Missouri Public Pension Exemption

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I have heard a rumor that the exemption from state income taxes for the state pension and deferred comp is going away. Please comment.
We are not aware of any changes to the Missouri Public Pension Exemption. We included a reminder about the exemption in the Fall/Winter issue of RetireeNews that is now online and on its way to mailboxes soon. For specific questions, we would suggest you contact the Missouri Department of Revenue or your tax professional. Print Friendly and PDF

Department of Corrections Rumor

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I JUST HEARD A VICIOUS RUMOR THAT MISSOURI MIGHT PRIVATIZE THEIR PRISON SYSTEM. IF THAT HAPPENS, HOW WILL IT AFFECT MY BACKDROP AND PENSION?
We are not familiar with that rumor. Any hypothetical privatization of services provided by the Department of Corrections would likely require legislative approval and/or action by the Governor.

MOSERS would pay any accrued pension benefits (including BackDROP) to employees once they reach retirement eligibility age & service based on the pension formula for general state employees as outlined in state law as of the date the member leaves state employment.

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Moody's Ratings

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As a prospective state employee, I am curious on how any municipal ratings changes by Moody's will affect payout on MO Pensions.
Moody’s ratings do not affect the amount of MOSERS pensions payments. As a new state employee, you would receive a Statewide Employee Benefit Enrollment System (SEBES) brochure with an overview of benefits, including those offered by MOSERS. Along with other benefits, we administer a defined-benefit (DB) pension plan with payments based on a formula as shown below. (The multiplier is determined by your plan; 1.6% for MSEP; 1.7% for MSEP 2000/MSEP 2011). We encourage you to explore the section of our website called “What Plan Am I In?” to read more about the specific provisions in each plan.

Pension formula for general state employees: 

Final Average Pay (FAP) x Credited Service x Multiplier = Monthly Base Benefit

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COLA This Year?

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I was just curious if there will be a cola this year and if so how much will my check be?
We calculate the COLA for benefit recipients each year. We do not know yet what the 2018 COLA rate will be because the required data is not yet available but we will calculate and announce it in mid-January. The COLA rate 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 2018 rate will be based on the comparison of the CPI in 2016 to 2017. COLAs are payable on the anniversary of your retirement date (for most retirees*).

Watch our website in January for more information, and learn more on the COLA page.  We will send you a notice, either in the mail or in your MOSERS Document Express online mailbox, when the COLA is applied to your monthly benefit payment.

*Exceptions:

  • Retirees who converted from MSEP to MSEP 2000 during the conversion window in 2000 have COLAs payable each year in July.
  • Retirees who elected a BackDROP will have COLAs payable each year on the anniversary of their BackDROP date rather than on the anniversary of their retirement date.
  • MSEP 2011 members hired after January 1, 2018 who leave state employment prior to retirement eligibility, will receive their first COLA in retirement on the second anniversary of their retirement.
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    How is Final Average Pay Figured?

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    I'm thinking about retiring when I am 62 years old. I'm confused on which salaries would be used to figure my retirement. Is it the last 3 yrs of work, the 3 highest salaries, or the 3 highest consecutive salaries?
    Pay is one part of the three-part formula for general state employees:

    Final Average Pay (FAP) x Credited Service x Multiplier = Monthly Base Benefit

    Specifically, FAP is the average of your highest 36 full consecutive months of gross pay no matter where in your work history that may fall. Practically speaking, for most, it is during their last three years, but not always. (Note: If you become eligible for and elect the BackDROP* upon retirement, your FAP will be calculated using your MOSERS-covered work history prior to your BackDROP date.) 

    *BackDROP is available only to general state employees who are members of MSEP & MSEP 2000 and who work at least two years beyond normal retirement eligibility. 

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    Retirement Process Timeline

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    What is the earliest I can sign up to retire, prior to my retirement date.
     You can submit your retirement application up to 4 months (120 days) prior to your retirement date. There are specific due dates required for submission of your Retirement Application and Retirement Election Form.

    While most people think of their retirement date as their last day at work (when they pack up their things, say goodbye, and maybe have cake), for us at MOSERS, that is your “termination date”. Your “retirement date,” when it comes to getting your benefits from MOSERS, is the date you put on your Retirement Application and it will be the first day of the month in which you start receiving retirement benefit payments. For example, if a member’s last day at work is January 31, their retirement date could be February 1 and they would get their first payment from MOSERS on February 28. The timeframe to apply for a February 1 retirement date is October 1 – December 31.

    We encourage you to go to our website, log in to your Member Homepage, and retire online as soon as you have gathered information and made your decisions. Before your benefit payments can begin, you must complete the 2-step retirement process. This process, which involves your submission of several important forms, allows MOSERS to provide you with relevant, individualized information needed to make informed decisions regarding your future benefit payment. Use the Retirement Guide to assist you. This summary of the retirement process includes a detailed explanation of each form as well as a Smart Start Checklist of information you should have readily available when you apply. The Retire Online video also has helpful tips to lead you through the process.

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    Losing BackDROP?

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    I've hear a rumor that MOSERS employees are telling people that we need to retire soon because we will probably be losing our backdrop money. 
    Any changes to BackDROP, or any retirement provision, must go through the legislative process and be signed into law by the Governor.

    It is possible that someone misunderstood information from a MOSERS employee. If you elect the BackDROP* at retirement, it will likely reduce your monthly pension benefit amount because you are electing to take part of your benefit as a lump-sum and part of your benefit as a lifetime monthly payment rather than all of it as a monthly benefit.

    Another possible scenario that someone may have misunderstood has to do with the timing of one’s BackDROP period relative to when they otherwise would have been eligible for the Temporary Benefit. The Temporary Benefit is available to members eligible to retire under the MSEP 2000 through the Rule of 80. It is payable, in addition to the base benefit, until age 62. The BackDROP lump sum is calculated based on 90% of what you would have received in retirement benefits had you been retired during the BackDROP period. The maximum BackDROP period is 5 years. If someone had been eligible for the Temporary Benefit but worked until age 67 or older, the amount of the lump-sum payment might decrease.

    The BackDROP is simply a benefit payment option that is available to eligible members. Details related to BackDROP can be confusing! Members who are or may become eligible for BackDROP are encouraged to attend a PreRetirement Planning Seminar and/or make an appointment with a MOSERS benefit counselor for further explanation.

    *BackDROP is available only to general state employees who are members of MSEP & MSEP 2000 and who work at least two years beyond normal retirement eligibility.  

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    Vesting & MSEP 2011

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    I was hired November 1st 2015. I was wondering how long I have to work for the state in order to draw retirement when I am the age I can retire. Like if its 5 years, Say I work 5 years and quit the state job because I have a baby and need to be a stay at home, when I am 55 can I draw retirement, or do I lose retirement because I quit?
    You have to work long enough to be vested in order to receive a future retirement benefit. Once you are vested with MOSERS, even if you leave state employment, you will be eligible for a lifetime monthly benefit once you meet the age and all other legal requirements and retire under a MOSERS defined benefit pension plan. The good news is the legislature passed a bill this year to change the vesting requirement for members who were first employed on or after January 1, 2011 (members of MSEP 2011) from 10 years to 5 years. The 5-year vesting for MSEP 2011 members will go into effect on January 1, 2018. MSEP 2011 members must be actively employed on or after January 1, 2018 to be covered by this change.

