Friday Top Five: Retirement Related News for 6/27/14

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From Columbia Daily Tribune: Nixon cuts $786.2 million because of revenue shortfalls, tax uncertainty

Almost all new spending in the coming budget year — including increases for public schools and higher education — must be put off, Gov. Jay Nixon said Tuesday as he announced $786.2 million in budget restrictions and vetoes.
A shortfall in revenue was aggravated by a “complete breakdown” of the budget process as lawmakers passed a series of sales tax exemptions and other tax breaks for businesses in the final week of the session, Nixon told reporters during a news conference.

From Bloomberg: Christie Wins Budget Battle Over Cuts to Pension System

New Jersey Governor Chris Christie won a key budget battle when a judge ruled he had legal authority to cut payments to the state pension system because he faced a fiscal emergency.

Christie was confronted with “staggering” shortfalls in his $33 billion budget for the year ending June 30, Superior Court Judge Mary Jacobson said today. Christie acted reasonably in paying $696 million to cover current employees, while deferring $887 million to help close the gap left by previous governors, the judge ruled.

The gender gap in financial literacy is closing, but nonetheless remains significant, according to a study by Financial Finesse.

The financial education firm’s study suggests that much of women’s improved literacy is owed to their willingness to access financial wellness programs, in the workplace or otherwise. In 2013, 63 percent of all financial wellness program users were women, it said.

From Michigan Radio: Michigan economists warn against ending pensions for public employees

Some economists say Michigan failed to consider the consequences of ending pension plans for public workers.

The state stopped offering pensions to new employees in 1997. Budget officials say that decision has cut Michigan’s long-term debt by about $5 billion.

A new report from Great Lakes Economic Consulting says the new 401(k) style plans may be cheaper. But it says it’s not fair to compare them to traditional pensions, which provide better protections for both workers and employers.

From Bloomberg: Retirees Suffer as $300 Billion 401(k) Rollover Boom Enriches Brokers

Kathleen Tarr says AT&T Inc. (T) employees looked to her as “their de facto 401(k) expert.” Visiting their homes and offices, she advised them on their retirement plans as they called up balances on computer screens.

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State Budget Vetoes

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Do you know the impact of the vetoed bills on MOSERS and its programs? It would be wonderful if you could tell us what this means for MCHCP (since they don't have Rumor Central blog). Thanks!
Because of the reductions in state employee positions, the state's contribution to MOSERS will be reduced from the amount approved in the final appropriation. This is expected because the state contribution is based on the actuarially determined rate, which is 16.97% of payroll for Fiscal Year 2015. When payroll is reduced the total contribution amount is reduced, but the required rate (16.97%) remains the same. Unlike some other states, the state of Missouri has consistently fully funded the amount determined by independent actuaries that is necessary to properly and responsibly fund your pension plan.

To assist members who may be impacted by the vetoes and withholdings, we have posted information on our website for members facing a layoff or leaving state employment. We are happy to personally assist any MOSERS members who are facing a layoff or termination. They are encouraged to contact MOSERS by phone: (573) 632-6100 or (800) 827-1063, by email: or in person from 7:30 a.m. – 4:30 p.m. Monday-Friday at 907 Wildwood Drive, Jefferson City, Missouri. No appointment is necessary – we welcome walk-ins.

We also reached out to MCHCP to find information for you. They advise that the Governor’s recently announced budget vetoes and withholdings will not affect member premium rates for the remainder of the calendar year. If you have any additional questions, please contact MCHCP member services at 800-487-0771.

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Friday Top Five: Retirement Related News for 6/20/14

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From The Wall Street Journal: For Employers, a Hidden Downside to 401(k) Plans

When companies ditch their traditional pension plans in favor of defined-contribution plans such as 401(k)s, investors typically cheer. After all, 401(k) plans shift uncertainty about market ups and downs off of corporate balance sheets and onto employees’ shoulders.

But there may be a significant cost to those decisions down the road in the form of stagnation in the top ranks and an exodus of young stars, according to new research by Haig Nalbantian, a senior partner at human-resources consulting firm Mercer.

From MarketWatch: Why retirement planning is more than 401(k)s and IRAs

In his famous poem, "For whom the bell tolls," English poet John Donne warns his readers against thinking the funeral bells we hear aren't for us, the living: Because of the interconnectedness of humankind, each is diminished by the loss of another.

He begins the poem, "No man is an island, Entire of itself." The poem has something to teach investors because no portfolio is an island, either.

From USA Today: States facing rising tide of retirement

Aging baby boomers are showing signs they are willing to relinquish their jobs as the Great Recession recedes, bringing on the wave of retirements that state governments feared.

The impending exodus is prompting many human resources departments to dust off "succession plans" for filling positions in a better-educated and lower-paid workforce than the private sector.

From Investopedia: New Retirement Living Option - And Income Source

Thanks to a recent wave of residential zoning changes in bedroom communities scattered across the country, many late Boomers and leading-edge Gen-Xers have a retirement-planning and investment option their older brothers and sisters didn’t have.

