A Look Back at 2014

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For the MOSERS News Archive:
  1. 2014 COLA Rate Determined
  2. MOSERS Board of Trustees Candidate Biographies
  3. Security Update
  4. Registration Update
  5. 2014 Annual Benefit Statements
  6. How to Create Your Benefit Estimate
  7. Confused about Backdrop?
  8. Who to Contact at Retirement
  9. The Cost of Retirement
  10. 2015 Annual Optional Term Life Insurance Review
For Rumor Central (minus Friday Top Five, a popular series):
  1. Financial Security, Peace of Mind
  2. Real Retirees: James Broadfoot
  3. Legislator vs. General Employee Pay Increases
  4. Real Retirees: Randy Woods
  5. Debunked: Changes to Your Benefit Calculation Early Payouts
  6. Disability and Early Retirement
  7. State Budget Vetoes
  8. When Should Retirees Expect their COLA?
  9. Unpaid Vacation Leave
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Friday Top Five: Retirement Related News for 12/31/14

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From Huffington Post: Why 401(k)s Shouldn't Replace Pensions

It's not just basic finance, it's common sense: A large pool of money invested by professionals will yield far greater returns than small, separate accounts managed by individuals with no professional training in finance.

So why do some think that ending Illinois' defined benefit pension system and moving workers into privatized, 401(k)-style accounts is a good idea?

From USA Today: Retirement: How women can generate income for life

Many women have a "quiet fear" that they won't have enough money for retirement, but they can take several steps to make sure that doesn't happen.

"The key is to continue earning throughout retirement and to find ways to create income for life," says Donna Phelan, 62, who has worked with thousands of women nationwide during her 18 years with several large Wall Street investment firms. She has an MBA in finance and is the author of a new book, Women, Money & Prosperity: A Sister's Perspective on How to Retire Well.

From The Motley Fool: 3 Smart Retirement Moves to Make in 2015

The start of 2015 is right around the corner, and with it comes an opportunity to make three smart moves that can help you secure a more comfortable retirement.
Related -  A Deferred Compensation Carol.

From MarketWatch: 4 retirement-planning rethinks for 2015

Retirement security, if not the greatest, is one of the principal financial concerns of long-term investors.

For this reason, the new year provides a good time to reflect on your retirement plan and to make sure that you have put in place the strategies and tactics that can increase the probability of reaching your retirement goals.

From Business Insider: Here's The Most Important Thing Any American 25-Year-Old Can Do In 2015

As 2014 comes to a close, many folks prepare to commit to their 2015 New Year's resolutions.

We have a resolution for every 20-something in America who isn't saving for retirement: start saving now.

Because, with each day you wait to start saving, the difficulty of hitting your retirement goals literally compounds. Literally.

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Final Average Pay

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I have seen several times on Rumor Central a reference to "final average pay" as part of the retirement benefit calculation. The word "final" makes me think the calculation is based on one's last years of employment prior to retirement, but I thought I saw elsewhere that the calculation is based on one's highest three years of salary, no matter when they occurred. Please clarify; thanks.
Final Average Pay, or FAP, consists of your highest 36 full consecutive months of pay, no matter where in your pay history that may happen to fall. (Practically speaking, for most, that is their last three years but not always.) The only exception to this would occur under the BackDROP. If you become eligible for and elect the BackDROP upon retirement, your highest 36 consecutive months would be determined from your work history preceding your BackDROP date. In other words, if you elect BackDROP, your pay during that period would not be used in calculating your monthly benefit.

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Friday Top Five: Retirement Related News for 12/26/14

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From CBS Money Watch: How to turn cheaper gas into retirement savings

The lowest gas prices in years isn't only an opportunity for motorists to cut fuel costs -- it's also a chance to fill up your retirement savings.

Indeed, although cheap gas can boost the U.S. economy as a whole, many people would benefit more by squirreling the savings away in an IRA or 401(k) account.

Fidelity Investments recently released a chart showing how much a budget windfall could build over time if it were saved for retirement.

From USA Today: Three ways to improve your retirement planning

Many people are behind when it comes to retirement planning.

But it doesn't have to be that way. There are some easy and, quite frankly, painless ways for you to get in front of proverbial eight ball. Here's what experts recommend.

From BenefitsPro: Terrified about health care in retirement

There’s nothing like worrying about healthcare, especially how you’ll pay for it in retirement.

