BackDROP Benefits & Death of Member

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Is it true that if a vested State Employee passes away before filing for retirement that the backdrop benefit is lost?
We try to make information about your benefits as clear as possible, but all plan provisions are established by law which sometimes makes it a little complicated. So, let’s break it down.

The key fact is not if a member passes away before they file/apply for retirement; it is if they pass away before their actual retirement date. Retirement date is defined by state law. Most people think of (and celebrate) their last day at work as their retirement date but, for us, that is their termination date (defined as their last day of work in a MOSERS benefit-eligible position).

The law defines “Retirement Date” as: The first day of the calendar month when a member begins to receive retirement benefits. The first payment is made the last working day of that month.

If a member passes away before their retirement date, any elections they made about retirement are null and void, including any elections about BackDROP. If they were still working and had not yet reached their retirement date (as defined above), they are considered an “active member” and we must pay their eligible survivor. Here is a similar question and answer on this topic:
http://mosersrc.blogspot.com/2016/12/backdrop-survivor-benefits.html.
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Retirement Formula

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I am hearing rumors that the new Administration might be interested in changing the retirement formula. I want to retire probably in mid year 2017. Would this have an impact on me if I retire before this change were to go into effect or would I be covered until I die by what my current retirement estimates are?
 As a vested member of the MSEP or the MSEP 2000, your accrued pension benefits are protected by law and cannot be reduced or modified. Your MOSERS pension is a defined benefit (DB) plan which means it provides a lifetime benefit to you.

Any change to the retirement formula (or any other state employee pension provisions) would require passage of legislation by the Missouri General Assembly and approval by the Governor. Pre-filing of 2017 legislative proposals began on December 1 and the legislative session begins on Wednesday, January 4. To date, we have not seen any proposals to modify any MOSERS pension plan provisions for current members. Typically, as was the case in 2010 with the passage of the MSEP 2011, plan changes made by the legislature affect new hires as of a certain date. We will keep our members informed through our website, newsletters, and social media if there is any news on retirement-related legislation.

Please note that benefit estimates provided to you through the MOSERS website or from staff must be verified, meet all legal requirements, and if necessary, be corrected before any payments can be made. Once you believe you have made your retirement decisions, be sure to verify your assumptions with information that has been provided by MOSERS prior to making your final benefit election(s).

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Contacting Terminated-Vested MOSERS Members

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Does MOSERS actively seek to locate and contact former employees who worked only long enough to become vested? For example, someone who resigned after having worked 65 months in the 90s and may not know or remember they may be eligible for a benefit.
 You are probably referring to “terminated-vested” members, those who are no longer employed in a position covered by MOSERS, are vested in the system, and are entitled to a future retirement benefit* when they meet the age requirement.
MOSERS sends letters to terminated-vested members 120 days before they become eligible for early (reduced) retirement benefits. If the member does not apply for early retirement, we notify them again 120 days before eligibility for normal (unreduced) retirement benefits. Once a year, we provide a newsletter for terminated-vested members called VestedInterest, which we can either mail or email. We also send a benefit statement every five years.
Our suggestion for terminated-vested members is:  Be sure to keep your contact information up to date so we can reach you with important benefit information! We  attempt to locate all members but sometimes the post office doesn’t have/provide a forwarding address. Ensure we have your mailing address, email address, phone number, and updated beneficiary information. You don’t have to wait to hear from us. If you are unsure of your eligibility or need to update your information, a MOSERS benefit counselor can help - contact us! Alternatively, as a member, you can create a MOSERS Online ID & password to review & update your own personal information. You must have a valid email address on file with MOSERS in order to do so.

*Benefit payment options and eligibility for benefits are based on the laws in effect on the date you left state employment.

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Retirement & Tax Forms

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I left state employment on 12-31-15. Will MOSERS send my W2 form or does department of correction send out W2?
A W-2 Form will come from a current or former employer, not from MOSERS. A W-2 Form is used to report wages paid to employees and the taxes withheld from them.

MOSERS will send 1099-R forms to anyone who received any pension/retirement benefits from MOSERS during calendar year 2016. For tax reporting purposes, wages and retirement benefits are different. MOSERS will send 1099-R forms for 2016 by January 31, 2017. Read the article in the Fall/Winter issue of RetireeNews for more information about 1099-R Forms.

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Investment Returns

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Your annual report shows that FY16 was an absolute disaster in terms of fund returns versus benchmarks(page 5), but doesn't say why. So . . . what happened?
Thank you for your interest in MOSERS’ investment returns. The newsletter contains our summary annual financial report which is just a snapshot; our comprehensive annual financial report (CAFR) is available in full on our website and upon request in hard copy. As you can see in both reports, we are facing some headwinds in the near term, but our long term plan is solid and the objective data supports that conclusion. To address your question, we have copied below an excerpt from the Fiscal Year 2016 letter from our Chief Investment Officer, Seth Kelly. For additional detail and context, you can read the full CIO letter on page 67- 68 of the Investments section of our CAFR. Please let us know if you have any further questions.

The causes of this year’s underperformance are easily diagnosed and understood. However, performance deserves a critical review. This year’s result notwithstanding, being different from the benchmark can be positive. The best success with active management comes when the effort is focused on risk management. To this end, traditionally, we have used active management to avoid over-priced risks in favor of risks with higher future returns – and have been successful. The best long-term returns come from those investors willing to take a contrary approach – buying unloved assets while selling adored assets. While this approach has an ability to make one look foolish in the short-term, in the long-term, it has resulted in higher returns and proves patience will financially accrue to the investor willing to focus on large margins of safety. 

Our internal strategies, which are heavily biased toward undervalued assets, told us to buy the most cyclically sensitive sectors too early. Internal strategies, like emerging markets and higher actual inflation, caused a portion of this year’s underperformance. Being contrary in the financial markets, unfortunately, means you are constantly at odds with the momentum crowd. This friction is created because the momentum crowd determines an asset is worth owning due to its appreciated price. That same crowd ignores the fact that, all else equal, a lower price makes the asset more attractive and represents lower risk in the future (since a majority of the risk was observed in the price decline). 

