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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Friday Top Five August 23 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 PlanSponsor: Think Tank Proposes New Retirement Plan

The proposed plan from the Center for American Progress is called Secure, Accessible, Flexible and Efficient (SAFE), and "would combine elements of a traditional defined benefit pension—including regular lifetime payments in retirement, professional management and pooled investing—with elements of a defined contribution plan, such as predictable costs for employers and portability for workers." Read more about the key features of the plan at this link. You can also access the full report.

From Go Figure (the State Legislatures Magazine from the National Conference of State Legislatures): New Guidelines are Changing How Public Pension Accounting Affects the Books, Budget and Bond Ratings

From the article: "Until recently, state and local lawmakers needed to focus only on a single set of calculations, within parameters set by the Governmental Accounting Standards Board (GASB), to assess both the condition and costs of their public pension plans. But the days of a single set of numbers are gone. In June 2012, the GASB approved new standards for public pensions and the employers that sponsor them: states, cities, school districts, etc.

Known officially as GASB Statement No. 67 and No. 68, the revised standards for public pension plans apply to fiscal years that began after June 15, and will take effect for employers  after June 15, 2014.

Lawmakers will now have at least three sets of pension numbers for three different purposes—books, bonds and budget. As sponsors of public pension plans, state and local governments must understand the source, purpose and audience for each to make sound policy decisions and accurately communicate with constituents about the condition of the retirement plan."

From The Squared Away Blog: More Carrying Debt into Retirement

From the post: "The number of people in their 60s who have debt has grown from just under half of that age group in 1998 to nearly two out of three in 2010. And their debt, as a share of their assets, has surged during that time from 10 percent to 18 percent."

From  MarketWatch's Encore Blog: 98-Year-Old Athlete Triumphs at Games

This is a case study on the importance of the link between successful aging and the importance of exercise.

From the HuffPost Post50 Blog: 5 Things Never To Say To Someone Retiring

These questions are based on some pretty big assumptions, so you may just want to stay clear of them.

And your Friday bonus: The movie “Airplane” was released 33 years ago last month.  A newspaper was displayed for an instant in one of the scenes. Check out the attachment from that scene.

[caption id="attachment_731" align="aligncenter" width="630"]Pension Actions Delayed Pension Actions Delayed[/caption]

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 16 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 AARP Blog: Social Security: Still Lifting Many Older Americans Out of Poverty

On the importance of Social Security: "In the early 1930s, before Social Security was created, many older Americans were destitute or depended on help from family and friends for basic needs like food and shelter. Today, Social Security is the single most important anti-poverty tool – lifting about 21.4 million people of all ages out of poverty."

From the Best Life Blog at U.S. News and World Report: 7 Ways Retirement Is a Young Person's Issue

From the post: "Retirement may seem a long way off for people in their 20s and 30s, but the requirements for successful retirements should be a present-day concern for younger and older people alike. Based on research presented at the [recent] Retirement Research Consortium, here are seven ways retirement should be viewed as a young person's issue:

1) Social Security Reform ; 2) Psychology and Framing; 3) Debt; 4) Longevity and Inequality; 5) Unemployment and Health; 6) Age Discrimination; 7) Annuities.

Read the full article to see how each of these items is a young person's issue as much as an older person's issue.

From ClickZ (Marketing News): Social Media Usage Amongst Older Generations Triples, According to Pew

From the article: "Although younger adults continue to be the most likely social media users, one of the more striking stories about the social networking population has been the growth among older internet users in recent years,” Pew said in a report. “Those ages 65 and older have roughly tripled their presence on social networking sites in the last four years—from 13 percent in the spring of 2009 to 43% now.” Read the full Pew report for more information. You can also read this related article (Boomers Dive Into Social Media) from the WSJ's MarketWatch.

From The New York Times Economix Blog: Rowboats for Retirement

"Among those 55 to 64 years old, two-thirds of working households with at least one earner have retirement savings less than one year’s income, far below what they will need to maintain their standard of living in retirement. By a variety of measures, most households, even those with defined benefit pensions, are falling far short of the savings they will need." This report from the National Institute on Retirement Security is cited.

From Today Money: Downsizing in Retirement Turns Less Into More

From the article: "For empty-nesters and retirees who still have a mortgage and a house to maintain, downsizing can reduce one of their biggest fixed expenses, help stretch their retirement budget at a crucial time and ensure they don’t outlive their savings."

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 9 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: Desperate to Retire? Don’t.

This is a post about a recent article in the Journal of Financial Planning by David Blanchett, head of the retirement research group at Morningstar's money management unit in Chicago, in which he suggests that delaying retirement helps make for successful golden years by:

  • increasing monthly social security benefits

  • giving workers more time to save through their 401(k)s

  • reducing the number of years people are actually in retirement

From the New York Times: Public Pensions After Detroit

The NYT editorial board, in this piece, suggests that there are many lessons public pension funds can learn from Detroit, but reducing the benefits promised to hard-working public employees at the first sign of trouble isn't one of them.