That’s the concern of more than 62 percent of boomers who have not yet retired, and who say they are “terrified” about the costs of healthcare destroying their retirement or making it altogether impossible.
Related -  CLAIM is available for all state employees needing guidance through Medicare decisions.
MCHCP provides information on Retiree health care plans

From The Motley Fool: 3 Investing Resolutions Worth Keeping

The new year is right around the corner, so now is the perfect time to consider this past year's successes and failures and determine what profit-friendly actions should be taken in 2015. In that vein, here are three resolutions investors might consider keeping in the coming year.

From Huffington Post: 5 Retirement Planning Steps Most People Overlook

Your retirement date is rapidly approaching. You're in good financial health and you feel well-positioned for a secure retirement.

But you're still worried you might be overlooking something.

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Raising the Temporary Benefit Age

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Has there ever been any legislation to up the age for the temporary benefit if you retire before 62? Reason being, this is supposed to offset being eligible for Social Security, but everything I look at SS it says I will not be eligble until 67.
To the best of our knowledge there is no effort to change the age (from 62 to 67) at which the temporary benefit ends in the MSEP 2000. The federal law that gradually raised the age to receive full social security benefits went into effect with the 1983 social security amendments, but the age for early social security eligibility remained at age 62. The MOSERS temporary benefit became law on 7/1/2000 and was designed to serve as a bridge between your MOSERS retirement and your eligibility for early social security benefits. At age 62 the temporary benefit stops. It is a personal decision, with pros and cons on both sides, to take early/reduced social benefits at age 62 or wait until you are eligible for full social security benefits. We encourage you to talk with a financial advisor or staff at the Social Security Administration to help you decide which is best for you individually.

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Friday Top Five: Retirement Related News for 12/19/14

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Only a small percentage of retirees are directly affected by the new rule. But future legislation may lead to more pension cutbacks.

The last-minute deal to allow retiree pension benefit cuts as part of the federal spending bill for 2015 passed by Congress last week has set off shock waves in the U.S. retirement system.

Related -  Rumor Central’s Federal Pension Changes

The Missouri State Employees Retirement System (MOSERS) reported that someone gained "unauthorized access" to four members' accounts.

The hacker or hackers filled out online forms that required the use of the members' Social Security numbers, retirement identification numbers and passwords, according to news reports. Candy Smith, the retirement system’s communication and strategic planning coordinator, told the Jefferson City News Tribune attempts to get money were detected, and no money was released.

Almost 700 Missouri government retirees renewed their online access to account information Tuesday, the Missouri State Employees Retirement System (MOSERS) said.

“We did have 686 members who established a new password today and logged into their member homepage,” spokeswoman Candy Smith said Tuesday afternoon. “Staff were on the phones all day assisting members and are available Monday-Friday, from 7:30 a.m. to 4:30 p.m.”

Related -  Registration Process Update

The need for guaranteed income in retirement planning is crucial as the shift continues away from defined benefit to defined contribution plans, according to new research sponsored by Prudential Financial, Inc. (NYSE:PRU).

The findings of the latest National Retirement Risk Index (NRRI), published by The Center for Retirement Research (CRR) at Boston College, reveal households with access to a workplace retirement plan are less at risk of not being able to maintain their standard of living in retirement. In addition, the type of plan is also a key factor: 20 percent of households with a defined benefit plan through their current employer are at risk, while 53 percent with only a defined contribution plan are at risk. That compares to 68 percent with no plan at all.

Boone County will grant employment, retirement and survivor benefits to same-sex couples at the new year after a string of court cases chipped away at Missouri’s constitutional ban on homosexual unions.

“The county offers health insurance, dental and life insurance for married spouses regardless of the gender of the partners. As long as they have a valid marriage license, they are considered a spouse under our benefits plan,” Boone County Human Resources Director Jenna Redel-Reed said.

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Returning Withdraws to Deferred Compensation Plans

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A previous Rumor Central answer says that retirees can keep their savings in the Deferred Comp plan, but after age 70 aren't we required to make annual withdrawals which are then taxed? Can those withdrawals be put back into another Deferred Comp plan?
Per IRS rules, you are not allowed to rollover any part of a required minimum distribution (RMD). The following is a detailed description of required minimum distributions from the State of Missouri Deferred Compensation Plan.

Required Minimum Distributions (RMDs)
Tax laws require you to begin annual withdrawals, known as Required Minimum Distributions (RMDs), from your retirement accounts in the year you reach age 70½, or when you retire, whichever is later. The State of Missouri Deferred Compensation Plan reviews your account each year to ensure that you are withdrawing the minimum amount required by law. If you do not withdraw enough to satisfy your RMD, the difference will be paid to you by December 31st. If this is the first year you are required to receive a distribution, you will be sent your RMD in March of the following year.

