Taxes on MOSERS Pension?

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Your RetireeNews, Fall Winter 2017 states if a retiree lives in Missouri, then Missouri state income tax may be due on the pension. Does this imply that if a retiree is a resident of another state (even one without a state income tax) that the Missouri pension is not taxed by the State of Missouri?
Each person’s situation may be different and we cannot advise you on your tax liability as it pertains to your MOSERS pension. We suggest you contact the Missouri Department of Revenue and/or a qualified tax advisor about your tax liability.

MOSERS withholds state taxes only for Missouri residents. If you aren’t a Missouri resident in retirement, contact the appropriate state and local tax authorities to determine the taxability of your MOSERS benefit there. We will mail 1099-R tax forms to all retirees by January 31, which you can read more about in the current Fall/Winter 2018 issue of RetireeNews.

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Retiree Payment Schedule

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After a person retires and receive their first retirement check, I am curious to know how will the be paid out? Will it be monthly, or bi-weekly?
Retirees are paid once a month, on the last working day of each month. If you enroll in direct deposit during the retirement process, your payment will be transferred electronically on that day. If you receive a paper check, it will be mailed on the last working day of the month. We encourage retirees to participate in direct deposit, since it is faster and more secure than a paper check.

You can view the payment schedule for the current year on our website, which we will be updating for 2019 soon.

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COLA This Year?

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Will there be any COLA this year?
Every year, we calculate and announce the retiree COLAs in mid-January. We won’t have data for the 2019 COLA until mid-January of 2019 because the information necessary to make that calculation is based on a comparison of changes from 2017 to 2018. The rate calculation is based on 80% of the percentage increase in the average CPI from one year to the next with a maximum increase of 5% (minimum 0%).* We will send you a notice, either in the mail or in your MOSERS Document Express online mailbox, during the month when you get your COLA.

Watch our website in January for more information. Learn more on the COLA page and in the upcoming issue of RetireeNews coming in late December.

* If you retired under the MSEP, and were hired before August 28, 1997, your COLA will be determined based on the annual COLA calculation except that you will receive a minimum 4% COLA (maximum 5%) until accumulated COLAs reach 65% of your initial (or original) benefit. This is called your COLA cap. After your benefit has increased to the COLA cap amount, your COLA will be between 0-5% each year.

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Part-Time Employment

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My initial State employment was as a part time employee. Do any of those years count towards my years of service when calculating my retirement options?
No, most likely not. The position must be “benefit-eligible”. Part-time positions are usually not benefit-eligible so that service likely does not count for retirement purposes. You will receive service credit only for periods that your employer reports you worked in a benefit-eligible position and for which they made employer contributions to MOSERS.

A position is benefit-eligible if it meets these two criteria:

1. The position must be in the nature of an ongoing (a multi-year position including a position covered by a contract) or permanent position.
2. The position must normally require the performance of duties of not less than 1,040 hours per year.

If the position meets both requirements, the position is eligible for MOSERS benefits. If not, the position is not eligible for MOSERS benefits. You may contact a MOSERS benefit counselor and they can tell you what service we have on record for you and provide you with benefit estimates.

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Survivor Benefit for Vested Employee

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Employee is vested and dies before retirement, will their spouse receive any retirement benefit.
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. You can find information regarding the death of a member on our website. Survivors should contact a MOSERS benefit counselor for guidance through the process.

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 terminated-vested members of MSEP 2011 who were first employed on or 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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Final Average Pay and BackDROP Period

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MY PENSION IS BASED ON MY BEST 36 MONTHS EARNINGS. WAGES DURING MY 5 YEAR BACKDROP PERIOD ARE EXCLUDED. WHAT IF MY BEST 36 MONTHS ARE AFTER I COMPLETE MY 5 YEAR BACKDROP PERIOD?

Any pay earned after your BackDROP date (the beginning of your BackDROP period) does not count - it is excluded when we calculate your monthly retirement benefit. We will look at your entire pay history in your MOSERS-covered employment prior to your BackDROP period to find your highest 36 consecutive months of pay and use that to calculate your monthly benefit.

Remember, your BackDROP period, whether it is a 2-year or 5-year period, will always be immediately prior to your retirement date. That means, you wouldn’t continue to be employed in a MOSERS benefit-eligible position after your BackDROP period.