    Vesting is one part of retirement eligibility. The other part is age.  As a member of MSEP 2011, you will become eligible for normal retirement when you are age 67 and have 5 years of service OR under the “Rule of 90” which is when you are at least age 55 and your age and service equals 90 by the time you leave state employment.

    For example, let’s say you are employed by the state for 7 years, leave state employment for five years, then return to work and work for another 23 years for a total of 30 years of service. If you were age 60 with 30 years of service and still employed, you would be eligible to retire under the Rule of 90. On the other hand, if you became vested but never returned to state employment, then you could begin receiving your MOSERS retirement benefit at age 67. The formula for calculating your benefit is Final Average Pay  x  Multiplier (0.017)  x  Service Credit = Monthly Benefit so, the longer you work, the more your benefit will be.

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    Rumor Central Posts

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     How often is Rumor Central updated? Maybe it should be updated at least once a week to keep us all posted about the latest concerns and/or talk about our retirement program.
    We update Rumor Central when we receive a question about retirement, life insurance or long-term disability benefits administered by MOSERS. When we post a new question, everyone who is signed up to receive the notifications will get an email on Friday of that week so they will know a new question has been posted. If no new questions are submitted, we don’t post any updates, because the content is generated by our members and what they would like to know about.

    In addition, if we receive a question we have recently addressed on the blog, we may not post it again and instead just respond individually to the sender (if contact information is provided.) We encourage members to review the Categories section before submitting a question to see if a similar question has already been answered before submitting a new question. For example, the number (181) posted next to BackDROP means we’ve answered 181 questions about BackDROP on the blog. If there is something you’d like to know about related to MOSERS benefits, and it’s not listed under the Categories page, please send us a question!

    We also encourage our retirees to attend a Coffee Break educational seminar in their local area. The 2018 schedule will be posted on our website in January and included in the Fall/Winter issue of RetireeNews in December. These seminars are an excellent opportunity to hear the latest MOSERS news and network with other retirees!

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    MOSERS & PSRS?

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    I keep hearing rumors that Peers and Mosers are joining forces. Just wondering if this is a possibility or not. 
    No, we are not aware of any efforts to merge MOSERS and the Public School & Education Employee Retirement Systems (PSRS-PEERS). Print Friendly and PDF

    Income Replacement in Retirement

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    I was told that if you work for the state for 40 years that your retirement will be roughly the same as your salary. This doesn't make sense to me but need to check it out.
    With forty years of service, your retirement benefit from MOSERS would not be the same as your salary; however, your MOSERS benefit plus your Social Security benefit would be closer to replacing most of your pre-retirement salary. Here is more information:

    The retirement plan through MOSERS is a defined-benefit pension. That means the benefit is defined by law and based on a formula as shown here:

    Final Average Pay (FAP) x Credited Service x Multiplier (1.6% for MSEP; 1.7% for MSEP 2000/MSEP 2011) = Monthly Base Benefit  

    Example: Let’s assume that when you retire, your annual salary is $40,000; you have 40 years of service; and you elect MSEP with a  multiplier of 1.6% (0.016)

    FAP ($40,000/12 = $3,333.33 monthly) x Credited Service (40 years) x Multiplier (0.016) = Monthly Base Benefit

    $3,333.33 x 40 x 0.016 = $2,133.33

    With 40 years of service, your monthly base benefit is equal to 64% of your salary at retirement. This does not include the impact of such provisions as the Temporary Benefit which may apply, if eligible, or COLAs in retirement.

    As noted in our publication, Key Facts, generally speaking, combined pension and social security benefits should replace approximately 75% of a 30-year employee’s final average pay. Additional personal savings through programs such as MO Deferred Comp can make up the difference. You can get a pension benefit estimate at any time by logging in to your Member Homepage. Click on Estimates, then on Estimate Your Retirement Benefit. You may wish to print several versions based on different dates or other factors. Or, contact a MOSERS benefit counselor to request estimates or to make an appointment for a face-to-face meeting. We encourage you to explore the section of our website called “What Plan Am I In?” to read more about the specific provisions in each plan. Once you meet the age and service requirements and retire under a MOSERS defined benefit plan, you are guaranteed a lifetime pension benefit. When you are Ready to Retire, we are here to help.


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    Pension Funding

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    If the MOSERS retirement fund is only 69.6% funded currently and that figure does not go up or only goes up a little by the time I am eligible to retire in 5 years then does that mean I will only get
    69.6 % of what I am supposed to get on my monthly pension?
    No. MOSERS pays 100% of the promised benefits due to members. The funded status (technically the unfunded actuarial accrued liability or UAAL) of the retirement system is separate from the formula that is used to calculate your MOSERS retirement benefit. We are not a “pay-as-you-go” system, rather we are pre-funded through contributions from the state, contributions from members who were first employed on or after January 1, 2011, and from investment earnings. The funded status refers to the value of assets we have currently relative to all present and future liabilities.

    MOSERS provides a defined-benefit pension. That means the benefit is defined by law and based on a formula as shown here:

    Final Average Pay (FAP) x Credited Service x Multiplier = Monthly Base Benefit

    The multiplier is determined by your plan (1.6% for MSEP; 1.7% for MSEP 2000/MSEP 2011). We encourage you to explore the section of our website called “What Plan Am I In?” to read more about the specific provisions in each plan.

    We have answered many Rumor Central questions on system funding recently that you may also find helpful.

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    Change to Rule of 90?

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    I have heard from several people including some in a supervisor position that with the change from 10 year vesting to a 5 year vesting period that we will also be returning to 80 and out as opposed to 90 and out, is this true?
    No. Other than the vesting period changing from 10 years to 5 years, the provisions of SB 62 have NO impact on members of MSEP 2011 who work in a MOSERS benefit-eligible position until they reach normal retirement eligibility.

    Members of MSEP 2011 will become eligible for normal retirement when they are age 67 and have 5 years of service OR under the “Rule of 90” (“90 & Out”) which is when they are at least age 55 and their age and service equal 90 when they terminate/leave state employment.

    It is important to note that the 5-year vesting for MSEP 2011 members will go into effect on 1/1/2018. MSEP 2011 members must be actively employed on or after 1/1/2018 to be covered by this change. For more information on vesting, see The Change from 10 to 5-Year Vesting for MSEP 2011 Members.



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    Sick Leave & Retirement

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    Is there any discussion about allowing current employees to use sick leave hrs as time worked in order to retire earlier, rather than counting them at retirement for yrs of service? If so what type of time frame for implementation is being looked at.
    No, not that we are aware of. Currently, you will get one month of credited service for each 168 hours of unused sick leave you have at retirement. While this will increase the amount of your benefit, unused sick leave cannot count toward eligibility for retirement. That is, the months of unused sick leave will not make you eligible for retirement sooner, but will increase the amount of your payment.

    Any change to this, or any other state employee pension provision, requires passage of legislation by the Missouri General Assembly and approval by the Governor. Pre-filing of bills begins on December 1, 2017 and the 2018 legislative session begins on January 3, 2018. We do not know what might happen with individual bills during the legislative session but we will monitor all legislation impacting MOSERS and inform our members of any changes that become law.