If you are receiving periodic payments, your payment schedule will continue unchanged. However, if you have requested payments equal to your RMD, the State of Missouri Deferred Compensation Plan will adjust your payment amount(s) so that your RMD is satisfied. This adjustment will take place every January or at the time you establish an RMD-only schedule.

If you are not receiving periodic payments, you may establish one at any time, but you are not required to do so. Your account will be reviewed annually to ensure compliance with the regulations and any remaining RMD will be distributed automatically.

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How to Budget for the Holidays

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The holidays are upon us! Finances can add a lot of stress for families in the winter months, but you don’t have to turn into a Grinch! We’ve put together a list of 9 steps you can take to keep your gift-giving jolly this year.

1. Plan for Affordability, Not the Latest Craze

Too many holiday lists start by featuring the latest must-have items and gifts for all. Only after the holidays will some consider the important question: How will you pay for that? It’s a recipe to be broke.

Instead, make your holiday list by starting with the question – What can I afford? Choose gifts and make decisions based around that. After all, the holiday is only one day. You’ll thank yourself by starting your new year on a good note.

Start considering how much you’ll need for next year’s holidays and begin your new year with a savings pledge.

2. Have a List

A well thought-out gift will make more impact than a flash in the pan. Knowing what you want to give your loved ones may keep you on track and avoid impulse spending.

3. Do Online Research

A good way to check if your budget is realistic for what you intend to purchase is to do some online research before you hit the mall. Not only does it provide you a great way to gather ideas and market rates, you’ll also save time and energy by avoiding the mall simply for research purposes.

4. Go Simple on Unnecessary Items

There are a lot of items that aren’t needed during the holidays. Save your money and finite resources by not including them in your celebrations. Examples include:
  • Ribbons, bows, fancy tape, stickers, etc.
  • Holiday-specific tablecloths.
  • Massive money on outside lights – set your decorations on a timer or limit when you turn them on.

5. Make a Pact: No Unnecessary Gifts.

Don’t break your budget for unnecessary gifts! Consider skipping on gifts for coworkers and friends. You may find that they’ll be relieved not to have additional financial obligations.

6. Print Coupons/Vouchers and Hit Sales

Now the fun part! Doing your homework ahead of time will help you know the best price for items on your list! You can keep track of sales, coupons, and price patterns! Knowledge and a plan will also help curb impulse buying if you know you can get it cheaper in two weeks.

7. Kids Aren’t Retail Snobs

Hopefully, the young children in your life don’t value your love based on the price of your gifts, so don’t shell out big bucks unnecessarily! For example, if you know your toddler is more interested in the packaging than the gift, consider wrapping several boxes within themselves for the gift of an experience.

8. Set Price Limits and Spread the Cost Around

Setting price limits with friends and family is another helpful way to keep your budget. Some holiday traditions include gift games or Secret Santa, where each individual brings a single $5-10 gift. You can range from the thoughtful to the downright silly.

9. Delay the Holiday – Buy  During the January Sales

Many people know that retailers keep their prices high until after the main holiday and post-holiday gift card rushes are over. Consider getting large, costly purchases after the price drops in January.  It also allows you some time to spread the cost across both December and January paychecks so you won’t have to incur extra debt!

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Federal Pension Changes

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the Governor of Kansas is cutting the State's contribution to their State employees pension system; can Missouri general Assembly, or the governor, do likewise? With the above, as well as Federal legislation regarding cutting other types of pensions, how concerned should we retirees be?
Your MOSERS benefits are secure. The recent federal pension changes do not apply to governmental pension plans like MOSERS. There are a few states that have announced cuts to actuarially determined contributions to their state employees’ retirement plans.  Unlike those states, the state of Missouri has consistently fully funded the amount determined by an independent actuary to be the contributions required to properly and responsibly fund the pension plan.  In addition to other negative ramifications, a decision to reduce contributions to MOSERS could potentially have a negative impact on the state’s bond rating, and thus increase the state’s cost of borrowing.