This is one of the factors to consider when making your elections about BackDROP. You can contact a MOSERS benefit counselor who can assist you in evaluating your options. You can also get benefit estimates based on different scenarios and use our Comparison Calculator to compare the long-term impact of different options. (Watch our Comparison Calculator video and our Creating a Benefit Estimate video for help getting started.)

For more information, see our recent post on Final Average Pay and on the 3-part formula we use to calculate retirement benefits.

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How is Final Average Pay Calculated?

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I thought retirement payments were based on last 3 years' salary of employment at the state. I heard over the weekend that retirement payment is actually based on 36 months of your highest paid salary throughout a state employment history. Would appreciate clarification. Thanks.
To calculate your pension benefit, we will use your highest 36 full consecutive months of paywherever that occurs in your individual pay history. Practically speaking, most people earn their highest 36 consecutive months of pay in their last three years of state employment, but not always.

Read below for more information. 

We calculate benefits for general state employees using this formula: 
Final Average Pay (FAP) x Credited Service x Multiplier = Monthly Base Benefit

•         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. In other words, pay during the BackDROP period is excluded when calculating your monthly benefit amount.) 
•         Credited Service is the amount of time (in years & months) that you have worked in a MOSERS benefit-eligible position (added to any 
service credit that you may have purchased or transferred).
•         Multiplier – The multiplier for
MSEP is 1.6% (0.016); for MSEP 2000 & MSEP 2011 it is 1.7% (0.017).


As an example, let’s use the following assumptions:
•         Final Average Pay - $2,600.00     
•         Credited Service - 25 Years 3 Months      
•         MSEP Multiplier - 1.6% (.016)

$2,600.00 x 25.25 x .016 = $1,050.40 in monthly pension benefits from MOSERS

See Which Plan Am I In? to determine if you are a member of the MSEP, MSEP 2000, or MSEP 2011 and to find summaries of benefits, brochures, handbooks, videos and more. Use the Member Login to access your own individual information, see when you are eligible to retire, print a benefit estimate, and retire online when you are Ready to Retire.
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Why is the retiree COLA 80% of the CPI?

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The annual cola amount for MSEP 2000 is calculated as follows - MOSERS COLA rate = 80% of the percentage increase in the average CPI-U from the one year to the next. Is there a reason for the 80% instead of 100% or some other percent other than that is what the statute prescribes? Thanks
 You are correct that Missouri state statute stipulates how cost-of-living adjustments (COLAs) will be calculated and that is the process we follow at MOSERS.
(For members of MSEP, see: Chapter 104.415; for members of MSEP 2000, see: Chapter 104.1045.)
In general, the statutes say COLAs will be based on 80% of the percentage increase in the average CPI from one year to the next. (There are some exceptions.)
COLAs are a tremendously valuable part of the benefits our members receive because they help members cope with inflation as the prices of goods and services increase during their retirement years. The 2019 COLAs will be announced in January 2019. Last January, we posted information about the 2018 COLAs.
Setting the COLA, like all the other MOSERS benefit provisions, is a General Assembly policy decision.
Changing how COLAs are calculated to something like 100% of the increase in the CPI would have significant cost implications (increasing employer contributions by several million dollars per year).

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Pension Buyout?

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Will there be another pension buyout?
There are no plans in place at this time to offer another buyout option. The Missouri Legislature authorized the MOSERS Board of Trustees to offer the recent Buyout Program under SB 62 but that authorization expired on May 31, 2018. This was a one-time program. If MOSERS were to offer another buyout program in the future, it would require legislative approval. If such legislation passed, we would notify all eligible members. Print Friendly and PDF

Leaving Employment Before Retirement Date

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My retirement plan is MOSERS 2011. If I leave state employment AFTER I am vested but BEFORE my retirement age/date, how do I figure my monthly benefit amount?
If you are vested with MOSERS (you have at least 5 years of service) and then leave state employment, you will be eligible* for a lifetime monthly benefit, which will begin once you meet the age requirement (and all other legal requirements) and retire under a MOSERS defined benefit pension plan. In general, your benefits will be based on the laws in effect on the day you leave state employment.

For general state employees, we calculate retirement benefits using this three-part formula:

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.)

