun piece on how to age well from OWN, the Oprah Winfrey Network. "New ways to make sure you keep blossoming into an even-better you" include staying in touch with those who knew you "back when," focusing on the big picture, and learning to adapt. Read the whole list at the link above.

From the Squared Away Blog: Retiree Paralysis-Can I Spend My Money?

From the post: "What are they afraid of? “That something is going to take it all away from you, or you’re going to run out,” said Lewis, president of Resource Advisory Services in Knoxville. Spending money “is a big bridge to cross” for retirees.

But there’s another explanation for their paralysis: the decision about how much to spend, and how fast to spend it, is one of the most complex financial decisions an individual will make. It requires people who were lucky enough or diligent enough to save to suddenly juggle complex math and countless variables, some of them unknowable:

  • How long will I live?

  • How much money do I need?

  • Where’s the stock market going?"

Also from the Squared Away Blog: Aging U.S. Workers-The Fittest Thrive

From the post: "The earnings of U.S. workers in their 60s and 70s are rising faster than earnings for people in their prime working years, according to a new study.  Defying the stereotype that they’re marking time, today’s older workers are also just as productive as people in their prime working years."

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

Refusing a COLA

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Why would someone not want to accept a COLA?
Some members may choose to forfeit the COLA because it would move them to a higher tax bracket.  However, IRS regulations require that a person must begin receiving their monthly retirement benefit at age 70 1/2.

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Attending PreRetirement Seminars

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How early should I attend a retirement seminar?
PreRetirement Planning seminars target general state employees who are within five years of retirement (or already eligible). However, you are welcome to attend anytime, and as many times as you want. Seminars are $10 per attendee.

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Question about Board Rule Changes and Relationship to Passage of HB 233

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In reviewing the Summary of all Truly Agreed To & Finally Passed Legislation, I noticed the following:"SCS HCS HB 233 -- STATE EMPLOYEE BENEFITS This bill changes the laws regarding the Missouri State Employee Retirement System (MOSERS) and the Missouri Department of Transportation and Highway Patrol Employees' Retirement System (MPERS) so that they are consistent for both systems. In its main provisions, the bill: (12) Specifies that an additional benefit increase, lump sum benefit payment, or cost-of-living adjustment cannot be adopted unless the plan's actuary determines that the funded ratio of the most recent periodic actuarial valuation is 80% prior to adoption and at least 75% after adoption. Currently, the adoption of an additional benefit increase, lump sum benefit payment, or a cost-of-living increase is not based on the most recent periodic actuarial valuation. This provision must not prevent a plan from adopting any provision that is necessary to maintain a plan's status as a qualified trust."Is this related to the board rule changes regarding actuaries?
No, HB 233 was simply what we call a “clean up” bill that was passed during the 2013 Missouri legislative session. The provisions contained in it will go a long way toward making benefit administration easier for everyone involved. The bill was sponsored by two members of the MOSERS Board of Trustees, Senator Lamping and Representative Leara. The passage of HB 233 is unrelated to the Board rule changes regarding the selection of actuaries.

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Friday Top Five July 12 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 St. Louis Post-Dispatch: Active Investing Proves Costly For State Pension Funds

A recent report by the Maryland Public Policy Institute suggests that "large state-run pension funds spend more than they need to on expenses because of their preoccupation with hiring active managers." According to the report, Missouri is the second-highest in terms of costliest investment expenses. The article does point out, however, that Missouri "achieved an above-average rate of return of 1.6 percent over five years." Executive Director Gary Findlay is also quoted, saying "Over the past 10 years, MOSERS has averaged a 9.4 percent annual return, compared with 7.5 percent for the average public pension fund and 8.1 percent for a benchmark index. Those results save taxpayers money and make benefits more secure for state employees."

  • An article in Pensions & Investments reports that public pension plan executives slam the fee study mentioned above. The study, mentioned above, "is drawing criticism from pension executives for its methodologies and conclusions."

From the Illinois Government News Network: Governor Quinn Suspends Pay to Illinois Representatives and Senators

From the article: Governor Pat Quinn [July 10, 2013]issued a line-item veto of House Bill 214 to suspend pay for Illinois state legislators. Since taking office, the governor has been pushing for comprehensive pension reform to resolve the state's worst-in-the-nation pension crisis. Today's action follows years of legislative inertia on pension reform, while the state’s unfunded pension debt grows by millions of dollars a day.