MOSERS has two sources of revenue:  1) Contributions by the employer (and employees in MSEP 2011), and 2) investment earnings. For the current fiscal year, the state’s contribution to MOSERS represents only 1.2% of the total state budget. Over the past 20 years, investment earnings have accounted for more than two-thirds of MOSERS revenues. See Key Facts Regarding Funding of the Missouri State Employees' Retirement System  and Not Your Average Pension Fund for additional information on this topic. The fact that the state has consistently made contributions on time and in full, combined with MOSERS above-average investment returns, saves money for the state, keeps contributions at a reasonable level, and strengthens the security of your benefit.

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Sick Leave & the Rule of 80

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Why can't we use out time (sick and annual) toward our 80 and out. If members were allowed to use their time toward the 80 and out, what kind of impact would that have?
Annual leave is not used in calculating your retirement benefit. Any unused annual leave will be paid by the agency you work for. You may want to contact your payroll/personnel officer to determine their procedure for paying out unused annual leave.

You will receive one month of credited service for every 168 hours of unused sick leave reported to MOSERS by your employer at the time you leave your position. Your sick leave is used in calculating the amount of your retirement benefit, but cannot be used to determine eligibility. For example, if you have 336 hours of unused sick leave, you will receive credit for an additional 2 months of service (336/168=2) when your retirement benefit is calculated. This 2 months of sick leave will not get you 2 months closer to retirement however; as we cannot use it to calculate when you are eligible.

The plan design reflects the policy that retirement eligibility is based on age and actual service rendered. The statute states a member has to be eligible for retirement in order to receive the additional sick leave credit. There would be a cost to change that policy because we receive retirement contributions to fund the benefits based on actual salary only;  no retirement contributions are paid on sick leave and annual leave. 

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2015 Legislation Rumors

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Have you heard of any legislation that would allow the reduction of our retirement amounts? I have read rumors to that effect.
MOSERS isn’t aware of any proposed legislation to that effect. The regular legislative session resumes in January of 2015, so we will monitor any retirement-related bills and continue to keep our members informed. You can follow the status of all public retirement bills on the Joint Committee on Public Retirement’s website at www.jcper.org.

You might also be thinking of the proposed federal retiree pension changes in the news lately. This issue wouldn’t affect state employees in Missouri.

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Friday Top Five: Retirement Related News for 12/12/14

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From StL Today: Pension system for most county employees will recognize gay marriages

Another public retirement system in Missouri has expanded benefits to members' same-sex spouses.

The latest decision affects employees and retirees of the 111 county governments covered by the County Employees' Retirement Fund. The fund's board voted unanimously last week to recognize same-sex couples who were wed in states where such marriages are legal.

From News Tribune: State employees' online retirement system hacked

Missouri government retirees won’t be able to access their information online until Tuesday morning — thanks to someone who managed to gain “unauthorized access” to four MOSERS members’ home pages.

MOSERS — the Missouri State Employees Retirement System — sent about 81,000 emails, and another 20,000 letters, on Thursday to members, explaining the situation, which follows “four successful attempts beginning last month to fraudulently complete an online form for active members of MOSERS.”

From Inside Higher Ed: Academics Prepared for Retirement

The economic downturn appears to have pushed back the timeframe for many higher education employees to retire -- but when they ultimately do, they will be better prepared financially and otherwise than other Americans, a new survey suggests.

The survey, by the pension giant TIAA-CREF, asked a group of higher education professionals a set of questions about their retirement plans and preparation, and compared those findings with a similar survey of all Americans.

From NPR: That Nest Egg Needs To Last As Long As You Do. So How Do You Start?

Retirement for baby boomers will look different than it did for their parents — Americans are living longer, health care costs more, fewer people have pensions today, and many people facing retirement haven't saved much.

All of that makes managing the nest egg you do have even more vital. But many people need and want guidance on what they should do to make sure their retirement savings last.

From CNN: Ditch 'The Number' and find a realistic retirement savings goal

You'd never know it for all the attention "The Number" gets in retirement planning. But the fact is that the road to retirement has far too many twists and turns to pin down your savings effort to any single number -- magic or otherwise.

But that doesn't mean you shouldn't have some sort of target to help you get and stay on track toward a secure retirement. Research shows that people who have a goal are more than twice as likely to feel confident about accumulating the savings they'll need.

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Winter Financial To-Do

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Between the holidays, end-of-year planning, and travel, this time of the year can be the busiest months for some.  By keeping track of your finances and avoiding over-extending yourself, you can help avoid starting the new year on a sour financial note. Here are a few things to help you get started!

1. Budget for Charitable Donations

Now that the season for giving is upon us, you may find yourself giving too much (or not being able to give enough). Determine your annual charitable budget and start saving for next year! You can set up an automatic transfer from your checking to a savings account earmarked for donations.