Example

FAP $3,000 (per month)         x          7.5 years of Credited Service             x          0.017 Multiplier 
for MSEP 2011 = $382.50 Monthly Base Benefit

Keep in mind that additional service will increase your benefit:

FAP $3,000 (per month)         x          23 years of Credited Service              x          0.017 Multiplier for MSEP 2011= $1,173 Monthly Base Benefit

As a member of MSEP 2011, you will become eligible for normal retirement when you have at least 5 years of service and reach age 67 OR under the “Rule of 90” which is when you are at least age 55 and your age plus service equals 90 prior to you leaving state employment.

As a member of MSEP 2011, you pay contributions to help fund the system. Upon termination of employment, you may request a refund of your contributions or you may leave your contributions with MOSERS. It you take a refund of your contributions, you will forfeit all your credited service and any future rights to receive benefits from the system, but you get a check equal to the amount of contributions you made plus any interest. See our Member Contributions brochure for more information.

For more information, see the MSEP 2011 Retirement Plan video or the MSEP 2011 Handbook. You can also request a benefit estimate by calling a benefit counselor.

*An exception is if you were fired because you were convicted of a specified felony committed in connection with your job as a state employee on or after August 28, 2014. See Missouri Revised Statute §105.669

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COLAs and BackDROP

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My retirement date is January 1, 2019 and my backdrop date is March 1, 2016. Will I receive a COLA on my backdrop date in March, 2019?
Typically, members receive a COLA each year on the anniversary of their retirement date, unless one of the exceptions* applies. In your case, since you elected BackDROP, your COLAs will be payable each year on the anniversary of your BackDROP date rather than on the anniversary of your retirement date. In your specific case, your COLAs will be awarded in March, and you will receive a COLA on March 1, 2019.

We will determine the 2019 COLA in mid-January of 2019, and will announce the COLA amount on our website. We will send you (all members) a notice, either in the mail or in your MOSERS Document Express online mailbox, when the COLA is applied to your monthly benefit payment.

*The other exceptions of when COLAs are applied include:

·         Retirees who converted from MSEP to MSEP 2000 during the conversion window in 2000 have COLAs payable each year in July.
·         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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Unused Sick Leave & Credited Service

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What happens to your sick time earned when you retire and have between 5 and 10 years of service completed?
Your MOSERS pension benefit is calculated using the formula:

Final Average Pay x Credited Service x Multiplier = Monthly Base Benefit. 

As part of this calculation, we will add one month of additional service for each block of 168 hours of unused sick leave you have at retirement. For example, if you have 2,500 hours of unused sick leave, you will receive an additional 14 months of credited service (2500/168=14.88) when your retirement benefit is calculated. Your unused sick leave is used in calculating the amount of your retirement benefit, but cannot be used to determine eligibility for retirement or BackDROP. Any amount of sick leave that remains above the calculated additional service credit is forfeited.

There are some specific situations in which unused sick leave doesn’t count:
•        MSEP 2011 members: If you leave state employment after January 1, 2018 and prior to being eligible for early or normal retirement, you will get no service credit for unused sick leave.
•       MSEP retirees: If you leave state employment prior to being eligible for early or normal retirement, you will get no service credit for your unused sick leave.
•       Legislators, statewide elected officials, and judges: You do not accrue sick leave.

Please note: Employees of colleges and universities should discuss maximum accrual levels and procedures with their HR office.

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Public Pension?

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Is mosers a public or private pension?
MOSERS is a public defined benefit (DB) pension plan so the benefit you receive through MOSERS is considered a public pension. As long as you reside in Missouri, your retirement benefits are subject to Missouri state income tax and federal tax. You may also be interested in information we have posted about the Missouri state tax Public Pension Exemption. Print Friendly and PDF

Sick Leave & Retirement

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There's a rumor going around that employees can no longer use their sick leave toward their retirement. I haven't heard of any changes, but I wanted to make sure since I handle retirement at our facility and have been asked. Thank you!
Often, people misunderstand how unused sick leave affects their MOSERS pension benefit. Unused sick leave does NOT count towards service for retirement ELIGIBILITY. It never has. In other words, it will not make you eligible for retirement sooner than you would have been without it. You must meet both the age and service requirements  –  not counting unused sick leave – to be eligible to retire.