External manager selection stands out as being particularly problematic this year. The last several years, we made changes to benchmarks without corresponding changes to the manager roster. Our external active management was used to deemphasize U.S. corporate growth. The return environment for the assets that diversify US corporate growth has been difficult, which caused our external managers to underperform. We will continue to transform the active manager roster, but are patient enough to ensure the transformation is positive for the fund. 

So what does this mean for the future? It means we will focus on the things we can control; namely, management fees, the portfolio’s diversification and the portfolio’s active management. While the return environment might remain difficult, staff will focus on putting the fund in the best position for success over the long term.


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BackDROP & Survivor Benefits

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I am a retired state employee and my wife will be retiring from the state later this year. Someone told us that should she pass away before she retires her backdrop would be forfeited and I would not receive it? Is that true?
For purposes of clarity, let’s assume your wife’s retirement date is March 1 and benefit payments would be issued on March 31.

If your wife met all the requirements, applied for retirement and elected BackDROP but passed away before her retirement date/before March 1, as her eligible spouse, you would not receive the BackDROP lump-sum payment but you would receive a monthly survivor benefit for life. Your survivor benefit would be based on the Joint & 100% option and calculated using her final average pay and credited service as of her date of death.

Based on the same assumptions as above, if your wife passed away on or after her retirement date/March 1, but before payments were issued for the month, you would receive the BackDROP lump-sum payment and survivor benefits would be paid according to the benefit payment option she elected when she completed the MOSERS retirement process. The calculation for the monthly benefit would be based on her final average pay and credited service as if she retired on her BackDROP date/the beginning of her BackDROP period. By electing BackDROP, there is less creditable service and potentially a lower final average pay in the benefit calculation which, in almost all cases, reduces the monthly benefit for the member and subsequently, the surviving spouse.

For more information regarding survivor benefits, please review the “Survivor” section of our website: https://www.mosers.org/Members/Survivors.aspx.

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Changes to Rule of 80/Rule of 90 & Vesting

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Question 1: Is there any truth to rumors of the personnel hired after 2011 to have their pension funded the same as personnel hired before 2011? I am referring to 80 and out, verses 90 and out.
Question 2: Is the 5 year vested pension coming back in July of this year?
If we understand Question 1 correctly, you are asking if there will be a change to when members of MSEP 2011 will be eligible to retire.

Any change to the Rule of 90 (or any other state employee pension provisions) would require a change in the law. Pre-filing of 2017 legislative proposals began on December 1.  To date, we have not seen a proposal to modify the retirement eligibility requirements for current MSEP 2011 members.  The 2017 legislative session begins on Wednesday, January 4.  Changes to laws affecting state employee retirement benefits must be made by the Missouri legislature and approved by the Governor. We will keep our members informed through our website, newsletters and social media if there is any news on retirement-related legislation. 

Regarding Question 2 About Vesting*:  It is important to note that the Office of Administration (OA) released a Compensation & Benefits Study last summer.  One of the report recommendations included reducing the MSEP 2011 vesting period relative to the state employee retirement benefit from 10 to 5 years. A vesting period reduction would require legislative action.  Below is a link to the OA website which contains the “2016 State of Missouri Compensation & Benefits Report”.
 http://oa.mo.gov/personnel#mogov-tabs-pane-5-tab-0  

We will keep our members informed through our website, newsletters and social media if there is any news on retirement-related legislation.  

* To be "vested" means you are eligible for a retirement benefit once you have met the age and service requirements. (The vesting requirement for general state employees in MSEP and MSEP 2000 is 5 years of creditable service. The vesting requirement for general state employees in MSEP 2011 is 10 years of creditable service.)
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Retirement Eligibility for Terminated-Vested Member

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When a vested employee resigns, when will they be able to draw their retirement benefits?
Members who are vested* with MOSERS and leave state employment can begin receiving a lifetime monthly benefit once they meet the age requirement for their plan and complete the retirement process with MOSERS.

The benefit for general state employees is calculated using the formula Final Average Pay x Credited Service x Multiplier = Monthly Benefit.

Retirement age and eligibility requirements depend on the plan the member is in (MSEP, MSEP 2000 or MSEP 2011). Please see the Which Plan Am I In? section of our website, then find the specific age and service requirements in the appropriate member handbook or in the summary of benefits comparison brochure. Depending on their situation, terminated-vested members may be able to choose early retirement with reduced benefits, or they may choose to wait for normal retirement with unreduced benefits. Benefit payment options and eligibility for benefits will be based on the laws in effect on the date the member leaves state employment. Members must meet all legal requirements.

* To be "vested" means you are eligible for a retirement benefit once you have met the age and service requirements. (The vesting requirement for general state employees in MSEP and MSEP 2000 is 5 years of creditable service. The vesting requirement for general state employees in MSEP 2011 is 10 years of creditable service.)

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Death of a Member Before Retirement Date

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If a person is eligible to retire (80+ years), but continues working and sadly passes, then does the spouse get full benefits or merely what has been paid into the system?
We recently addressed this question on the blog, which you can view here. You can also use the Categories menu option above to search for previously answered questions on survivor benefits and many other topics. Print Friendly and PDF

Columbia Tribune Article

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What are implications of article on front page of Columbia Daily Tribune about asking legislature for more money in current financial situation of state?

While the MOSERS Board of Trustees and staff are cognizant of the state budget issues, we also have a fiduciary responsibility to protect the retirement interests of current and future MOSERS members.

The budget request submitted for Fiscal Year 2018 reflects this commitment. It also reflects the reality that the MOSERS request, as a percentage of the total state budget, is the same today as it was 20 years ago. In the FY 1999 budget, the pension obligation represented 1.45% of the total state budget. With the budget request submitted for FY 2018, the pension obligation is projected to be 1.45%.

 We appreciate your inquiry and assure you that we will be communicating to policy makers throughout the duration of the budget process that retirement commitments made to state employees throughout their careers are an important part of the employees’ compensation package and they have been administered through a system that has remained efficient and affordable from the state budget perspective for more than two decades.
 