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    Buyout Program

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    So why is MOSERS trying to buy former employee's retirements from them? I know it to be true, one such employee I worked with now works with my spouse and showed him.
    Senate Bill 62, passed during the 2017 regular legislative session, authorizes the MOSERS Board of Trustees to establish a voluntary pension buyout program. This program allows certain former state employees who are vested for a pension to cash out their future monthly retirement benefit in exchange for a one-time lump-sum payment now. The Buyout Program is NOT available to current state employees or members who are already retired.

    The Buyout Program is completely voluntary and we encourage each eligible former state employee to discuss their individual situation with a financial advisor before making a decision.

    We provided eligible former state employees with letters and a newsletter in September that outlined their options so that they may make an educated decision. If they do not elect the buyout, we will contact them prior to their retirement eligibility.

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    Survivor Benefits

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    If I die before I retire does my wife automatically receive the benefit when she retires?
    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. Survivor benefit payments can begin as early as the month following your death provided that MOSERS receives and processes the survivor application and all necessary documentation, such as a death certificate*.

    The monthly benefit for your spouse will be based on the benefit you have accrued as of your date of death and calculated according to the Joint & 100% Survivor Option. The survivor benefit will be paid monthly for the remainder of your spouse's lifetime.

    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.

    Otherwise, 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.

    *Exception: The “immediate” survivor benefit provision is not available for future terminated-vested members of MSEP 2011 who will be hired after January 1, 2018. This was a change made in SB62 during the 2017 legislative session as a cost offset for the reduction in the vesting requirement from 10 years to 5 years for members of MSEP 2011. Eligible survivors of such members will begin receiving benefits when the deceased member would have attained normal retirement age. 

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    Travel Assistance Benefit

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    I would like to know if the Travel Ins. United Healthcare Global is still in effect? I am going to be traveling outside the US & need to know if I become ill or injured will the Ins. cover me?
    Yes, members and retirees who have MOSERS basic life insurance* are eligible for travel assistance when traveling at least 100 miles from home or in a foreign country.  Family members, including a spouse and children through age 25 are also covered. Medical assistance is one of the services they provide, including locating medical care, 24 hour access to nurses by phone, and emergency transportation services. All you need to do is print the wallet card with the worldwide phone number and bring it with you.

    The travel assistance brochure on our website also has information in case you need information before your trip, such as passport and visa information, currency exchange, and inoculation requirements.

    *MOSERS' life insurance is not available to employees of the Department of Conservation or state regional colleges/universities except for Lincoln University and State Technical College of Missouri.
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    Optional Life Insurance Premiums

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    When I retire from Missouri state employment, how much will my Optional Life Insurance premium increase? I have heard that it is expensive to keep after retirement because the rates increase. For example, if I increase my Optional Life Insurance to $30,000.00 this year with a $57.00 per month premium, how much will the cost per month increase?
    I plan on retiring at age 67. I am 65 years old now. I think the Optional Life Insurance rates will increase as one ages? Is this correct? And, by how much will the rates increase?

    Your premium for optional life insurance coverage through MOSERS* depends on your age (see table below) and the amount of coverage you have selected. Effective January 1, 2018, the monthly rate for a person age 65-69, will be $1.90 per $1,000 of coverage. For example, to have $30,000 in coverage: $1.90 x 30 = $57.00 monthly premium. At age 70 your premium will increase. (The rates for 2018 have been reduced. In 2017, it was $1.94 per $1,000 for ages 65-69.)


    MOSERS Optional Life Insurance Rates effective January 1, 2018.
    Age
    Monthly Premium per $1,000 of Coverage
    Under 35
    0.08
    35-39
    0.10
    40-44
    0.16
    45-49
    0.24
    50-54
    0.43
    55-59
    0.76
    60-64
    1.18
    65-69
    1.90
    70 & Over
    3.33
    The month of October is the Annual Optional Life Insurance Review period for active employees who have optional life insurance through MOSERS. October is your window of opportunity to evaluate your optional life insurance coverage and decide if you would like to increase it (within the established guidelines) without proving insurability.

    When you retire within 60 days of leaving state employment, you may elect to continue purchasing any amount of coverage from $1,000 up to a maximum of $60,000 (in increments of $500). However, the amount of coverage you carry into retirement cannot exceed the amount you carried while actively employed. You have 60 days from the end of the month in which you leave state employment to make an election to convert the remaining optional life insurance to an individual policy through Standard Insurance Company if you meet eligibility requirements.

    You may reduce your optional life coverage amount after retirement; however, you may not increase your coverage amount after retirement. To calculate your monthly and annual premiums, there is a convenient Optional Life Insurance calculator on MOSERS’ website. Click on Members, then Calculators. (Note: It still uses rates for 2017 since the reduced rates will not go into effect until January 1, 2018.)

    If you terminated optional life insurance coverage through MOSERS at retirement (or did not have any), it cannot be reinstated or added after retirement. Please see the Life Insurance Handbook for more information.

    *MOSERS' life insurance is not available to employees of the Department of Conservation or state regional colleges/universities except for Lincoln University and State Technical College of Missouri.

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    Chairwoman's Message to Members

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    The Springfield News-Leader reported on Sept. 13: "Lawmakers were jolted Wednesday morning when Missouri Treasurer Eric Schmitt told them that a large state pension plan has continued to weaken financially.
    "Ten years ago, the Missouri State Employees' Retirement System (MOSERS) reported that it had enough money to cover about 79 percent of the future benefits it has promised to pay. Schmitt and others consider 80 percent to be a sign of a stable pension, though 100 percent funded is obviously an even better place to be.
    "As of July 2016, MOSERS had dropped to about 69.6 percent funded. And over the last fiscal year, the news has worsened."
    So, given all these negative stories coming out in the media, what can you do to reassure us that the MOSERS pension fund will be able to fund all retirees at 100% well into the future? Thank you.
    We appreciate your attentiveness to the news and your interest in this story.

    Last week, we posted a message on our website from the Chairwoman of the MOSERS Board of Trustees. You can find that at this link:

    https://www.mosers.org/MOSERS-News-Archive/2017/Chairwomans-Message.aspx

    Also, copied below is the text of her message.

    Dear Members:

    As Chairwoman of the MOSERS Board of Trustees and a member of the system, I want to let our members know about recent board activity that will ensure the system remains on a strong financial footing. In light of recent headlines in articles that reference MOSERS, I want to reassure you that your MOSERS benefit is secure.

    Beginning in FY17, the Board adopted a funding policy to gradually lower MOSERS’ investment return assumption to more accurately reflect capital market expectations and to confirm its commitment to sound financial practices. While this movement in assumptions will result in higher annual employer contribution requirements in the short-term, it is the board’s expectation that these changes will strengthen MOSERS’ financial position and will ultimately enhance the retirement security of our members.

    As outlined in the chart below, MOSERS has a long-term plan in place to achieve a 100 percent funded ratio (assets to cover liabilities). This long-term plan is much like a home mortgage that requires a commitment to achieve a fully funded plan (or a paid off house). As long as there is a commitment to make the required mortgage payments, the house mortgage is ultimately paid in full. In Missouri, the Governor and the legislature have demonstrated a commitment to paying the full amount needed each year to pay promised benefits to retirees. The commitment from the state has been consistent since MOSERS’ inception -- and was evident this year as the amount needed for Fiscal Year 2018 was fully funded.