As part of your retirement benefit calculation, we will add one month of additional service for each block of 168 hours of unused sick leave you have at retirement. This will increase the AMOUNT of your benefit payment every month in retirement. Unused sick leave cannot count toward eligibility for retirement or as part of your 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 once you have retired.

There are some specific situations in which unused sick leave doesn’t count:
•        MSEP 2011 members: If you leave state employment after January 1, 2018 and prior to being eligible for early or normal retirement, you will get no service credit for unused sick leave.
•       MSEP retirees: If you leave state employment prior to being eligible for early or normal retirement, you will get no service credit for your unused sick leave.
•       Legislators, statewide elected officials, and judges: You do not accrue sick leave.


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Employer Contribution Rate

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I see the contribution rate has gone up to 21.77%. You're back at the trough again. I suppose it makes your job easier when all you have to do is simply charge institutions like MSSU more. It's an unfunded mandate that puts significant financial stress on all Missouri universities.
Where can I find the contribution rates for previous years? Is it a constant upward trend with no end in sight?
Here is a link to a fact sheet on the employer contribution rates on our website. It shows the employer contribution rates from FY14 through FY20. 

After considerable deliberation, the MOSERS Board of Trustees voted to lower the assumed rate of return (ARR) on investments from 7.50% to 7.25% and intends to further reduce the ARR to 6.95% for the June 30, 2020 actuarial valuation. 

Funding for the system comes from 1) investment returns, 2) employer contributions, and 3) employee contributions (from those first employed in a benefit-eligible position on or after 1/1/2011). 

Changing the assumption about the amount of funding that will come from investments (the ARR) automatically causes employer contributions to increase and our funded status to decrease in the short term, but will work to ensure MOSERS’ sustainability over the long term.

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2019 COLA Announcement

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Will there be raise for retirees for 2019? When will it be decided and how much?
Yes, if you are referring to the annual cost-of-living adjustments (COLAs), assuming there is an increase in Consumer Price Index. We will calculate the 2019 COLA in January 2019. The rate calculation is based on 80% of the percentage increase in the average Consumer Price Index from one year to the next. The maximum increase is 5% (minimum 0%). We will get the data we need to make the calculation in mid-January 2019.

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.
• MSEP 2011 members hired after January 1, 2018 who leave state employment prior to retirement eligibility, will receive their first COLA on the second anniversary of their retirement.

Watch our website in January for more information. Learn more on the COLA page and in the upcoming issue of RetireeNews coming in December.

We will send you a notice, either in the mail or in your MOSERS Document Express online mailbox, during the month when you get your COLA.

Note: If you are a legislator or statewide elected official who retired under MSEP 2000 or MSEP 2011, you do not automatically get COLAs. Your benefit will be adjusted only if there is an increase in pay for active members of the general assembly or statewide elected officials, respectively.

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State Employee Pay Raise?

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I heard that the pay increase for 2019 for state employees will not be given to state employees on their check, put is being used for their insurance premiums. If that is true does not seem fair as some employees do not carry state insurance... so do they get a raise ?....
We administer retirement, life insurance, and long-term disability benefits but are not involved in employee pay or medical insurance decisions so we do not know the answer to your question. Your agency’s human resources staff may be able to provide you with more information.

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BackDROP & Reemployment With the State

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If I retire with Backdrop, how long do I have to wait if I want to start back working in a state-paid position?
If you retire and return to work in a benefit-eligible* position, your monthly retirement payment will stop as soon as we are notified that you are re-employed. Once you have worked for at least 12 continuous months in your new benefit-eligible position, you will begin accruing a separate retirement benefit.

Once you re-retire, your previous benefit will restart and your new benefit (based on your new service and salary) will be calculated and your benefit payments (old benefit plus new benefit) will resume. You are not allowed to elect BackDROP after you have first retired. In other words, you will not be eligible for BackDROP if you return to state employment after having already retired from the state.

If you retire and return to work in any position not covered by MOSERS or MPERS (including work for the state in a non-benefit-eligible position), you may continue receiving your MOSERS pension benefits and earn as much as you wish. Such employment will have no effect on your MOSERS benefit.

*A benefit-eligible position is one that normally require at least 1,040 hours of work per year, is permanent in nature, and is covered by MOSERS or the MoDOT and Patrol Employees’ Retirement System (MPERS). Your employer, not MOSERS, determines if you are working in a benefit-eligible position.