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Reemployment After Retirement from MOSERS

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Can you retire from a Mosers position and take a position with one of the State universities and still draw your Mosers pension?
As a general state employee, your MOSERS retirement benefit would be stopped if you retire and later return to work in a benefit-eligible position covered by MOSERS or MPERS (MoDot & Patrol Employees’ Retirement System).

Your employer determines if the position is benefit-eligible. MOSERS administers benefits for most state agencies and regional state universities. See our website for a complete list of employers covered by MOSERS. If you have a question about whether or not a position will affect your MOSERS retirement benefit, we advise you to check with your potential employer.

MOSERS DOES administer retirement benefits for the following:
Harris-Stowe State University
Lincoln University
Missouri Southern State University
Missouri State University
Missouri Western State University
Northwest Missouri State University
Southeast Missouri State University
Truman State University
University of Central Missouri
State Technical College of Missouri

 MOSERS does NOT administer retirement benefits for the four campuses in the University of Missouri System – MU, UMKC, UMSL, and Missouri S&T.

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Pension Funding

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Very concerned, if Mosers is asking the Legislators for more money, what's to keep them from saying they don't want to fund our retirement any longer and we end up with reduced benefits, like Kansas. I planned my retirement based on this, this is the reason I worked for lower wages, I'd like it to be there when I do retire. Thank you for your insight.
The state of Missouri has been consistent in fully funding the contribution rate recommended by the actuary and certified by the MOSERS Board of Trustees. You may be interested to read a similar question we answered last Friday.

As a vested member of MSEP/MSEP 2000, your accrued pension benefits are protected by law and cannot be reduced or modified.

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Financial Health of Pension Plan

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I have heard that MOSERS is asking for over $40 million in additional funding from the State Legislature for the next fiscal year. Is this the case? And if so, why is the additional funding needed? Is the State Retirement fund solvent?
Thank you for your inquiry regarding MOSERS’ funding. Your diligence in maintaining an understanding of MOSERS’ overall fiscal health is commendable. 

To provide some background, money comes into the MOSERS trust fund in two ways: 1) Contributions by the employer and from employees in the MSEP 2011 and the Judicial Plan 2011, and 2) Investment Earnings. The two are linked. Over the past 30 years, investment earnings have accounted for approximately two-thirds of MOSERS’ revenues. Each year, the Missouri General Assembly appropriates an employer contribution to MOSERS typically at the level of annual employer contribution rate certified by the MOSERS’ Board of Trustees.  For more information, see our Key Facts regarding funding of MOSERS.

During 2016, the MOSERS Board of Trustees reviewed the plan’s experience study conducted for the five-year period ending June 30, 2015. Recommendations associated with this experience study were offered for the Board’s review. After careful consideration, the Board voted to:
    • Reduce the plan’s investment rate of return assumption from 8.0% to 7.65%, and
    • Strengthen the mortality tables associated with potential increased membership longevity.
These modifications were made to more closely align the fund with future capital market expectations as well as potential longer lifespans of members. Once incorporated, these modifications contributed to an increase in employer contribution requirements for FY18. The employer contribution rate increased from 16.97% to 19.45% of payroll. This change results in an approximate dollar increase in MOSERS’ appropriation request of $47 million as compared to the FY17 appropriation. As a percent of the total state budget, MOSERS’ appropriation represents approximately 1.4% of that total budget which has been consistent for more than a decade.

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Retiree COLAs for 2017?

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Will we receive a raise in 2017?

We believe you are referring to the cost-of-living-adjustment (COLA) for eligible retired members and their surviving beneficiaries. By law, every year, we calculate a COLA for retired general state employees. We will post the COLA for 2017 on our website by the end of January. We cannot determine the rate yet because the calculation is based on 80% of the percentage increase in the average Consumer Price Index (CPI) from one year to the next with a maximum increase of 5% (minimum 0%). The 2017 rate will be based on the comparison of the CPI from 2015 to 2016, for which the information is not yet available for November and December 2016. COLAs are payable on the anniversary of your retirement date (for most retirees*).

We encourage you to visit the COLA page in the Retiree section of our website, which has additional helpful information on how COLAs are calculated and a brief video explanation.

*Exceptions:
  1. Retirees who converted from MSEP to MSEP 2000 during the conversion window in 2000 have COLAs payable in July.
  2. Retirees who elected a BackDROP have COLAs payable on the anniversary of their BackDROP date.
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MSEP 2011 Vesting Period

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The MOSERS vesting period is being considered to be reduced from 10 years back to 5 years after the election.
We assume you are referring to the vesting period for MSEP 2011 members (those first-employed in a MOSERS benefit-eligible position on or after 01/01/2011), which is 10 years.   MOSERS administers retirement benefits but we do not have the authority to change plan provisions. However, this was a recommendation from the recent compensation study.  Nevertheless, before any change can be made to retirement benefits, the Missouri General Assembly must pass a bill and have that bill signed by the Governor.  The 2017 legislative session begins on January 4, 2017 and ends on May 12, 2017. We will continue to keep our members informed of any pension-related legislation during that time.

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When to retire?

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Is it better to retire after the first of the year for tax purposes or would it make much of a difference to retire in November? Someone told me it's better to go after the first of the year.
There are many different factors to consider when deciding when to retire with taxes being just one of them. MOSERS can provide you with different benefit estimates so you can compare your options but, ultimately, the decision about the “best” time will depend on your individual circumstances.

As it pertains to taxes, if you are eligible for BackDROP and elect it at retirement, you will be taxed on the lump-sum cash payment for the year you receive it if you don’t roll it over to a tax-deferred, qualified retirement account. The later in the year it is, the more taxable income you may have (from your employment plus BackDROP plus any other sources). Having a large spike in income in one year could result in you paying a higher percentage in taxes that year.

See our Special Tax Notice Brochure for information. In particular, if you are younger than age 59½ and don’t roll over your BackDROP distribution, you may also have to pay a 10% additional income tax on early distributions. If you elect a rollover (into the MO Deferred Comp Plan, for example) and defer the taxes, the time of year of your retirement doesn’t matter for tax purposes.

We encourage you to consult with a professional tax adviser before making your retirement decisions.
You may also be interested in a related topic on potentially utilizing the cafeteria plan to save taxes on medical insurance premiums during the remainder of the year in which you retire.