    MOSERS currently has $8 billion in assets with which to pay benefits. These assets work to keep your benefit secure. State employee pensions are an obligation of the state and MOSERS is well-positioned to continue paying the hard-earned retirement benefits of our members.

    Whether a past or current state employee, I wish to express my appreciation to you, our members, for your dedication to this great state and the citizens of Missouri. If you ever have any questions, please contact us at MOSERS, PO Box 209, Jefferson City, Missouri 65102, call us at (800) 827-1063, or visit our website at www.mosers.org

    Sincerely,

    Shannon Owens
    Chairwoman

    You can find more information in our Comprehensive Annual Financial Report which is posted to our public website. All members will receive a summary annual financial report (either by mail or email) as part of their winter newsletter.
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    Converting Life Insurance at Retirement

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    Upon retirement, are you allowed to convert the state maintained life insurance and/or optional life?
    Yes, as long as you had basic life insurance coverage as an active employee and did not terminate coverage at retirement. If you retire within 60 days of leaving state employment, the state will continue to pay for $5,000 of basic life insurance* coverage for your lifetime. You have 60 days from the date of retirement to make an election to port or convert the remaining basic life insurance to an individual policy through Standard Insurance Company if you meet eligibility requirements.

    Additionally, at retirement, you may elect to continue purchasing any amount of MOSERS optional life insurance coverage from $1,000 up to a maximum of $60,000 (in increments of $500). However, the amount of coverage you carry into retirement cannot exceed the amount you carried while actively employed. You have 60 days from the end of the month in which you leave state employment to make an election to convert the remaining optional life insurance to an individual policy through Standard Insurance Company if you meet eligibility requirements.

    Also, if you retire under the “Rule of 80” (MSEP 2000), or “Rule of 90” (MSEP 2011), you may retain all of your optional life insurance coverage until age 62. At age 62, your coverage will automatically reduce to a maximum of $60,000.

    If you terminated optional life insurance coverage through MOSERS at retirement (or did not have any), it cannot be reinstated or added after retirement. Please see the Life Insurance Handbook for more information.

    *MOSERS' life insurance is not available to employees of the Department of Conservation or state regional colleges/universities except for Lincoln University and State Technical College of Missouri.

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    System Funding

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    We have received some questions about MOSERS' funding related to the Buyout Program: 
    I just read an article in the St Joseph News Press that states the Missouri pension system " is struggling " It then talks of the pension buyout program. Financially is the system struggling?
    I saw in the editorials from the Kansas City and St Louis newspaper that MOSERS is funded only at 69%. What does this mean for the long term future of MOSERS
     As of June 30, 2016 (the close of the most recent fiscal year), MOSERS is 69.6% funded. That means that we have 69.6% of assets necessary to pay all accrued liability over the long term. Because we operate on a very long-term horizon (already analyzing and anticipating funding needs 30-50 years into the future). We will send a summary annual financial report for fiscal year 2017 to all members in December.

    The MOSERS board has taken several actions to keep the retirement system solid and secure into the future. The board approved a proposal to reduce the system’s long-term liability by offering a voluntary lump-sum payment (rather than a monthly pension) to former state employees who will be eligible for a pension benefit at some point in the future. This is the Buyout Program the articles are referring to.

    Also, unlike in other states, the Missouri General Assembly has consistently appropriated the full employer contribution to MOSERS as recommended by the plan’s actuary. The Governor signed House Bill 5 on June 30, 2017, which resulted in full funding of MOSERS at the contribution rate as certified by MOSERS Board of Trustees in September 2016.

    You can find more information on Rumor Central about other related Board decisions and MOSERS' appropriation as well as additional details regarding MOSERS' funded status.


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    When Do I Receive My COLA?

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    I was hired with the state in 1994 and currently fall under the MSEP. Will I receive my COLA each year on my anniversary date, or does this only apply if you do backdrop beyond your retirement?
     Yes, MOSERS calculates a cost-of-living adjustment each year for all general state employees. As a retired general state employee, you will receive a COLA each year on the anniversary of your retirement date, unless one of these exceptions applies to you:

    Retirees who converted from MSEP to MSEP 2000 during the conversion window in 2000 have COLAs payable each year in July.
    •         Retirees who elected a BackDROP* will have COLAs payable each year on the anniversary of their BackDROP date rather than on the anniversary of their retirement date.
    •         MSEP 2011 members hired after January 1, 2018 who leave state employment prior to retirement eligibility, will receive their first COLA in retirement on the second anniversary of their retirement.

    For more information, including how the COLA rate is calculated, and a helpful video, please see the COLA page on our website. This BackDROP graphic also illustrates the difference between BackDROP date and retirement date.

    *BackDROP is available only to general state employees who are members of MSEP & MSEP 2000 and who work at least two years beyond normal retirement eligibility. 

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    Buyout Program

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    Concerned about the retirement buyout coming up. I don't understand how its figured out, will they take in consideration how many years you will be actually in retirement, help with taxes if you cash out, financial advice. Also, when can we expect more of the information to come out. Thank you!
    We are currently finalizing the list of members who are eligible for the Buyout Program and verifying all their information. We cannot yet answer any questions about eligibility or individual lump-sum amounts until we have mailed your letter. We will send letters about the Buyout Program to all eligible members by the end of September. This voluntary program will be offered to eligible former state employees who are vested in a MOSERS retirement plan.

    Not Eligible: You are not eligible for the buyout if you are actively employed in a MOSERS or MPERS-covered position, already retired and receiving a MOSERS benefit, have applied for early retirement or will reach normal retirement eligibility with MOSERS prior to 12/1/2017. (See our Rumor Central post “Lump-Sum Payout?” for other reasons vested former state employees may not be eligible.)

    If you are eligible, we will send you a personalized letter which will contain both the estimate of your one-time lump-sum amount (if you choose to elect the buyout) and also your future estimated normal retirement annuity/monthly benefit amount. If you do not choose to participate in the Buyout Program, we will contact you prior to retirement eligibility and provide information about the retirement application process.

    The amount of the lump-sum payment will be 60% of the present value of your future normal retirement annuity. In order to estimate how long a member might live in retirement, we will use unisex mortality tables. The discount rate used to calculate the present value of your future normal retirement annuity is 7.50% (this is the amount we assume we will earn each year through our investments). All lump-sum payment amounts will be calculated as of October 1, 2017.

    With regard to taxes,

    If eligible, you should read the Special Tax Notice and consider discussing it with a qualified tax advisor to ensure you fully understand the tax implications of electing the buyout payment.
    If eligible, you may take the lump-sum buyout payment as a cash payment, as a rollover to a qualified retirement plan, or as a combination cash and rollover distribution.
    Any distribution not directly rolled over to a qualified retirement plan will be reported as taxable income in the year of payment. MOSERS is required to withhold 20% of the taxable portion of a cash distribution for federal income tax. If you are younger than age 59 1/2, an additional 10% early distribution federal tax penalty may apply.

    To give members a heads-up so they will be watching for their letter, we will send a newsletter (by email and to home mailing addresses that we have on file) to eligible members with more information about the Buyout Program.

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    Changes to Rule of 90?

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     I WOULD LIKE TO KNOW IF THE "90 & OUT RULE" STILL APPLIES OR DID THE CHANGES GO BACK TO "80 & OUT"?
    There are no changes to the Rule of 90/“90 & Out” for members of the MSEP 2011.