Well- and deeply rooted in their pleasant suburban neighborhoods, these forward-looking people in their late 40s, 50s and 60s are putting savings and home equity to work by building separate, secondary houses on the same building lots as their existing family houses. Called Accessory Dwelling Units or ADUs, these new, smaller houses can be used for multigenerational family living or for rental income.

From Time: The Hidden Cost of Taking a 401(k) Loan: Borrower’s Remorse

One-third of Americans are tapping their nest eggs for loans. Do you really want to give up retirement for a great vacation?

In a financial emergency, borrowing from your 401(k) plan seems like an obvious step—and given the tough economy, many people are doing just that. But a new survey finds a surprising number of people are tapping their retirement nest eggs for frivolous spending. And they’re later regretting it.

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Matching Contributions

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Is there anymore information on the state restarting the matching contributions to our Deferred Compensation Plans as of July 1, 2014. The Governor's office, in an informational e-mail, a while back had said something about this match starting up again July 1st.? If it does start up again how much are they proposing to match each pay period?
The bill, which proposes a $25 per pay period match for qualified participants who contribute at least $25 per month, is included in the budget, which has not been signed by the Governor yet. You can read the full text of the bill here. For the latest news on the match, continue to check the State of Missouri Deferred Compensation Plan website and follow the Plan on Facebook, Twitter and YouTube.

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Survivor Benefits

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If the employee dies before retirement, but they are vested, is their retirement benefit payable to their spouse or children in a lump sum or monthly payments? If so, how does an employee designate that before retirement? What if an employee terminates employment and dies before age 62, which is the age the terminated employee would normally be eligible to receive their their spouse or children eligible for their pension benefit?
For general state employees,* regardless of whether you are actively employed with the state or terminated, if you die before retirement, but are vested (five years of credited service for MSEP and MSEP 2000, ten years of service for MSEP 2011), a monthly survivor benefit will be paid to your eligible spouse or child(ren). No advanced designation is needed. Although survivor benefit payments can begin the first of the month following your date of death, they are not automatic. Each eligible benefit recipient must submit an Application for Survivor Benefits with the required proof-of-age and lawful presence documentation. Your survivor(s) should contact MOSERS and a benefit counselor will help them start the process.

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 payable for the remainder of your spouse’s life. If there is no eligible spouse, a total of 80% of your monthly base benefit will be paid to your natural or legally adopted child(ren) who are younger than age 21. If there is more than one eligible child, the benefit will be divided equally among them. The survivor benefit for each child will stop when the child becomes age 21 (unless a child is totally disabled).

If you die while actively employed and your death is determined to be duty-related, your eligible spouse or child(ren) will receive a survivor benefit equal to the non-duty-related death before retirement benefit, but in no event will the benefit amount be less than 50% of your average monthly pay. In the event of a duty-related death, there is no minimum service requirement.

If you have applied to retire but die prior to your retirement date, the Retirement Application and any subsequent elections (such as BackDROP, if applicable) will become null and void. This means the eligible survivor(s) will get a monthly benefit as described above, but not a lump sum.

The Survivor page on our website has more information and helpful links.

Just for clarification, the age for normal retirement eligibility varies. As stated in your question, it may be age 62 (with 5 years of service for members of MSEP 2000) but varies based on years of service and  date of hire/plan membership. Please see the normal retirement eligibility provisions in the summary of benefits chart for your plan on our website under Which Plan Am I In?

* The information above pertains to general state employees. Provisions related to survivor benefits vary for judges, ALJs, statewide elected officials and legislators. Those members can get more information about survivor benefits from their retirement handbook or by contacting a MOSERS benefit counselor.

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Friday Top Five: Retirement Related News for 6/13/14

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From The Fiscal Times Retirement Savings Fears Grip Americans:  “I Don’t Have Enough” 

Americans are freaking out about their personal savings – and for good reason. A recent Gallup poll found that 59 percent of those surveyed were very or moderately worried they won’t have enough money for retirement – by far their biggest concern.

From AP Corbett hints he’ll hold up budget over pensions 

HARRISBURG, Pa. (AP) — Gov. Tom Corbett hinted Tuesday that he is prepared to hold up the state budget past the June 30 deadline unless lawmakers enact legislation to significantly rein in the soaring costs of pensions for future state and school employees.

From the Economic Policy Institute Understanding Cuts to Public Pensions 

In the past several years, fears that underfunded public pensions are a growing burden on taxpayers have led to calls to cut employer-provided pension benefits through increased employee contributions, increased retirement ages, reduced cost-of-living adjustments (COLAs), or other changes. But too often news reports on proposed or enacted pension cuts either overplay the rationale behind them, or minimize the impacts on affected workers. The latter is especially true with changes that do not decrease take-home pay but reduce future retirement benefits and thus may be harder to quantify.

From Lolly (powered by citywire) Got a 'defined benefit' pension? Hang on to it, it's a 'gold standard'!

The government is consulting on allowing people to transfer from secure defined benefit pensions to less secure defined contribution pensions.