You may also be interested in a related topic on potentially utilizing the cafeteria plan to save taxes on medical insurance premiums during the remainder of the year in which you retire.  Print Friendly and PDF

Retiree COLAs?

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When will retirees receive their COLAs?
COLAs are payable on the anniversary of your retirement date (for most retirees). The exceptions are:

  1. Retirees who converted from MSEP to MSEP 2000 during the conversion window in 2000 will have COLAs payable in July.
  2. Retirees who elected a BackDROP will have COLAs payable on the anniversary of the BackDROP date.

You can read more in the article we posted on our website when we announced the COLA rate in January:
https://www.mosers.org/MOSERS-News-Archive/2016/2016-COLA-Rate-Determined.aspx 

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Vested Employee Returning to State Employment

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When I left employment in 2014, I was vested in the 2000 MSEP plan. If I return to state employment in the future, will I still be eligible for retirement under the 2000 MSEP plan with 80 and out? Or will I have to retire under 2011 MSEP with 90 and out? I have been told both, so I need clarification. Thank you.
If you were first employed in a MOSERS (or MPERS) benefit-eligible position on or after July 1, 2000 but prior to January 1, 2011, you would most likely be a member of the MSEP 2000.  If you returned to state employment as a member of MSEP 2000, the Rule of 80 (also known as “80 & Out”) would be one way you could reach normal retirement eligibility. The other way would be when you reach age 62 and have at least 5 years of service.

To retire under the “Rule of 80,” in MSEP 2000, you must:

  1. Be at least age 48, and
  2. Your age and service must equal 80 or more, and 
  3. You must be actively employed.

 In other words, a terminated-vested member of the MSEP 2000 is not eligible for the “Rule of 80.”

For more information about plan membership and retirement eligibility, see the  Which Plan am I in? section of our website. You can check your plan membership and when you are eligible to retire by logging in to your Member Homepage, clicking on Estimates, then Estimate Your Retirement Benefit.  The website will reflect your current status so be aware that your eligibility for retirement as a terminated vested member may be different than it would be if you returned to work as an actively employed member because you would begin accruing additional service.  Alternatively, you may contact a MOSERS benefit counselor by phone at (800) 827-1063 to discuss your specific situation and your options.

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Death Before Retirement & Survivor Benefits

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I am a former state employee, who was vested when I left state employment. If I die before I begin receiving my pension benefit, will my spouse be eligible to receive it? Or will MOSERS get to keep my pension? If my spouse is eligible to receive my pension benefit, how does that happen, when will my spouse be eligible to get it (age 62? 65? Immediately upon my death?), and for how many years (10, 20, lifetime?)? Thank you. 
Thank you for your questions. Let’s address each one individually:

  1. If you die BEFORE you begin receiving your MOSERS pension benefit, will your spouse be eligible to receive it?  Yes, if you are a general state employee, married, vested in MOSERS, and die before you retire with MOSERS, your eligible surviving spouse will receive survivor benefits. 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. If there is no eligible spouse, a survivor benefit may be paid to your natural or legally adopted child(ren) who are younger than age 21. This benefit is dependent on the law in effect at the time of your termination. 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 and you terminated service with the state on or after 8/28/2001). If you die without any eligible beneficiaries, no retirement benefits are paid.
  2. HOW would your spouse begin receiving benefits from MOSERS? Your eligible surviving spouse can find information on our website and should contact a MOSERS benefit counselor for guidance through the process. We will provide your spouse with a customized Application for Survivor Benefits which he or she must complete and return along with any other necessary documentation. Information about your MOSERS benefits is contained in your Benefit Statement which all active, terminated-vested, and retired members can find by logging in to their MOSERS Member Homepage
  3. WHEN will your spouse begin receiving benefits from MOSERS? Benefit payments can begin the month following your date of death as long as the application and any necessary documents (such as a death certificate) have been submitted, and all legal requirements have been met. 
  4. HOW LONG will your spouse receive MOSERS pension benefits? The survivor benefit will be paid monthly for the remainder of your spouse's lifetime. 
All of the above information applies if you die BEFORE you begin receiving your MOSERS pension benefit. Members often have similar questions about death AFTER retirement. A key feature of your MOSERS defined benefit (DB) pension plan is that it can provide financial security for your eligible survivor(s) as well. During the retirement process, you will make elections to determine if any potential survivor benefits will be paid to anyone after your death or not. We hope you find this information helpful.

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Contribution Balance

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For someone on the MSEP 2011 plan, is there a way to see the current balance of the 4% benefits withheld for retirement? If someone is planning on leaving before retirement eligibility it would be helpful to view the balance before making termination plans.
Yes, if you log into your MOSERS Member Homepage at www.mosers.org by clicking on the blue Member Login button, you can view a Contribution Calculator. It shows your current balance, based on the latest payroll information sent from your employer.

If you terminate employment from a MOSERS-covered position you may request a refund of your contributions including credited interest. However, you are not required to withdraw your contributions when you leave. If you are vested, MOSERS will continue to pay interest until you either withdraw the funds, reach normal retirement eligibility or die. If you think you might return to MOSERS-covered service, carefully consider your options because by receiving a refund, you forfeit all your credited service and future rights to receive benefits from the system. For vested members, this means forfeiting a lifetime monthly benefit at retirement age.

To see all of your options after leaving state employment, please see the Member Contributions brochure on our website.

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Deferred Comp Early Withdrawal Penalty for Beneficiary?

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I am retired and I am 60. My wife is 56 yrs old, not a state employee, and is the beneficiary of my deferred compensation account. If I were to die, would she be subject to the 10% federal penalty for withdrawing money before 59 1/2 from my deferred comp fund?
No, as your widow, she would have penalty-free access to your pre-tax savings in the 457 plan prior to her attaining the age of 59½.

As a participant in MO Deferred Comp, you have penalty-free access to your pre-tax savings in the 457 plan prior to age 59½ as long as you are separated from state service. This great benefit carries over to your beneficiary as well. Keep in mind, a 10% penalty will apply to distributions from any employer contributions and earnings in a 401(a) account or rollover dollars (such as BackDROP) from other qualified accounts withdrawn prior to age 59½ by you or your surviving beneficiary(ies).