From Reuters' Muniland Blog: The Real History of Public Pensions in Bankruptcy

In this blog post, Cate Long takes us on a tour of public pensions in bankruptcy through the years, including Prichard, AL, Central Falls, RI, Vallejo, CA, Jefferson County, AL, Stockton, CA, San Bernadino, CA, and of course, Detroit. This is not to suggest that pensions are the cause of these cities' bankruptcies. Quite the contrary. Says Long: "Nothing could be further from the truth."

From the Best Life Blog at U.S. News and World Report: Dear Sons: Can We Talk About Death And Dying?

A wonderful letter from a father to his sons about the importance of discussing end-of-life decisions before it's too late. "It's not too soon. It's time to talk. We know having this conversation would give us a lot of peace of mind. But we think it would do the same for you, too."

From the New York Times: A Plan to Avert the Pension Crisis

The writers of this NYT editorial piece opine that many of the problems of cities and municipalities around the country (lengthening emergency response times, shortened hours of operation at libraries and parks, unfilled potholes and unrepaired sidewalks) are the result of "unaffordable public employee pension and health care costs." The folks at the National Conference on Public Employee Retirement Systems (NCPERS) disagree. Click here to read their response.

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 2 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: Detroit Looks to Health Law to Ease Costs

A very interesting article on the Affordable Care Act and its relationship to retiree health care costs. With unfunded retiree health care costs looming in cities across the country, according to Neil Bomberg, a program director at the National League of Cities, “[t]he Affordable Care Act does change the possibilities here dramatically [by offering] a very high-quality, potentially very affordable way to get people into health care without the burden falling back onto the city and town." However, if many cities or localities go that direction, "it could amount to a significant cost shift to the federal government." Specifically mentioned are Detroit, Chicago, Sheboygan County, WI, and Stockton, CA.

From The Detroit Free Press: Michigan AG to Defend Public Pensions, State Constitution in Detroit Bankruptcy Filing

From the article: "Taking an opposing side to Gov. Rick Snyder and Detroit emergency manager Kevyn Orr, Michigan Attorney General Bill Schuette said Saturday that he will defend the state’s constitutional protection of public pensions in the Motor City’s historic bankruptcy filing."

From the Straight Talk Blog: Social Security and Two-Income Couples

New research by the Center for Retirement Research, which supports this blog, suggests that "for married couples, the sharp increase in the ranks of working wives has reduced the share of their joint earnings during their working years that is replaced by Social Security when they retire. For the typical couple born in the Depression, Social Security benefits cover 45 percent of their prior earnings, but that falls to 41 percent for baby boomer couples retiring today."

From the Wall Street Journal: The Experts: What Will Surprise People the Most When They Retire?

Get advice from a wide variety of people in this column, including, Ken Dychewald, CEO of think tank/consultancy Age Wave, Molly Mettler, senior vice president of mission at Healthwise Inc., and others on some of the biggest surprises retirees face.

From the Wall Street Journal: How Long Will Your Retirement Savings Last?

From the article: "BlackRock, the world’s largest money manager, unveiled an elegantly simple tool today to answer would-be retirees’ most basic question: Will my savings last?"

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

Funded Status

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What is the funding level of MOSERS? Last I heard it was less than 80% but that was a year or so ago & I think steps were taken to correct it.
The most important message we have for you and all MOSERS members is that promised benefits are secure. As of June 30, 2012, the System’s actuary reported that the MOSERS funding ratio was 73.2%. The board, as required by law, certifies to the state the actuarially determined contribution rate (the ARC) that is necessary to cover the current liabilities of the plans and move the system toward 100% funding over a period of future years. According to the American Academy of Actuaries, references to 80% funding have become a mythic standard, when in actuality the financial health of a pension plan depends on many factors in addition to funded status, including a plan’s funding or contribution policy and whether contributions are actually made in accordance with the plan’s policy. The State of Missouri has, without exception, fully funded the ARC.

Unlike a few states where pension plans are in trouble, the state of Missouri has consistently done the right thing by fully funding the contribution rate certified by the board of trustees. While the current funding level is below that mythical 80% level, it is due, for the most part, to the asset value decline associated with the great recession that began in 2008, which is a temporary issue. Despite the losses that year, our relative performance was very good because of the defensive posture of our investment program. The combination of the ongoing collection of actuarially determined contributions and our prudent and professionally managed investment program will move the system from its current soundly funded status back to the preferred pre-2008 higher levels of funding over the course of the next several years.

At the September 2013 meeting of the MOSERS Board of Trustees, they will receive the report of the independent actuary and vote on the contribution rate to be certified for the FY15 budget, which begins July 1, 2014.

As said at the outset, your retirement benefits are secure.

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