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University of Missouri

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With MU in discussions to buy St. Mary's Hospital, will benefited employees (Part-time and full-time) who are retired from the state of Missouri and receiving their retirement benefit have to stop that benefit when they become MU employees and fall under that plan? 
No. MOSERS and the University of Missouri are separate retirement systems. A MOSERS retiree could take a part-time or full-time position with an MU employer and continue receiving their benefits since such employment would not be in a MOSERS or MPERS benefit-eligible position.

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Employer Contributions to Social Security

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Does my employer contribute to my social security while I am a state employee?
Yes. As a state employee, you and your employer both pay into Social Security while you are working. For questions about deductions from your paycheck, contact your employer’s human resources department. For questions about Social Security benefits, visit the Social Security Administration’s website at www.ssa.gov or call them toll-free at (800) 772-1213. Print Friendly and PDF

College & University MOSERS Members

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I work at a university. The president of the University recently said that MOSER's is trying to kick university employees out of the system. What will happen to our pensions if we are kicked out?
We are not pursuing any efforts to remove university members from MOSERS. Ultimately, if there were any proposed changes to any retirement plan provisions for our members, they would have to go through the legislative process, be passed by the Missouri General Assembly, and be signed into law by the Governor. The 2019 legislative session begins January 9, 2019 and ends on May 17, 2019. You can track all proposed legislation relating to MOSERS on our Legislation page or on the Joint Committee on Public Employee Retirement website. Print Friendly and PDF

BackDROP & Returning to Work

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What would happen if I retire and draw backdrop and later decide to return to work for the State in a benefit eligible position? I know my retirement benefit would stop but what would happen with the backdrop?
If you retire and return to work in a benefit-eligible* position, your monthly retirement payment will stop as soon as we are notified that you are re-employed. However, any BackDROP money you received is yours to keep – there is nothing that requires you to return any of it to MOSERS if you return to work. Once you have worked for at least 12 continuous months in your new benefit-eligible position, you will begin accruing a separate retirement benefit. Once you re-retire, your previous benefit will restart and your new benefit (based on your new service and salary) will be calculated and your benefit payments (old benefit plus new benefit) will resume. You are not allowed to elect BackDROP after you have first retired. In other words, you will not be eligible for BackDROP if you return to state employment after having already retired from the state.

If you retire and return to work in any position not covered by MOSERS or MPERS (including work for the state in a non-benefit-eligible position), you may continue receiving your MOSERS pension benefits and earn as much as you wish. Such employment will have no effect on your MOSERS benefit.

*A benefit-eligible position is one that normally require at least 1,040 hours of work per year, is permanent in nature, and is covered by MOSERS or the MoDOT and Patrol Employees’ Retirement System (MPERS). Your employer, not MOSERS, determines if you are working in a benefit-eligible position.

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MSEP 2011 Vesting

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I was hired on June 30th 2014 and I was told I was vested at 10 years of service. Due to this change am I now vested at 5 years instead of 10?
Yes, if you continue working until you have five years of service, you will be vested. At the time you were hired in 2014, vesting for members of the MSEP 2011 (those first employed in a MOSERS benefit-eligible position on or after January 1, 2011) was ten years. Last year, the Governor signed legislation which changed the vesting requirement to five years, effective January 1, 2018. MSEP 2011 members must be actively employed on or after 1/1/2018 to be covered by this change. The changes were summarized on our legislative page and in this article about the vesting change on our website. Keep in mind, the longer you work, the more credited service you will have and the higher your pension benefit will be.
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BackDROP & Survivor Benefit?

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If I have completed my five year backdrop period and continue working in my state position, would my spouse receive the backdrop lump sum payment if I died while still working?
For example, if I completed the five year backdrop period on 8-1-2018, continued working, planned on retiring on 6-1-2019, but died on 3-1-2019 - would my spouse receive the lump sum back drop as well as the monthly survivor pension benefit, or would she just receive the monthly survivor pension benefit?
If you pass away before your retirement date, any elections you made about retirement are null and void, including any elections about BackDROP. If  you were still working and had not yet reached your retirement date, you are considered an “active member” and we must pay your eligible survivor. Your spouse’s monthly survivor benefit would be based on the Joint & 100% benefit payment option and calculated using your final average pay and credited service as of your date of death. Your spouse would not receive the BackDROP lump-sum payment if you died prior to your retirement date. In calculating your spouse’s monthly benefit, we would count the time in what would have been your BackDROP period – your total years and months of creditable service. For more information regarding survivor benefits, please visit the Survivor section of our website. 
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Increasing Contributions?

