Appropriation for Pension Funding

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Is this the first time you have had to ask the legislature for money to fully fund the retiree pensions?
No. The legislature appropriates money every year as part of its normal process of running state government to pay for salaries and benefits of state employees. A “fully funded” or “100% funded pension system” means the plan has sufficient assets to provide for all benefits at a certain date. Said another way, “fully funded” means the plan has what it needs to pay all current and future pension benefits.

Each year, based on various facts and assumptions about the future (such as the number of active employees, their years of service & salary, the number eligible to retire, the number who have retired, life expectancy, inflation, etc.)  independent actuaries determine how much money is required to fund MOSERS.

Money to pay current and future MOSERS pension benefits comes from:
1.      Contributions from employees who are members of the MSEP 2011 or Judicial Plan 2011 (4% of pay),
2.      Earnings on investments of money in the MOSERS trust fund, and
3.      Contributions from employers (state agencies) as a percent of active employee payroll.

Considering all of the above factors, each September, members of the MOSERS Board of Trustees certify a contribution rate, as a percentage of state employee pay. This budget request makes its way through the state budget appropriations process meaning it must be approved by the Missouri House and Senate and the Governor. Currently, the legislature is working on the budget for Fiscal Year 2018 which begins July 1, 2017. Below are several important facts:

•        The MOSERS Board certified a contribution rate for FY18 of 19.45% of covered payroll which results in an increase of approximately $46 million in funding for MOSERS (compared to FY17). The Governor’s FY18 budget fully funds the MOSERS budget request. The budget summary said, Governor Greitens is “committed to maintaining the state’s benefit package for its hard-working public servants” and “[o]ther states across the country are jeopardizing state employee retirement benefits by not adequately funding their pension systems.”
•        The legislature has consistently appropriated the full amount needed to fund the system over the long-term, as determined by independent actuaries, which contributes to Missouri’s AAA credit rating.
•        State employee pensions represent approximately 1.45% of the total state budget. The cost, as a percentage of the total state budget, has remained level for decades.
•        The average pension for general state employees retired from MOSERS is approximately $15,000 per year.
•        Accrued pension benefits from MOSERS are protected by law and cannot be reduced or modified.
•        Any future changes to MOSERS pension plan provisions would require passage by the Missouri legislature and approval by the Governor.

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