    Members of MSEP 2011 will become eligible for normal retirement when they are age 67 and have 5 years of service OR under the “Rule of 90” which is when they are at least age 55 and their age and service equal 90 when they terminate/leave state employment.

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    Lump-Sum Payout?

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    I have heard rumors of letters going out in September offering current retires a lump sum pay out on their retirement. Is this true?
    No. Members who are already retired are not eligible for the Buyout Program. The Buyout Program is voluntary and allows vested former state employees (who meet all eligibility requirements) to elect to cash out their future monthly retirement benefit in exchange for a lump-sum payment now. We will mail a letter and application to eligible members during the month of September.

    You are NOT eligible to participate in the Buyout Program if:

    You have been employed by the State of Missouri at any time after June 30, 2017 in any position covered by MOSERS or MPERS.
    You would have reached normal retirement age and are eligible to receive a normal retirement annuity from MOSERS before December 1, 2017 (this includes all current retirees).
    You have applied for or you are receiving early retirement benefits from MOSERS.
    You are a member of the Missouri State Employee Plan 2011 and are eligible for a refund of your employee contributions under section 104.1091, RSMo, and the amount of the refund would be greater than the amount of the buyout payment otherwise payable under the Buyout Program.
    You left state employment between October 1, 1984 and September 1, 2002 and are eligible for a cash out of your future retirement annuity under section 104.335.6, RSMo.
    You are subject to a Division of Benefit Order ("DBO") issued by a court under sections 104.312 or 104.1051, RSMo, during a divorce proceeding.

    The Buyout Program was authorized under Senate Bill 62, which was enacted in 2017.

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    MSEP 2011 Retirement Eligiblity

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    I have followed the MSEP 2011 and SB 62 discussion on Rumor Central with interest, even though I fall under MSEP 2000. One of the things some of my colleagues that have been hired since 1/1/11 have been discussing is the minimum retirement age. If I read your posts correctly, the only time a person can receive retirement benefits under MSEP 2011 is when they either reach age 67 or when they hit 90 and out after age 55. To reach 90 and out, as I understand it, a person 55 would need 35 years of service, correct? In other words, someone age 55 would have to start work at age 20 and stay in state employment for the next 35 years to be eligible. Otherwise anyone with less than that amount of service would have to wait until they're 67 or their service plus age is 90. It appears there's no "middle ground" under this provision. Am I missing something?
    The criteria for normal retirement eligibility for MSEP 2011 members is:

    • Age 67 with 10* yrs. of service or
    • “Rule of 90” - at least age 55 with age and service equaling 90 or more. (Your example is correct: 55 + 35 = 90)

    A member of  MSEP 2011 could elect early retirement, which is a reduced benefit amount.

    Age 62 at the time of termination with 10* yrs. of service

    (The base benefit will be reduced 1/2 of 1% (.005) for each month your age is younger than normal retirement/67.)

    *Effective January 1, 2018, the vesting requirement will reduce from 10 years to 5 years of service for MSEP 2011 members actively employed ON or after January 1, 2018. 

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    SB 62 & Changes to MSEP 2011

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    I was wondering if we are going to be switching back to 80 and out as well as back drop? I started about 3 years ago and do not have these benefits but was told we are to receive them again.
    Other than to reduce the vesting period from 10 years to 5 years, the provisions of SB 62 have NO impact on members of MSEP 2011 who work in a MOSERS benefit-eligible position until they reach normal retirement eligibility.

    Members of MSEP 2011 will become eligible for normal retirement when they are age 67 and have 5 years of service OR under the “Rule of 90” which is when they are at least age 55 and their age and service equal 90 when they terminate/leave state employment.

    BackDROP is available only to general state employees who are members of MSEP & MSEP 2000 and who work at least two years beyond normal retirement eligibility.

    For more information on vesting, see The Change from 10 to 5-Year Vesting for MSEP 2011 Members.

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    MSEP COLA

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    Did the governor change the 4% cola on the old plan (MSEP)? 
    No. The provisions in SB 62 have NO impact on members of MSEP or MSEP 2000. What you may be referring to is one of the “offsets” in SB 62 which contribute to making the MSEP 2011 vesting reduction (from 10 years to 5 years) cost neutral for the state. These offsets apply only to new terminated-vested members of MSEP 2011, effective January 1, 2018—one of these provisions is that the first cost-of-living adjustment (COLA) for such members will be applied on the second anniversary of their retirement (rather than the first anniversary).

    The offsets have no impact on current employees, retirees, or members of MSEP 2011 who retire directly from active state employment.

    To review information about COLAs for other members, the COLA calculation depends on which plan you are in. If you retired under MSEP and were hired before August 28, 1997 and were vested in MSEP, you will receive a minimum 4% COLA until your accumulated COLAs are equal to 65% of your initial base benefit. This is called your COLA cap. Upon reaching the cap, your COLA will be calculated like other retirees and will range from 0% to 5% each year depending on the increase in the Consumer Price Index.

    The 2017 COLA rate for MSEP retirees who have reached their COLA cap, MSEP members who were first hired on or after August 28th, 1997, and members retired under MSEP 2000 is 1.010%.

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    MSEP 2011 Members and SB 62

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    I was hired July 2013, I will now be vested in 5 years instead of 10. My question is will I still have to contribute 4 percent to my retirement and will I still be 90 and out. thank you.
    Yes, you will still have to contribute 4% of pay to your future retirement benefit. It is important to note that the 5-year vesting for MSEP 2011 members will go into effect on 1/1/2018. MSEP 2011 members must be actively employed on or after 1/1/2018 to be covered by this change.

    Members of MSEP 2011 will become eligible for normal retirement when they are age 67 and have 5 years of service OR under the “Rule of 90” which is when they are at least age 55 and their age and service equal 90 when they terminate/leave state employment.

    For more information on vesting, see The Change from 10 to 5-Year Vesting for MSEP 2011 Members.

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    Senate Bill 62 and Sick Leave

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    We recently received several similar questions about SB 62:
    1. How will SB62 change the way accumulated sick leave is calculated when a person chooses to retire?
     2. I am receiving conflicting information on the recently passed SB 62 and would like clarification.  I am currently employed by the state (hired in 1993) and I intend to participate in MSEP upon retirement.  With the recent passage of SB 62, will I receive service credit for unused sick leave, and, will I receive a COLA on my first anniversary?  It is my understanding that SB 62 provision do not apply to MSEP members but I want to be certain.  Thank you for your clarification.
     3. An article in the St. Louis Post Dispatch says "MOSERS is placing new restrictions on using accumulated unused sick leave in calculating a pension payout." What is the change and when will the new calculations be adjusted?
    4. I have a question regarding the new pension law that was just passed, Senate Bill 62. According to the St. Louis Post Dispatch article, there are new restrictions on accumulated sick leave. Exactly what are these restrictions? Does this mean the blocks of sick leave I have accumulated will no longer count toward my retirement formula? The article leaves more questions than answers.
    5. What did the Governor just sign re: retirement and unused sick leave and cost of living?

    The provisions in SB 62 have NO impact on members of MSEP or MSEP 2000. Additionally, other than to reduce the vesting period from 10 years to 5 years, the provisions of SB 62 have NO impact on members of MSEP 2011 who work in a MOSERS benefit-eligible position until they reach normal retirement eligibility.