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Is it possible to contribute more to your pension, to lower your retirement date and still receive a full pension.
No. The only potential way to move your retirement eligibility date closer is to purchase or transfer qualifying prior public service that you may have and combine it with your MOSERS pension. See our MSEP 2011 Acquiring Service Credit brochure for more information or contact a MOSERS benefit counselor to see if you qualify and if it would be beneficial for you to do so.

In order for any prior public service to qualify, it must have been full-time, nonfederal, public (government) employment that you performed in Missouri. Examples include prior employment with a public school, city, or county in Missouri, or employment covered by the MoDOT & Patrol Employees Retirement System (MPERS). This could potentially make you eligible for retirement sooner if the extra service resulted in you hitting the Rule of 90 prior to age 67. (The Rule of 90 is available only to those still actively employed by the state.)

You may also want to keep in mind that you are not required to keep working for the state until retirement age in order to get your pension. Once you are vested with MOSERS, even if you leave state employment, you will be eligible for a lifetime monthly benefit once you also meet the age and all other legal requirements and retire under a MOSERS defined benefit pension plan. Your benefit is calculated using the formula:
Final Average Pay x Credited Service x Multiplier = Monthly Base Benefit. 
Remember, it is this formula, NOT employee contributions (made by those first employed on or after 1/1/2011), that determines your monthly retirement benefit. The longer you work, the more your benefit will be.

You certainly can contribute more to MO Deferred Comp to increase your supplemental savings for retirement but it won’t make you eligible for retirement any sooner.

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Prop A

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How will the rejection of Prop A impact retirees? Will they have to pay union dues? Will a portion of dues go to political candidates? Thank you.
 Prop A has no impact on any MOSERS retiree benefits. Print Friendly and PDF

COLAs

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I don't understand if mosers is profiting so well why do the retirees only get 1.5% raise. It seems like the pot gets bigger and why not pass it out. The cost of living goes up an up but the retirees are going backwards. I have been retired 14 years and only get 21% increase and Mosers does about 7.5% thats 147% increase. It looks a little lopsided. I know it's a complicated process. Like the ones that took the back drop you handed them a bonus that i never saw because I choose to retire and give a job to younger adults instead of letting them not work and the back droppers working filling that spot. 
The way that MOSERS is set up, neither staff nor Board Members can decide to increase cost-of-living adjustments (COLAs) or monthly retirement benefits. It is all based on state statute and it all factors into the overall funding structure of the retirement system.

COLAs are calculated according to state statute (104.010.14 of the Revised Statutes of Missouri), which stipulates that the CPI used to calculate COLAs must be the “CPI-U (Consumer Price Index for All Urban Consumers). For most general state employees, the COLA is based on 80% of the percentage increase in the average CPI from one year to the next. COLAs are intended to help you cope with the rising cost of goods and services that you buy.  You can see a detailed explanation of how the 2018 COLA was calculated in January 2018.

Your benefit is calculated using the formula: Final Average Pay x Credited Service x Multiplier = Monthly Base Benefit. Benefit amounts vary for each retiree based on their individual pay and service history. Funding to pay benefits comes from three sources:

1. Contributions from Employers, as a percentage of employee payroll
2. Contributions from Employees first employed in a benefit-eligible position on or after January 1, 2011
3. Investment Returns

The purpose of investing trust fund assets is to provide a funding source that helps pay the cost of the benefits. Over that past 20 years, 61% of the assets in the MOSERS Trust Fund have come from investment returns. If it weren’t for the income from investments, the cost to the state and to members would be significantly higher. When calculating how much the state will have to contribute going forward, our external actuaries make assumptions on various economic and demographic factors. One is how much we can expect to earn from investment income. That assumption for FY18, which ended June 30, 2018, was 7.5%.