From The Baltimore Sun No easy answers for pension downturn

The recent article on the improved finances of, but poor outlook for, traditional pensions ("Company pension plans shape up, ship out," June 1) was good but did not delve far enough into solutions. It correctly noted that defined benefit plans provide better protection for working households than the current alternatives and that only high-income households have sizable nest eggs in their 401(k) or other defined contribution plans. The fact is that not only is it difficult for many people to save voluntarily, but much of the money put into 401(k) plans by low and moderate income individuals will be withdrawn early and not be available when they retire or run out quickly thereafter. There are no easy solutions. All involve some combination of mandatory employee contributions, mandatory employer contributions and mandatory annuitization of at least a part of account balances. Print Friendly and PDF

Retirement Benefit and Age 62

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When you retire do you get a check once or twice a month? And is it a short term retirement that when you turn 62 then your checks stop?
MOSERS retirement benefits are paid once a month on the last working day of each month. Click on the Payment Schedule tab from our homepage to view the 2014 payment schedule on our website.

 A MOSERS member’s base retirement benefit does not end at age 62. If a member is eligible for the base benefit PLUS the temporary benefit, the temporary benefit ends at age 62 but the base benefit continues for life, as long as the member does not return to work with the state in a MOSERS benefit-eligible position. The Temporary Benefit is a provision of the MSEP 2000 or MSEP 2011. It is not available in the MSEP and would not apply if you retire under MSEP 2000 or MSEP 2011 and are older than age 62 when you retire. If you are unsure which plan you are in, see Which Plan Am I In? or contact a MOSERS benefit counselor. I hope you find this information helpful. Print Friendly and PDF

Friday Top Five: Retirement Related News for 6/6/14

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From NAGDCA: Improving Retirement Readiness for State and Local Government Employees

The idea of retirement is a relatively new concept. A child born in 1900 had an average life expectancy of 47 and many from that era could expect to work for as long as possible and then move in with their children to live out their last days. The notion of stopping work some day because they attained a certain age was never considered except by those who were able to amass their own personal wealth.

From Houston Herald: Long-time social worker honored at retirement

After 35 years of working in social services for the state of Missouri, Roby resident Linda Elliott is calling it a career.

Elliott was honored for her lengthy stint in a ceremony last Thursday at the Division of Family Services building in Houston. Among more than 100 attendees of the event was Rep. Robert Ross, who read and presented to Elliott a proclamation recognizing her career.

From CFO: Unique Pension Strategy Posed: Sell Stocks, Buy Call Options

An asset-management firm focused on defined-benefit (DB) pension plans is making, to say the least, an unusual recommendation: that plan sponsors replace equities with call options in their portfolios.

The strategy will help lock in recent market gains, according to Donald Andrews, head of liability-driven investment strategy at Legal & General Investment Management America. Most plans are now are funded with more than 90 percent of their future liabilities, and some are over 100 percent. That’s thanks to the strong stock market and a modest recovery of long-term bond interest rates, which hit a historic low in late 2012.

From PlanAdviser: Employees More Focused on Overall Financial Wellness

Employees are showing more focus on their overall financial wellness, according to a Financial Finesse report.

Seventy-eight percent of questions received by Financial Finesse’s team of Certified Financial Planner professionals during the first quarter of 2014 were proactive in nature, focusing on what employees could do to improve their financial wellness rather than what they needed to do in response to an immediate financial problem.

From PlanAdviser: Sponsors Want Advisers to Adjust Focus

Plan sponsors want more consultation on outcomes and how to accurately measure and improve participants’ retirement readiness, says new research from the Principal Financial Group.

An increasing number of plan sponsors are relying on projected income replacement ratios to gauge the success of their plans, according to the Principal Financial Group. Numerous industry experts speaking at the 2014 PLANSPONSOR National Conference, held this week in Chicago, shared a similar assessment, yet sponsors on the whole say they’re not sure their financial professionals are on the same page (see “PSNC 2014: Plan Health and Retirement Readiness”).

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Beneficiaries and You

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How do I check who my retirement money beneficiary is? If I have already designated an agent, does that person automatically become my beneficiary?
Many people get agent and beneficiary confused, but they are not the same thing. An agent is authorized to make benefit decisions on your behalf should you become incapacitated. A beneficiary is a person (or entity) that you have designated to receive your final retirement benefit payment or life insurance proceeds upon your death.

When you retire and choose a benefit payment option on your Retirement Election form, this determines if a benefit will be paid to anyone after your death. When you die, survivor benefits will be paid according to the benefit payment option you elect on your Retirement Election form, regardless of your marital status.

The Designation of Agent form allows you to choose who will be responsible for managing your MOSERS benefits should you become incapacitated or disabled. MOSERS must pay benefits to the individual who has legal responsibility for your financial matters. This is an optional form you may complete and submit through MOSERS’ website at any time, whether you are retired or not. If you aren’t sure who you have designated, you may call a benefit counselor at (800) 827-1063 or log into your secure Member Homepage and, under Forms on the main menu, click on Designation of Agent. The agent will be listed at the top. 

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