You may also be interested to know, that you can keep your money in the deferred comp plan throughout your retirement. Furthermore, you are not required to start withdrawing your savings until you reach age 70½. If you pass away before this time, or even after you begin taking Required Minimum Distributions (RMDs), your beneficiary has several options for when they are required to meet the annual withdraw amount. Visit the IRS’ website for more detailed information on RMDs. Beneficiaries of a deceased MO Deferred Comp participant must complete the Beneficiary Account Setup and Withdrawal Packet to create an  account and initiate withdrawals from the plan. When you or your beneficiary are ready to start taking distributions, the deferred comp plan offers several automatic and manual payment options to help you easily access your retirement savings. The Distributions Options Guide goes over these payment options in more detail.

Remember, it’s crucial that you annually review and update your beneficiary information with MO Deferred Comp, as well as with MOSERS. Keep in mind, you can designate contingent beneficiaries for circumstances when a primary beneficiary precedes you in death. To review your deferred comp beneficiary information, log on to Account Access and navigate to the Personal Information page under the Manage My Account tab.

For more information, visit www.modeferredcomp.org or contact a participant services representative at (800) 392-0925.

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Preventing Identity Theft

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I was just notified by my doctor's office that their system was breached by a hacker and that my personal information may have been stolen.
How can I make sure the hackers don't try to get my pension check?
To protect our members’ personal information, MOSERS follows best practices and industry guidelines regarding the handling of and access to member data and we routinely participate in security audits to ensure we keep up with technology. That being said, identity theft and data breaches are a real threat so we encourage our members to be vigilant and active in taking steps to protect themselves, too.

You should routinely change your password if you log in to your Member Homepage on the MOSERS website. From www.mosers.org, simply click on the blue Member Login button, then follow the instructions. Also, we recommend that you routinely change your password on any other sites that require one. As part of our security protocol, we send an email to you (at the email address we have on file for you) anytime your account is accessed. If you receive such an email and have not just logged on to your Member Homepage, please notify us immediately.

Alternatively, you may call us, ask to speak with a benefit counselor, and request that your MOSERS online account be locked.  This will prevent you and anyone else from accessing your information online. If you call MOSERS, the benefit counselor will ask questions to verify your identity. 
Here are some additional security tips from an article on our website: 


We hope you find this information helpful.

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Pre-Tax Premium Options for Retirees

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If I retire January 1, 2017 my health insurance will be paid out of my Dec. check for the month of January. Can I run my health insurance through the Cafeteria Plan and pay it out of my AL (annual leave payout) for 11 months in 2017, Feb. thru Dec?
(For most state employees, health insurance is administered by Missouri Consolidated Health Care Plan [MCHCP] or their employer if they work for Conservation or a state college or university. While we don’t administer health insurance, we hear this question a lot. It is a good question and the answer provides valuable information for retirees. We sent it to MCHCP and are posting their response to ensure we are passing along the most accurate information to readers.)

From MCHCP:

If you are retiring January 1, the answer is yes, because the annual leave payout in this scenario will be distributed on January 31, therefore you will use 2017 funds to pay 2017 premiums using the pre-tax premium option of the cafeteria plan.

Please note:  If your retirement date is December 1, you will not be able to use the pre-tax premium option to prepay the next year’s premiums due to federal guidelines governing the cafeteria plan.

Remember, MOSERS does not administer health insurance - Please contact MCHCP at 800-487-0771,  or contact your health insurance provider, for questions specific to your individual situation.

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MSEP 2011 Members & Rule of 80

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Why can't we go back to 80 and out? It is not fair to us just because we did not get hired earlier in our careers. We are getting shorted in every way.
It appears you are referring to the differences in eligibility for normal retirement:

MOSERS Normal Retirement Eligibility for General State Employees by Plan
-Normal Retirement Eligibility is the age and service required to receive an unreduced retirement benefit
MSEP
You are a member if employed in a MOSERS benefit-eligible position prior to 7/1/2000 and vested in MSEP.
MSEP 2000
You are a member if employed in a MOSERS benefit-eligible position prior to July 1, 2000, but left employment before becoming vested and returned to work in a benefit-eligible position any time after July 1, 2000, or first employed in a MOSERS benefit-eligible position on or after July 1, 2000 but prior to January 1, 2011.
MSEP 2011
You are a member if first employed in a MOSERS benefit-eligible position on or after 1/1/2011.
  •     Age 65 with 5 years of service, or
  •  Age 60 with 15 years of service, or
  • “Rule of 80” - at least age 48 with age and service equaling 80 or more
  • Age 62 with 5 years of service, or
  • “Rule of 80” - at least age 48 with age and service equaling  80 or more
Terminated-vested members not eligible for “Rule of 80”
  •     Age 67 with 10 years of service, or
  •     “Rule of 90” - at least age 55 with age and service equaling 90 or more
Terminated-vested members not eligible for “Rule of 90”

In 2010, following the Great Recession, the Missouri Legislature was faced with tough decisions about the state budget. Ultimately, they made changes to retirement benefits for new state employees. (Significant Reforms to State Retirement Systems were made in various other states around the same time and often to a greater degree). The changes made here help to significantly reduce costs to the state while also allowing our state to continue to provide a defined benefit (DB) retirement plan for current and future state employees. In a MOSERS DB plan, once you meet the requirements and retire, you have the security of knowing that you will receive at least that amount every month for life – you won’t outlive your benefit. A DB plan can also help provide financial security for your eligible spouse if you die first. DB plans are now almost unheard of in the private sector and they help our state recruit and retain qualified employees to provide vital state services, which is important to all Missouri residents.

MOSERS administers retirement benefits but we do not have the authority to change plan provisions. Any changes would require passage of legislation by the Missouri General Assembly. Print Friendly and PDF

Health Insurance Premiums at Retirement

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When I retire I will have 24 years in, what will I pay for my health insurance? I understand there is a 2.5% discount per each year served. and do I pick up all the premium at retirement?
Please contact MCHCP to get specific answers to your questions about medical, dental, and vision insurance as they relate to your individual circumstances.