BackDROP isn’t a bonus. It is an benefit payment option available at retirement if an employee works at least two years beyond their normal retirement eligibility date. It allows such members to get a lump-sum payment in addition to their monthly benefit. However, none of their pay or service credit during their BackDROP period counts toward their monthly benefit. So, generally speaking, their monthly benefit is less if they elect BackDROP than it would have been had they not taken BackDROP.

Thank you for your question and for your service to the State of Missouri. Print Friendly and PDF

Withdrawing Funds

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Is is possible to withdraw a portion of our annuity?
No. MOSERS is a non-contributory defined benefit (DB) plan for members hired before January 1, 2011. As such a member, your employer pays the necessary contributions to MOSERS while you are actively employed so that you may receive a future monthly retirement benefit and potential survivor benefits. Since you do not pay contributions, you are not eligible to withdraw funds from the retirement system.

Members employed in a MOSERS-covered position for the first time on or after January 1, 2011 are required to contribute 4% of their gross salary to help fund the retirement system. Those members, if they leave state employment, have the option of requesting a refund of the contributions they have made to MOSERS plus any interest on their contributions – if they do so prior to reaching normal retirement eligibility. Any member who receives a refund will forfeit service credit and the right to receive any future retirement benefits from MOSERS.

Any refund of contributions taken as cash (as opposed to rolling it over to MO Deferred Comp, a traditional IRA, or other qualified retirement plan) is considered taxable income for the year you receive it. MOSERS is required to withhold 20% for federal taxes on such a refund. If you receive a cash payment before you reach age 59½ and do not roll it over, you may have to pay an IRS a penalty equal to 10% of the taxable portion of the payment in addition to the regular income tax. See our Special Tax Notice for more information.

The IRS does not currently allow pension plans to offer lump-sum payouts to current retirees in exchange for reduced future benefit payments. MOSERS did offer a buyout program which enabled eligible members to accept a lump-sum payment in lieu of all future annuity payments. However, this program was not available to members who had already begun receiving monthly benefits.

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High 36

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MY FIVE YEAR BACKDROP PERIOD IS COMPLETE. I KNOW MY RETIREMENT CHECK IS BASED ON MY BEST 36 MONTHS. IF I DO NOT ELECT BACKDROP, CAN I USE MY BEST 36 MONTHS THROUGHOUT MY ENTIRE CAREER, OR ONLY THE PERIOD PRIOR TO MY ORIGINAL BACKDROP DATE?
Yes, if at retirement you do not elect BackDROP, we will review your entire pay history and find the 36-month period with your highest pay, which may be in your final years of employment, and will use that in calculating your monthly benefit.

Background for Other Readers: Any pay or service you get during your BackDROP period is not counted when calculating your monthly benefit payment.  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.

But keep in mind, 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. You may elect not to take BackDROP if you want all your service and pay to count and, likely, increase your monthly benefit.

This graphic may help explain the big picture, or you can read the BackDROP brochure on our website for more information. BackDROP can be complicated to understand, so MOSERS benefit counselors are available to help by phone or in person by appointment. Call (800) 827-1063 to discuss your options. Counselor can also provide you with benefit estimates, with and without the BackDROP included, so you can compare.

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Rule of 80 & Age 55

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One of my coworkers informed me that state employees who are retirement eligible per the rule of 80 will be penalized if they are under the age of 55. I am not aware of any such penalty but wanted to ask. 
No. There is no penalty or reduction to your MOSERS pension benefit if you meet both the age and service requirements for normal retirement eligibility before the age of 55. To be eligible to retire under the Rule of 80 in the MSEP and MSEP 2000, you must be at least age 48 and your age and years of service must equal 80 or more.

Taxes &/or penalties related to other distributions:

•        There may be a 10% IRS tax penalty if you are younger than age 59 ½ at the time of payment, elect BackDROP*, and take a lump-sum cash payment. If you terminate employment in or after the year you reach age 55, this penalty will not apply. Additionally, MOSERS is required to withhold 20% of a BackDROP cash payment for federal taxes. More details are available in the Special Tax Notice brochure on our website. In such a situation, you can avoid the IRS tax penalty by rolling over the BackDROP payment to a qualified retirement account such as with MO Deferred Comp and not withdrawing it until you meet all IRS regulations (generally speaking, that is after you attain age 59 1/2 but there are exceptions, see page 4 of the Special Tax Notice, including one for public safety employees).
•        If you have made pre-tax contributions to the MO Deferred Comp plan (an internal revenue code section 457(b) plan), distributions from that plan following retirement or termination of service at any age are subject to ordinary income tax only.
•        Employer “match” contributions made on behalf of an employee to a 401(a) plan are subject to an additional 10% penalty if withdrawn prior to age 59 1/2.