2. Start Researching Financial Aid for College Costs

The government starts accepting applications for financial aid January 1, and the sooner you or your child can submit the application, the better your chance for maximizing aid. Learn more about FAFSA deadlines here.

3. Review your Credit Card Health

Responsible use of credit cards can be a great boost for your credit. Building a strong credit history and score can help you get a better interest rate on mortgages or other loans, but your credit cards can cause your scores to crash if you don’t watch your credit to debt ratio. Keep tabs on your credit spending during the holiday season to make sure you aren’t over-extending yourself and haven’t lost your information to holiday Grinches.

If you’re concerned about how much debt you should take on (or just want a helpful guide to start), check out our Money Matters workbooks for helpful guidelines and worksheets.

4. Update Your Passwords & Commit to Internet Security

The Internet is one of the most powerful tools available. But along with technology must be an ongoing commitment to ensuring protection of your financial identity. 
  • Change your computer and online passwords frequently (every 90 days is a nice rule of thumb)
  • Use complex login passwords
  • Install antivirus software
  • Don’t open attachments or click links on strange websites
As a reminder, MOSERS will never solicit your information through an email. When you contact us, we will ask you to provide information to confirm your identity.

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Friday Top Five: Retirement Related News for 12/5/14

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From TroyMedia: Public sector pensions fare better in defined benefit model

Within the pension industry, thoughtful discussion about ideal pension plan designs has moved beyond the defined benefit versus defined contribution debate to focus on a broader range of pension plan designs and reform options.

From The New York Times: Retirees Turn to Virtual Villages for Mutual Support

RICK CLOUD, 68, knew that he wanted to stay in his home in Austin, Tex., as he aged. But Mr. Cloud, who is divorced, was not sure how he could do that without relying on his two daughters.

Then he ran across the idea of virtual retirement villages, whose members pay a yearly fee to gain access to resources and social connections that help them age in place. Sold on the concept, Mr. Cloud joined with some friends to start Capital City Village four years ago.

“Our virtual village can connect me with people my own age so I can do more things,” said Mr. Cloud, a retired technology consultant. “I worry about being single and getting older.”

From Time Money: Flunking Retirement Readiness, and What to Do About It

Americans don't get the basics of retirement planning. Automating 401(k)s and expanding benefits for lower-income workers may be the best solution.

Imagine boarding a jet and heading for your seat, only to be told you’re needed in the cockpit to fly the plane.

Investing expert William Bernstein argued in a recent interview that what has happened in our workplace retirement system over the past 30 years is analogous. We’ve shifted from defined benefit pension plans managed by professional financial pilots to 401(k) plans controlled by passengers.

From Pensions & Investments: NIRS study: DB plans still more cost-effective

The structural cost advantages of defined benefit plans over defined contribution plans has not changed in recent years, despite DC enhancements, said a research report released Thursday by the National Institute on Retirement Security.

The report revisits 2008 NIRS research that found a typical large defined benefit plan provides the same level of retirement benefit at half the cost of a defined contribution plan. In the 2014 report, “Still a Better Bang for the Buck: An Update on the Economic Efficiencies of Defined Benefit Pensions,” a typical DB plan has a 48% cost advantage over DC for an identical level of benefit, despite DC enhancements like target-date funds and annuities.

From Connect MidMissouri: Are same-sex divorces legal in Missouri?

A man who married another man in Iowa is asking Missouri to grant the couple a divorce, even though the state does not recognize same-sex marriages.

An attorney for a man identified in court documents as M.S. argued before the state Supreme Court Wednesday that Missouri should allow divorces for same-sex couples legally married in other states.

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MSEP 2000 Qualifications

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i started working for doc on 3-13-2000 my ? is am i eligible for the mesep 2000 retirement plan?
Yes, if you first worked in a MOSERS benefit-eligible position prior to July 1, 2000 and are vested in the MSEP (The vesting requirement for general state employees in MSEP and MSEP 2000 is 5 years of creditable service.), then you are a member of the MSEP, and at retirement you may remain in the MSEP or elect the MSEP 2000. (Keep in mind, members may be eligible for retirement in both plans on the same date or different dates, depending on their individual combination of age and service.) For more information about plan eligibility, see Which Plan Am I In? on MOSERS’ website, then you can find the specific age and service requirements in the appropriate member handbook or on the summary of benefits comparison brochure. Print Friendly and PDF