The Missouri State Employees’ Retirement System (MOSERS) administers retirement, long-term disability and life insurance benefits for our members. Health insurance is provided through MCHCP (for most state employees) so we cannot answer health insurance related questions but we can help you find more information. The MCHCP website says:

The retiree premium is based on years of service with the state at retirement. The state contribution is calculated by using the number of full years of service (as reported by MOSERS or another retirement system) multiplied by 2.5 percent. The contribution for non-Medicare retirees is based on the PPO 600 Plan premium with the tobacco-free incentive and wellness premium. The contribution for Medicare retirees is based on the PPO 600 Plan total premium. The maximum state contribution cannot exceed 65 percent.

For more information, you can log in to the website and use the premium calculator or contact them at www.mchcp.org or 800-487-0771.

Staff from MCHCP, as well as from Social Security and MO Deferred Comp, present a session at MOSERS’ PreRetirement seminars. If you are within five years of retirement eligibility, we encourage you sign up for a seminar.

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Penalty for Early Withdrawal from Deferred Comp?

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When I retire I will be 56 yrs old, will I be penalized for withdrawing money from my deferred comp fund?
Many retirement savings accounts, will impose a 10% penalty on top of federal tax withholdings for any distributions made prior to age 59 ½; however a 457 plan, like MO Deferred Comp, isn’t one of them*.  In fact, one of the biggest benefits of saving with the deferred compensation plan is penalty-free access to your money before age 59 ½ as long as you are separated from state service.

Remember, you do not have to withdrawal your money from the deferred compensation plan after you retire or leave state employment.  Keeping your money with MO Deferred Comp is a smart way to maintain access to all of the great features you enjoyed while you were working. Actually, 60% of state retirees still have an account after five years of retirement and are still enjoying the plan’s low cost, custom investment options. Once retired, the deferred compensation plan provides a variety of manual and automatic payment options to help you access your hard-earned savings.

If you have additional questions, please visit the MO Deferred Comp’s website or call 800-392-0925 to speak with a participant service representative.

*A 10% penalty will apply to distributions from any employer contributions and earnings in a 401(a) account or rollover dollars (such as BackDROP) from other qualified accounts.

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State Retiree "Fees"?

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 It was rumored by an employee of DESE that a 9% fee was being charged to state retirees for services provided by MOSERS. If this is true, what services are being charged?
No, this is not true. We are not sure where the figure of 9% came from but tried to imagine how this rumor may have started. Here are a few possibilities:

Member Contributions: Members of the MSEP 2011 and the Judicial Plan 2011 (who first began working in a benefit-eligible position on or after 1/1/2011) are required by a law passed in 2010 to contribute, by payroll deduction, 4% of gross pay toward their retirement benefit. This contribution is not a fee—it is made on a pre-tax basis and members will receive no less than the amount contributed, either in future retirement benefits or through a refund of contributions plus interest. The individual member account is the member-financed portion of the retirement benefit eventually received. In fact, the majority of employees who do retire will receive substantially more in retirement benefits than the amounts they contributed. See the example of the value of your retirement benefit in our New Employee Orientation brochure. There are three sources of income for the MOSERS pension fund; (1) the 4% contributions from those first hired on or after 1/1/2011, (2) the employer’s contributions (currently, 16.97% of covered payroll), and (3) MOSERS’ investment income.

Deferred Compensation Administrative Fee: Whether it’s an account like the deferred comp plan offered to state employees or an outside IRA, it costs money to grow your savings in a retirement saving account. Retirement savings accounts charge account administrative fees in addition to investment management fees for each fund option. MO Deferred Comp prides itself on competitively-low costs and being transparent about any fees passed on to savers. In the MO Deferred Comp Plan, the “Per Participant Administrative Fee” is $15 per year plus 0.09% of assets (or 9 basis points). The 0.09% is included in each fund’s expense ratio. The average expense ratio of a Missouri Target date fund is 0.22% (0.09% administrative and 0.13% investment management).  The MO Deferred Comp Plan fees are among the lowest out-of-pocket participant fees (administrative and investment management) compared to a universe of peer retirement savings plans according to CEM Benchmarking, Inc. Learn more about low costs and other advantages on the MO Deferred Comp website

We hope this helps address your concerns. 
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Effects of "Brexit" on Retirement Benefits?

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With Britain's withdrawal from the EU, how is that going to effect our backdrop and retirement. Will be retiring soon and this development has me very concerned.
 Britain’s withdrawal from the EU will not affect your BackDROP amount or monthly retirement benefit.  Furthermore, your MOSERS pension benefit will not be impaired by any short-term market event because it is based on a formula set by law:  Final Average Pay x Credited Service x Multiplier = Monthly Base Benefit.  (Learn more about MOSERS PreRetirement Seminars, the formula, and the retirement process here.)

MOSERS is a pre-funded plan, which means your employer (as an agency of the State of Missouri) makes ongoing financial contributions which are combined with investment earnings and, as of 2011, contributions from new state employees, to pay all current and future benefits. The state makes contributions to your benefit throughout your career. Those contributions have been, and will continue to be, invested in a long-term investing plan that does not react to short-term political events.

To reiterate, your benefit is secure. Money comes into the MOSERS fund in two ways:
1) Contributions - from employers and from employees in the MSEP 2011 or the Judicial Plan 2011, and 2) Investment earnings. MOSERS’ investment earnings on the amounts that have been contributed have significantly increased the assets available to pay your retirement benefit.

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Out-of-State Retiree

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If you retire with 80 and out in Missouri, would you be able to work in another state full-time and still draw your pension from Missouri?
Yes. Working in another state would have no effect on your MOSERS benefit. Your MOSERS retirement benefit would be stopped only if you retire and later return to work in a MOSERS or MPERS* benefit-eligible position. A benefit-eligible position is one that normally requires at least 1,040 hours of work per year and is permanent in nature.

*MoDOT & Patrol Employees’ Retirement System

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80 & Out?

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I understand that the 80 and out rule no longer exists. Is it called the 90 and out rule now?
It depends on your retirement plan. General state employees who are in the MSEP or MSEP 2000 are eligible for normal retirement once their age and service equals the Rule of 80 (“80 and Out”). The minimum age requirement for employees first employed in a MOSERS benefit-eligible position prior to 01/01/2011 is age 48.