    Effective January 1, 2018, only members who meet both of the conditions below will NOT have service credit granted for unused sick leave:

    • First hired in a benefit-eligible position on or after January 1, 2011 (member of MSEP 2011) and
    • Left state employment with a vested retirement benefit but prior to reaching retirement eligibility.

    We refer to these members as “terminated-vested” members of MSEP 2011. (Similarly, terminated-vested members of MSEP do not receive service credit for unused sick leave if they left state employment prior to retirement eligibility, either normal or early.)

    In contrast, all members of MSEP, MSEP 2000, or MSEP 2011 who retire directly from active employment receive service credit for unused sick leave. Every block of 168 hours of unused sick leave equals one month of service credit. Unused sick leave is used in calculating the amount of the benefit but does not factor into reaching retirement eligibility.

    Note: Other “offsets” in SB 62 which contribute to making the vesting reduction cost neutral include the following for terminated-vested members of MSEP 2011 only, effective January 1, 2018:

    • Cost-of-living adjustments (COLAs) will be applied on the second anniversary of retirement (rather than the first anniversary).
    • If such a member dies prior to retirement eligibility, survivor benefits are not payable until the member would have reached their retirement eligibility age (rather than right away).

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    Is SB 62 Retroactive?

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    It is my understanding that Governor Greitens signed SB62. Is this bill retroactive or does it start Jan 1, 2018 and go forward? Also, does this bill make all DOC employees 80 and out?
    Effective January 1, 2018, the vesting requirement for current and future active members of MSEP 2011 (those member first employed in a MOSERS or MPERS benefit-eligible position on or after January 1, 2011) will be 5 years. It is not retroactive.

    Vesting is one part of retirement eligibility. The other part is age. Normal retirement eligibility age requirements are:


    MSEP                                                 MSEP 2000                           MSEP 2011
    Age 65 with 5 yrs. of service
    Age 60 with 15 yrs. of service
    “Rule of 80” - at least age 48 with age and service equaling 80 or more

    Age 62 with 5 yrs. of service
    “Rule of 80” - at least age 48 with age and service equaling 80 or more

    Age 67 with 5 yrs. of service (effective 1/1/18)
    “Rule of 90” - at least age 55 with age and service equaling 90 or more at time of termination


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    Sick Leave Applied to BackDROP?

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    I understand that unused sick leave may be applied towards retirement for the number of years/months worked. Can that sick leave be applied towards Back Drop? For example, if a person has six months of sick leave, can that individual only work 18 months and then apply the six months of sick leave to obtain a two year Back Drop?
    No. You will get one month of credited service for each 168 hours of unused sick leave you have at retirement. While this will increase the amount of your benefit, unused sick leave cannot count toward eligibility for retirement or as part of the BackDROP period. That is, the months of unused sick leave will not make you eligible for retirement (or BackDROP) sooner, but will increase the amount of your payment.

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    Maximum BackDROP

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    I would like to know if one elects the 5 year backdrop are they able to work past the 5th year (and still get the backdrop) or is it mandatory to retire that year?
    No, it is not mandatory to retire in the 5th year of your BackDROP. Your BackDROP* payment is based on the time worked after your normal retirement date. You may work more than five years beyond normal retirement eligibility, but the maximum BackDROP period is limited to five years prior to your actual retirement date.

    Generally speaking, if you elect a longer BackDROP period, your lump sum will be more, but your monthly payment will be less. You are not required to take BackDROP, regardless of how long you work beyond normal retirement eligibility, and you don’t have to notify MOSERS of any decisions about BackDROP until you retire.

    This graphic may help explain the big picture, or you can read the BackDROP brochure on our website for more information.

    *BackDROP is an option that allows eligible members to receive a lump-sum payment in addition to an ongoing monthly payment. It is available only to general state employees who are members of MSEP & MSEP 2000 and who work at least two years beyond normal retirement eligibility.

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    MOSERS' Funding Rate

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    I retired in 2010 and, at the time, recall hearing that MOSERS was 82% funded. However, the latest report is that MOSERS is 69'6% funded. That seems an alarming decrease during a time that both stocks and bonds have generally done quite well. What is the cause of the decline?
    The MOSERS Board of Trustees and the Missouri General Assembly have established a long-term plan relative to the actuarial funding and status of the system.  The MOSERS’ Board has, and continues to, implement a multi-year policy that reduces the assumption used by the system relative to investment returns, to address future capital market expectations.  In 2010, the Missouri General Assembly passed pension reform that established a new benefit tier within MOSERS (MSEP 2011).  This new tier is annually reducing the costs of the plan and will, over time, work to allow MOSERS to be a very viable, low-cost plan for all stakeholders.

    While short-term experience may result in seemingly negative outcomes, such as a reduced funded status of 69.6%, the long-term strategies, in place, are solid and the objective data supports that conclusion.

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    Changes to BackDROP?

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    I have been told there will be major changes to BACKDROP in the near future. I have 2 1/2 years of backdrop completed, and have planned on completing 5 years.
    What, if any, changes are proposed and how will it effect me at this number of years?
    The BackDROP is not changing. Any changes to BackDROP, or any retirement provision, must go through the legislative process and be signed into law by the Governor. We have posted a legislative summary of retirement-related bills that passed this session and are awaiting action by the Governor.

    BackDROP is an option available at retirement to general state employees in the MSEP and the MSEP 2000 only. If you work at least two years beyond your eligibility for normal retirement, this option provides a way for you to receive a one-time lump-sum payment at retirement in addition to your ongoing monthly benefit. BackDROP is not available to employees hired for the first time in a MOSERS benefit-eligible position on or after January 1, 2011.

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    Pension Underfunding

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    In light of Illinois' issue with their underfunded pension, how much is Missouri's pension underfunded?
    As of June 30, 2016 (the close of the most recent fiscal year), MOSERS is 69.6% funded. That means that we have 69.6% of assets necessary to pay all accrued liability over the long term. Because we operate on a very long-term horizon (already analyzing and anticipating funding needs 30-50 years into the future), our funded status is expected to go down somewhat over the next few years and then begin to go back up. We will send a summary annual financial report for fiscal year 2017 to all members in December.

    The MOSERS board has taken several actions to keep the retirement system solid and secure into the future. The board approved a proposal to reduce the system’s long-term liability by offering a voluntary lump-sum payment (rather than a monthly pension) to former state employees who will be eligible for a pension benefit at some point in the future. This is contingent upon the Governor’s action on SB 62. The Governor has until July 14, 2017 to take action on the bill (sign it, veto it, or allow it to become law without his signature). If SB 62 is approved by the Governor, we will contact eligible members.

    Also, unlike in Illinois, the Missouri General Assembly has consistently appropriated the full employer contribution to MOSERS as recommended by the plan’s actuary. The FY18 employer contribution contained in HB 5 was no exception and was Truly Agreed to and Finally Passed and sent to Governor Greitens on Thursday May 4th. The Governor has until July 1 to take action on HB 5, which includes MOSERS’ appropriation. You can find more information on Rumor Central about other related Board decisions and MOSERS' appropriation as well as additional details regarding MOSERS' funded status.

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    Vesting Change?

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    Heard the pension will be changing back to being vested at 5 years instead of 10 years. Is this true?
    Yes, if approved by the Governor, vesting for actively employed general state employees in the MSEP 2011 will be 5 years, effective January 1, 2018.

