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