It is the Rule of 90 (“90 and Out”) for general state employees who are members of MSEP 2011- those first-employed in a MOSERS benefit-eligible position on or after 01/01/2011. The minimum age requirement for the Rule of 90 is age 55.

Keep in mind any of the following may affect your retirement eligibility: your retirement plan (MSEP, MSEP 2000, MSEP 2011, etc.), age, service, and if you retire directly from active employment versus leaving state government and waiting to retire. Contact a MOSERS benefit counselor to discuss your specific situation.

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Social Security Retirement Benefits

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I retired with 80 and out. I will be 62 in October do I need to sign up for social security now?

 If we understand your question correctly, you are asking about timing your social security benefits with the end of your MOSERS temporary benefit* under the MSEP 2000. Your last temporary benefit from MOSERS will be paid at the end of the month in which you turn 62. MOSERS benefits are not automatically coordinated with social security, so you should contact the Social Security Administration to find out when you should apply and when you will get your first social security benefit payment so that you know and are prepared if there is a gap between payments.

We have a news article on our website that may also be helpful to you.

*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.

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Final Average Pay

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Is our retirement benefit based on the 3 highest years of wages?
or the 3 highest years of wages before you hit 80 and out?
I keep hearing both, so not sure which is right.
The answer depends on if you elect BackDROP (if eligible); not when you hit “80 & Out”. 

If you are a general state employee, your retirement benefit is calculated using a three-part formula:

Final Average Pay (FAP)        x            credited service         x             a multiplier

FAP is determined using your highest 36 full consecutive months of pay when looking at your entire work history covered under MOSERS. Practically speaking, for most, that is their last three years, but not always.

The exception to this would occur under the BackDROP (if eligible). If you become eligible for and elect the BackDROP upon retirement, your highest 36 consecutive months would be determined from your MOSERS-covered work history prior to your BackDROP date. (Some people find BackDROP easier to understand if they think of the BackDROP period as being “cashed in” because salary and service during that period don’t count in the calculation of your monthly benefit amount.)

So, to reiterate, if you don’t elect BackDROP, your monthly benefit will be based on your highest 36 full consecutive months of pay, regardless of whether that is before or after you might hit “80 & Out”.  See page 20 of the MSEP/MSEP 2000 General Employees Retirement Handbook for an example and more detailed information. Also, keep in mind that “80 & Out” is not the only way to become eligible for retirement. For example, as a general state employee in MSEP 2000, you might become eligible for normal retirement at age 62 with 5 years of service before you would become eligible for “80 & Out”.  See Which plan am I in? with a list of plan provisions including criteria for normal retirement eligibility in each plan. 

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Health Care Proposal?

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I recently heard there is a proposal being considered that would give retirees the opportunity to receive their full health care benefits through MCHCP at the same monthly premium they paid while working full time...true?
There was a healthcare retirement incentive (HB 1134) that was introduced in the 2016 legislative session, but it didn’t pass. The 2016 session ended on May 13th.  It would have to be reintroduced in the next legislative session which begins in January 2017 to be considered again.

Specific questions regarding health care benefits should be directed to your health care provider, which, for most state employees, is Missouri Consolidated Health Care Plan (MCHCP).

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Pension Plan Investment Fees

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In the Wall Street Journal 5/14-15,2016 Cross Country article by Marc Levine states 33 state pension systems spent $6 billion on Asset Management fees in 2014, according to a 2015 study by Maryland Public Policy Institute. The 10 states that spent the most on fees- including New Jersey, Maryland, South Carolina, and Missouri-achieved a rate of return no higher than the states that spent the least. It doesn't state the amount spent by Missouri, but how can this be justified?
Thank you for the Rumor Central question. We spend time reviewing the various analysis of public pension plan investments. In this vein, we saw the report published by the Maryland Public Policy Institute (MPPI) and the article in the Wall Street Journal (WSJ) based on the MPPI analysis. We believe that the MPPI contains material misstatements that we would like to address.


For instance, the WSJ article says “…Missouri…achieved a rate of return no higher than the states that spent the least.” This analysis was based on a 5-year rate of return ending 6/30/2014. In reality, MOSERS returned 13.2% (net of all fees and expenses) for the 5-year-period ending 6/30/14 vs. the median return of 12.7% for the “Bottom 10 Wall Street Fee Ratio States” as highlighted in the 2015 MPPI study. In other words, after all fees and expenses were paid, MOSERS still outperformed the 5-year median return reported for the 10 cheapest fee states. This simply says that we have outperformed the lower fee plans over the same 5-year period; contrary to the conclusions they have written. In our investigation, we could not discern where the MPPI research and WSJ article found their return information.


Additionally, MOSERS has a long-standing, national reputation for consistently disclosing all management and incentive fees associated with its external investment managers. Unfortunately, not all public pension plans adhere to the same philosophy of transparency and thoroughness as MOSERS. MOSERS has made a practice of full fee disclosure since 2002. As a matter of fact, Pew Institute recently issued a report that recognized MOSERS’ fee reporting standard as among the highest in the pension industry. However, when this disclosure difference is not accounted for, it makes the Maryland Public Policy Institute’s findings incomplete and misleading.


Inconsistent and opaque fee reporting activities make it difficult to compare pension plan fee structures in an “apples to apples” manner, especially the incentives paid to external investment managers, which many plans don’t disclose at all. This wide disparity in disclosure makes many pension plans appear to have lower fees relative to MOSERS when, in actuality, our fees may be comparable. For example, there are several funds in the MPPI analysis that, like MOSERS, invest a significant portion of their assets in alternative investments. 

Alternative investments, generally, are associated with high management fees and a share of the profit generated. The fact that these other funds share similar size allocations to these high-fee areas, but the analysis implies MOSERS has dramatically higher fees is misleading. The truth is, as discussed in the Pew Report, those funds aren’t disclosing a significant portion of their fees in their annual reports. If MPPI had the correct fee information, we believe it would have changed their conclusion as it relates to MOSERS.