    The Governor has until July 14 to take action on the bill (sign it, veto it, or allow it to become law without his signature).

    For more information, please see our Legislative Update and our response to Rumor Central questions on vesting.

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    Update on SB 62

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    Can you give me an update on the possible lump sum payment to former state employees? I believe the state legislature passed the bill and now it's up to Mosers. Any idea when a decision will be reached? I'm really interested in learning details of the proposal.
    The Governor has until July 14th  to take action on the bill (sign it, veto it, or allow it to become law without his signature).

    The legislation gives the MOSERS Board the authority to establish and offer a lump-sum payment program to terminated-vested members in lieu of retirement annuity benefits otherwise payable – but it does NOT require the board to do so. We do not know if or when the board will choose to establish such a program. If you would like additional information, please see the legislative update on our website summarizing SB 62.

    We will contact affected members if the lump-sum program is established. Please ensure that both your email and mailing address are up to date with MOSERS so that you will receive important information from us if you are affected by any new legislation.

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    Benefit Payment Options

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    Can you please define "lifetime annuity" and "180 garanteed payments?" And can you tell me how they compare?
    Life Income Annuity and Life Income with Guaranteed Payments are two types of retirement benefit payment options. Depending on your plan membership and marital status, you may have other options, too.

    Part of step 2 of the retirement process, completing your Retirement Election Form, includes choosing your benefit payment option. This election determines if a benefit will potentially be paid to anyone else after your death. Regardless of the payment option you elect, once you complete the retirement process with MOSERS, you will receive a benefit payment each month for your lifetime.

    If you choose Life Income Annuity, your retirement benefit will not be reduced but no survivor benefits will be paid to anyone after your death (other than the payment that is sent at the end of the month in which you die). If you are married and choose this option, your spouse must consent and waive their right to a survivor benefit by completing a form that MOSERS will send to you.

    If you choose Life Income with Guaranteed Payments, your retirement benefit will be reduced for your lifetime. The guaranteed period starts on the effective date of your retirement (not at the time of your death) and extends for the term selected: 60 Guaranteed Payments (available in the MSEP), 120 Guaranteed Payments (available in MSEP and MSEP 2000), or 180 Guaranteed Payments (available in the MSEP 2000). At minimum, the guaranteed number of payments you elected will be paid by MOSERS either to you, to your beneficiary, or as a combination with some paid to you and the remainder paid to your beneficiary. If you have received all payments in the guaranteed period, you will continue to receive your monthly benefit for your lifetime but your beneficiary(ies) will receive only the payment that is sent at the end of the month in which you die. Life Income with Guaranteed Payments is an option sometimes elected by members who are not married, have no minor children, and think they may not live long in retirement. It allows them to have any remaining payments in the guaranteed payment period go to another person, an organization, or a trust. You may name more than one beneficiary with this benefit payment option.

    It may be helpful to generate a benefit estimate on our website or request one from a benefit counselor to compare your options. We also have a Comparison Calculator online where you can input different benefit payment options and compare them over time.

    Benefit payment options for general state employees in the MSEP and MSEP 2000 are explained in more detail during our PreRetirement Seminars and on pages 18-21 of the PreRetirement Seminar reference book.

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    Post-Dispatch Article

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    We recently received two Rumor Central questions regarding the May 29th Post-Dispatch article:
    I was wondering if you could explain the May 29th, 2017, article in the St. Louis Post-Dispatch. It stated that should Gov. Greiten sign into law legislation that was recently passed the following would occur: MOSERS would be placing "new restrictions on using accumulated unused sick leave in calculating a pension payout." I have quite a bit of unused sick leave. Can you tell me how this would impact me and others in my situation? The article stated: "If signed into law, the changes outlined in the legislation will go into effect on January 1, 2018." If this change would have a tremendous impact, it sounds as though some of us might want to think about retiring before January 1st.
    In the event that the Governor signs SB 62 what effect does the following statement have: MOSERS is placing new restrictions on using accumulated unused sick leave in calculating a pension payout. This was included in the story in the St.Louis Post Dispatch. I have not seen it anywhere else.
    The provisions in SB 62 have NO impact on members of MSEP or MSEP 2000. Additionally, other than to reduce the vesting period from 10 years to 5 years, the provisions of SB 62 have NO impact on members of MSEP 2011 who work in a MOSERS benefit-eligible position until they reach normal retirement eligibility.

    Effective January 1, 2018, only members who meet both of the conditions below will NOT have service credit granted for unused sick leave:
    First hired in a benefit-eligible position on or after January 1, 2011 (member of MSEP 2011) and
    Left state employment with a vested retirement benefit but prior to reaching retirement eligibility.

    We refer to these members as “terminated-vested” members of MSEP 2011. (Similarly, terminated-vested members of MSEP do not receive service credit for unused sick leave if they left state employment prior to retirement eligibility, either normal or early.)

    In contrast, all members of MSEP, MSEP 2000, or MSEP 2011 who retire directly from active employment receive service credit for unused sick leave. Every block of 168 hours of unused sick leave equals one month of service credit. Unused sick leave is used in calculating the amount of the benefit but does not factor into reaching retirement eligibility.

    Note: Other “offsets” in SB 62 which contribute to making the vesting reduction cost neutral include the following for terminated-vested members of MSEP 2011 only, effective January 1, 2018:
    Cost-of-living adjustments (COLAs) will be applied on the second anniversary of retirement (rather than the first anniversary).
    If such a member dies prior to retirement eligibility, survivor benefits are not payable until the member would have reached their retirement eligibility age (rather than right away).


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    Legislation & MSEP 2000 Members

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    How does SB 62 affect MSEP 2000 employees?
    If approved by the Governor, SB 62 will only affect members of the MSEP 2000 who are or who become terminated-vested* within the window decided upon by the board.

    Below is a summary:

    •       The legislation gives the MOSERS Board the authority to establish and offer a buyout program to terminated vested members in lieu of retirement annuity benefits otherwise payable – but it does NOT require the board to do so.
    •       Members who make an election to accept such a buyout will forfeit their credited service and, if they return to state employment, will be considered a new employee.
    •       The authority for the board to establish such a program ends 5/31/2018.

    The vesting requirements for members of MSEP 2000 or MSEP will not be changed.

    MOSERS will provide more information via our website and social media when the Governor acts on this legislation. Please ensure that both your email and mailing address are up to date with MOSERS so that you will receive important information from us if you are affected by any new legislation.

    *A terminated-vested member is someone who has left state employment but has enough service to qualify for a pension benefit in the future once they also reach the age requirement for retirement.

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    SB 62 Provisions

    Posted on
    Will this below effect those that have been working for 4 yrs now under the 10 yr vested .. and were hired in with these benefits or will we get to keep these or is this for everyone straight across the board. see below :
    • They are not eligible to receive service credit for any unused sick leave.
    • If they die prior to normal retirement eligibility, benefits will not be payable to their survivor until the member would have become eligible for normal retirement.
    • They will not receive a cost-of-living adjustment until the 2nd anniversary of their retirement.
    The 3 offsets you listed that are contained in SB 62 affect only MSEP 2011 members who leave state employment after becoming vested (but prior to attaining retirement eligibility). If you continue in active employment in a benefit-eligible position until you meet the age and service requirements for retirement under the MSEP 2011, these provisions will still apply to you.  