“In this budget, there should be no paychecks for legislators until they get the job done on pension reform,” Governor Quinn said. “Pension reform is the most critical job for all of us in public office. I cannot in good conscience approve legislation that provides paychecks to legislators who are not doing their job for the taxpayers."

From the New York Times: Pension Proposal Aims to Ease Burden on States and Cities

Senator Orin Hatch of Utah "has devised a way for states and cities to exit the pension business while still giving public workers the type of benefits they want. It involves a tax-law change that would enable governments to turn their pension plans over to life insurers." According to the article: "Senator Hatch’s staff eventually decided that shifting the states’ pension business to insurers was the only way to continue providing the monthly checks that public retirees want without forcing local taxpayers to come up with more money every time the stock market plunges. Life insurers would bear the investment risk, shielding both retirees and taxpayers."

  • Read this aiCIO article in which MOSERS' Executive Director Gary Findlay is quoted regarding Sen. Hatch's proposal.

From Government Executive: Same-Sex Spouses Eligible for Benefits Regardless of Residency

From the article: "Same-sex spouses of legally married feds and retirees are eligible for health and retirement benefits regardless of which state they live in, according to new federal guidance."


From the Springfield News-Leader: In 10 years, Man Who Admitted Missouri State Bookstore Theft is Eligible for Up to $2,719 a Month in State Retirement

Mark Brixey admitted stealing $1.16 million from the MSU bookstore. In ten years he'll be old enough and to draw a pension from MOSERS, and there's no law that prevents that from happening.

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

MSEP vs. MSEP2000 Selections

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What percentage of retirees selected MSEP vs MSEP2000 in the past two years (2011 and 2012)? The April 15, 2011 question posted through Rumor Central covered the years prior to 2011.
Here is the FY11 New Retiree information (Active at Retirement) from our most recent Member Profile:

MSEP                    474         29%

MSEP2000        1,171        71%

We should have the FY12 and FY13 Member Profile information available later this summer.

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Friday Top Five July 5 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: 62YO Men File Social Security; Wives Pay

From the post: "This happens to a significant share of couples, because almost 40 percent of all Americans claim their benefits the same year they turn 62.  But a husband who waits until age 65 can increase his widowed wife’s future benefits by up to $170 a month, according to new research by Alice Henriques, an economist with the Federal Reserve Board in Washington."

From PlanSponsor: Is 70 the New 65? Probably, Unless You Up Your Savings Rate

From the article: "A recent paper by the Center for Retirement Research at Boston College—“How Important Is Asset Allocation to Financial Security in Retirement?” by authors Alicia H. Munnell, Natalia Sergeyevna Orlova and Anthony Webb—illustrates my point. While the focus of the paper is on asset allocation—that is, how participants invest—the paper also looks at the impact of retiring at different ages. It concludes that, by deferring retirement, employees can substantially increase their odds of retiring comfortably."

From USA Today: Haven't Saved Enough For Retirement? What To Do?

From the article: "We have millions of Americans who have nothing saved for retirement," says Diane Oakley, executive director of the NIRS. "We have 38 million working-age households who do not have any retirement assets." The author goes on to suggest strategies that might help.

From the Center for Retirement Research at Boston College: The Funding of State and Local Pensions: 2012-2016


The brief’s key findings are:

  • During 2012, using current GASB standards, the funded status of public plans declined slightly from 75 percent to 73 percent.


  • This decline reflected slow asset growth, which was only partly mitigated by reduced liability growth.


  • States and localities also continued to fall short on their annual required contribution payments.


  • Going forward, the funded ratio is projected to gradually move above 80 percent, assuming a healthy stock market.


From the St. Louis Post-Dispatch: Can You Afford to Retire? Ever?

This article walks you through some of the many questions you'll need to ask yourself in order to answer the big one: Can you afford to retire? Ever?

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 Through the Years

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What is the COLA percentage given to the MSEP2000 for the years 2009-2013?
You can see the history of COLAs at the link below. Thanks for emailing MOSERS.

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