In reference to the Wall Street Journal’s political “mischief” findings, it’s important to note that, while a number of MOSERS’ trustees do hold political office, our board is not responsible for day-to-day investment decisions. Instead, investment decisions are made by a dedicated, professional investment staff with the aid of independent consultants where necessary. The investment program at MOSERS is guided by a comprehensive set of investment beliefs that are aligned with MOSERS’ overall portfolio objectives. Fees are a critical risk consideration when it comes to future investment results and weigh heavily in the criteria established to make investments. However, fees are but one of the many variables investment staff considers when evaluating a possible investment. 

Thank you again for the question and your interest in MOSERS' investment activity. As a retired member of the system and recipient of a monthly benefit payment, we wholeheartedly understand your reservations when reading an article like this one. Rest assured that MOSERS is making every effort to minimize fees where possible and will continue to adhere to its guiding principles of preserving the long-term corpus of the fund, maximizing total return within prudent risk parameters, and acting in the exclusive interest of the members of the system.
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Retiree Health Care Premiums

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Is it true that if I have 30 years of service with the state of Missouri when I retired I would only need to pay half of my health insurance coverage?
The state’s contribution toward retiree health care premiums is based on years of service. The state’s contribution (also referred to as a subsidy) is 2.5% for each FULL year of service. The maximum subsidy is 65% (up to 26 years). It is based on the PPO 600 Plan.

Keep in mind that retiree health care premiums are higher than those of active state employees. For example, if your retiree health care premium is $800 and you received the maximum subsidy (65%), your portion of your premium would be $280 (35%). Specific questions regarding health care benefits should be directed to your health care provider, which, for most state employees, is Missouri Consolidated Health Care Plan (MCHCP).

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BackDROP Going Away?

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This morning I was told by a state employee that the backdrop benefit would be going away in January. If true, does this apply to new hires and state employees who are already vested will not be effected? 
We are not aware of any proposals to change or stop the BackDROP for members (general state employees) of the MSEP or MSEP 2000. However, members of MSEP 2011 (those first employed in a MOSERS benefit-eligible position on or after January 1, 2011) are not eligible for the BackDROP.
Any change to the BackDROP would require a change in the law, and the 2016 legislative session ends on May 13th.  As always, we will keep our members up to date through our website, newsletters and social media if there is any news on retirement-related legislation.

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Four-Day Work Week?

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A few years back I had asked about a bill relating to a four day 10 hour work week. Where is this now and is it still active?
There was proposed legislation (Senate Bill 316) during the 2011 legislative session to create a four day work week for state employees. It did not pass at that time, so it would have to be reintroduced. We are not aware of any such proposed legislation in the 2016 legislative session, which ends on May 13th. To track pension related proposals, you may be interested in accessing the Legislative Status Report maintained by the Joint Committee on Public Employee Retirement (JCPER) at http://www.jcper.org/legsheet.pdf which is updated daily. Print Friendly and PDF

Rule of 80 ("80 & Out")

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Is the 80 and out plan still available to employees, that when their age and years service total 80 they can retire, or has that been raised or changed? And does it apply if you had been an employee, left state employment and then go back into it?
Yes , the Rule of 80 is available to eligible general state employees in MSEP and MSEP 2000. The age and service requirement for existing employees hired prior to 01/01/2011 remain the same at age 48 or older and their age and years of service must equal at least 80. It was changed to Rule of 90 for members of MSEP 2011 only and affects only those hired for the first time on or after 01/01/2011.

A vested member of MSEP or MSEP 2000 who leaves state employment prior to retirement but then returns may still reach retirement eligibility through the Rule of 80.

Keep in mind any of the following may affect your retirement eligibility: your retirement plan (MSEP, MSEP 2011, etc.), age, service, and if you retire directly from active employment versus leaving state government and waiting to retire. Contact a MOSERS benefit counselor to discuss your specific situation.

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Notice to Employer When Retiring

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Is there a set amount of notice that we need to give our employer when we decide to retire ?
The short answer is:  Customary practice is to notify your employer of your intent to resign at least two weeks prior to your last day of active employment. Contact the human resources staff at your agency for additional information or for answers to specific questions.

This is a question we often get at MOSERS (and understandably so), but the reality is that your resignation (termination of employment) is a process that is between you and your employer. Your retirement is a process between you and MOSERS. Often the two processes overlap, but not always. We contacted staff at OA Personnel to verify the above, which they did, and they also supplied the additional information under the heading, Resigning from State Employment, below. But first, we thought it might also be helpful for you to know a bit about the retirement process with MOSERS.

Retiring With MOSERS
Keep in mind that the retirement process is longer than two weeks. There are specific due dates for submitting both the Retirement Application and Retirement Election form. It will be at least two months between the time you submit your Retirement Application and when you get your first retirement payment, so please plan your resignation (and income) accordingly.

For example, if you are eligible and wish to  have May 1, 2016 as your retirement date, you must:

  • Submit your Retirement Application to MOSERS no later than March 31, 2016. (We encourage you to log in at www.mosers.org to your Member Homepage and apply online.).
  • Terminate your employment (stop working for the state in a benefit-eligible position) and submit your Retirement Election Form to MOSERS no later than April 30, 2016. 
  • With a  retirement date of  May 1, 2016, you will receive your first retirement benefit payment on May 31, 2016.

  Learn more about the two-step retirement process for general state employees in the Retirement Guide which is on our website. You may contact a MOSERS 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, 7:30 a.m. to 4:30 p.m. Monday-Friday.

Resigning from State Employment (Information provided by OA Personnel)

For employees of Merit agencies and UCP Non-Merit agencies, sufficient notice may allow an employee to be re-employed by a Merit agency without having to pull a certificate and have the employee rank in the top 15 or top 15% of available applicants.  The particular appointing authority has the ability to choose to re-employ an employee that has left in good standing. The standard for “in good standing” is at least 15 days.  The “in good standing” status isn’t generally that important to retiring employees because they don’t anticipate coming back to state service in a Merit (or benefit-eligible) position.

Employers generally appreciate as much notice as they can get, particularly in the case of retirements. When organizations are required to try to replace experienced and knowledgeable staff, it helps to have lead time to try to prepare.

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