    Eligibility for benefits for any MSEP 2011 member who has already or who will terminate employment before the effective date of the bill (January 1, 2018) is based on the laws in effect on that person’s termination date*

    The Governor has until July 14 to approve or veto legislation. MOSERS will provide more information via our website and social media when the Governor acts on this legislation. Please ensure that both your email and mailing address are up to date with MOSERS so that you will receive important information from us if you are affected by any new legislation.

    *Termination date is your last day of work in a MOSERS (or MPERS) benefit-eligible position, as reported by your employer.

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    Pension-Related Legislation

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     We recently received two Rumor Central questions about pension-related legislation: 
    Are you going to summarize the actual pension changes enacted by the legislature during the current session? And when will the summary be available?
    I heard that the retirement vesting time has changed for FTE MOSER-eligible employees from 10 years to 5 years, effective Jan. 1, 2018. Any truth to that?
    Yes, it is true that the legislature changed the vesting requirement for MSEP 2011 members, pending Governor Greitens’ approval. The Governor has until July 14 to approve or veto legislation. The Missouri House and Senate Truly Agreed and Finally Passed (TAFP) HCS SS SB 62 on May 11th. If signed by the Governor, the 10-year vesting requirement for MSEP 2011 members will be changed to 5 years. In order to do this, policy makers had to provide “offsets” so that the change would not increase costs for the state. To that end, the following offsets apply to new terminated-vested MSEP 2011 members*:
    •       They are not eligible to receive service credit for any unused sick leave.
    •       If they die prior to normal retirement eligibility, benefits will not be payable to their survivor until the member would have become eligible for normal retirement.
    •       They will not receive a cost-of-living adjustment until the 2nd anniversary of their retirement.

    The same bill also contains language authorizing a pension buyout to terminated-vested members. Below is a summary:

    •       The legislation gives the MOSERS Board the authority to establish and offer a buyout program to terminated vested members in lieu of retirement annuity benefits otherwise payable – but it does NOT require the board to do so.
    •       Members who make an election to accept such a buyout will forfeit their credited service and, if they return to state employment, will be considered a new employee.
    •       The authority for the board to establish such a program ends 5/31/2018.
    •       If the MOSERS Board establishes a buyout program, it is anticipated that we will send packets to eligible terminated-vested members in September 2017.

    MOSERS will provide more information via our website and social media when the Governor acts on this legislation. Please ensure that both your email and mailing address are up to date with MOSERS so that you will receive important information from us if you are affected by any new legislation.

    *A terminated-vested member is someone who has left state employment but has enough service to qualify for a pension benefit in the future once they also reach the age requirement for retirement. 

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    MOSERS 2018 Funding

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    We recently received two questions on this topic:
    Was MOSERS fully funded for 2018?

    Does the budget that the legislature passed and sent to the governor contain an appropriation for the full amount requested by MOSERS to fully fund the retirement system?
    Yes, the budget committee agreed to fully fund MOSERS’ budget request for FY18. The appropriations bill was Truly Agreed to and Finally Passed and sent to Governor Greitens on Thursday May 4th.

    For background information about our funding, see the Rumor Central posts Appropriations for Pension Funding  from February and FY18 Funding for MOSERS from March.

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    Proposed Legislation for MSEP 2011 Members

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    My question is in regard to SB 333 and HB 729. I am currently a member of MSEP 2011 and have 4 years and 8 months of service time. If these bills pass and are signed, will I become vested in 4 months or will I become vested after 5 more years of service? Thank you.
    As currently written, if House Bill 729 &/or Senate Bill 333* pass, the vesting period will be reduced from 10 to 5 years of service, effective January 1, 2018, for current and future active members of MSEP 2011 (those members first employed in a MOSERS or MPERS benefit-eligible position on or after January 1). So, in your particular case, if this legislation were to pass and you are still employed, you will become vested on January 1, 2018.

    Eligibility for benefits for any MSEP 2011 member who has already or who will terminate employment before the effective date of the bill (January 1, 2018) is based on the laws in effect on that person’s termination date**

    Please note that this is proposed legislation. It must be passed by the Missouri House and Senate and approved by the Governor. If it is passed, it could also be change during the process. We will monitor all legislation impacting MOSERS and inform our members of any changes that become law. The 2017 legislative session ends on May 12, 2017.

    *Language to reduce the MSEP 2011 vesting requirement is also contained in HCS SS SB 62, HCS SB 394, and SCS HCS HB 831.
    **Termination date is your last day of work in a MOSERS (or MPERS) benefit-eligible position, as reported by your employer.

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    Roth IRA & Deferred Comp

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    Are retired MO state employees who have an income from part or full time employment (other than through the State of MO) permitted to open a ROTH IRA through Deferred Compensation ?  If so, how would they go about opening a ROTH IRA and what would be the annual limit for a ROTH contribution? 
    No. Once you have left state employment, you can no longer make contributions to the MO Deferred Comp Plan. However, you can keep your money in deferred comp, even if you're retired or simply working outside state employment. If you leave your money in the plan, you must begin taking required minimum distributions (RMDs) in the year you turn 70 ½. By staying in the plan after you separate from service, you will enjoy:

    •        Penalty-free access to your 457 savings before age 59 ½
    •        Competitively priced, custom investment solutions
    •        Convenient online account access
    •        Dependable customer service

    Keep in mind, you may lose these privileges — specifically the penalty-free access to your assets — if you roll your deferred compensation plan balance to another account type after leaving state employment.

    If you have any additional questions, please feel free to contact MO Deferred Comp at 800-392-0925 or stop by our local office 3349 American Ave, Ste A, Jefferson City, MO 65109.

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    BackDROP & Monthly Pension Benefit

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    A question about the backdrop: does it in any way effect your pension? Is your pension reduced? Where does the backdrop money come from?
    Yes, if you elect the BackDROP* at retirement, it will likely affect the amount of your monthly pension benefit. With the BackDROP, your monthly benefit will be calculated using your final average pay and creditable service as of the BackDROP date that you choose, rather than as of your actual retirement date. This typically results in a lower monthly payment (compared to what it will be if you do not elect the BackDROP). However, as a tradeoff for a lower monthly payment, you also get a lump-sum payment. The BackDROP is simply a benefit payment option that is available to qualified members.

    For additional information, you can: View this BackDROP graphic, read the BackDROP brochure and a variety of Rumor Central questions on the topic, discuss your options with a MOSERS benefit counselor, and use our online Comparison Calculator to see which option might be most advantageous to you over the long-term. This short Comparison Calculator video provides an overview of how the calculator can be helpful in comparing various benefit payment options. MOSERS benefit counselors are available by phone at (800) 827-1063 or you may make an appointment to meet with a counselor in person M-F, 7:30 a.m. - 4:30 p.m., by selecting Option 1 from the main menu.

    Regarding your question of where the money comes from for the BackDROP, it all comes from the MOSERS trust fund. In its simplest terms, the BackDROP provides the option to “take more money now and less later” or  “take less money now and more later”. You can see an example of the calculations in the BackDROP brochure. According to our actuaries, it is cost-neutral to the system.

    *BackDROP is available only to general state employees who are members of MSEP & MSEP 2000 and who work at least two years beyond normal retirement eligibility.  

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