Be sure to check with your financial institution or a tax advisor for information about your tax liability when you begin withdrawing your funds.


*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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Break in Service

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If I want to take a break from working right after retirement and not do the backdrop at that moment, how long can that break be before I decide to go back to work in a MOSERS-covered position? Or can that be done? And will that be considered backdrop then?
Per MOSERS board rule, a break in service is being off payroll for an entire calendar month. It looks like you have three options.

1. If you retire and return to work in a benefit-eligible* position, your monthly retirement payment will stop as soon as we are notified that you are re-employed. Once you have worked for at least 12 continuous months in your new benefit-eligible position, you will begin accruing additional retirement benefits. Once you re-retire, your benefits will be recalculated and your benefit payments will resume. You are not allowed to elect BackDROP after you have first retired. In other words, you will not be eligible for BackDROP if you return to state employment after having already retired from the state.
2. If you retire and return to work in any position not covered by MOSERS or MPERS (including work for the state in a non-benefit-eligible position), you may continue receiving your MOSERS pension benefits and earn as much as you wish. Such employment will have no effect on your MOSERS benefit.
3. If you leave state employment but don’t retire and then, after a break in service, return to state employment in a benefit-eligible position, you may become eligible for and elect BackDROP.

Visit our website for a list of state agencies who employ workers in MOSERS-benefit-eligible positions. Be sure to discuss your situation with the human resources staff at the agency where you are considering employment. They will be able to tell you whether or not the position is eligible for benefits.

You may contact a MOSERS benefit counselor to get more information about your individual situation and options.

*A benefit-eligible position is one that normally require at least 1,040 hours of work per year, is permanent in nature, and is covered by MOSERS or the MoDOT and Patrol Employees’ Retirement System (MPERS). Your employer, not MOSERS, determines if you are working in a benefit-eligible position.

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Final Average Pay & BackDROP

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Note: the question below refers to a previous Rumor Central question from July 2018:
"As you referenced, 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. In other words, any pay or service during your BackDROP period doesn’t count toward your monthly benefit payments."
Okay, based off this information, since I am working on my back-drop currently, an increase in pay will NOT increase my retirement? I am planning on working overtime as a Correctional Officer, will this have an effect on the amount of money I receive in my retirement? Yes or No...
You are correct that pay earned during your BackDROP period will not count towards calculating your retirement benefit. Your monthly benefit will be calculated using your final average pay (FAP) and credited service as of your BackDROP date (the day your BackDROP period begins).

Any pay or service you get during your BackDROP period is not counted when calculating your monthly benefit payment. To be clear, any overtime pay you receive during your BackDROP period will not be considered in calculating your final average pay. But keep in mind, 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. You may elect not to take BackDROP if you want all your service and pay to count and, likely, increase your monthly benefit.

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

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Funded Status

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I have heard reports on the news saying that our retirement benefits are only 60% funded and that MOSERS is in trouble. What is going on with that? 
Just to clarify, MOSERS pays 100% of the benefits due to members. The “funded” status that you are hearing about in the news has to do with the assets we have on hand relative to all current and future liabilities. As of June 30, 2017, MOSERS is 67.5% funded (p. 129 FY17 Annual Report).

Your MOSERS Board of Trustees is actively engaged in prudent analysis, plan sustainability, and benefit security for members. The Board's recent decisions to reduce the assumed rate of return on investments will result in higher employer contributions and a lower funded status in the short term but will strengthen MOSERS’ financial position in the long term. Each year, the MOSERS Board certifies an employer contribution rate which results in a state budget appropriations request. The employer contribution is based on a variety of factors and is calculated by our external actuary as the amount needed in order for MOSERS to pay current and future benefits.

Money to pay your retirement benefits comes from three sources:

1. Employer Contributions: The Missouri General Assembly has consistently appropriated the full employer contribution to MOSERS as recommended by our external actuary. Governor Parson signed the FY19 budget bills passed by the General Assembly, including the MOSERS appropriation contained in HB 2005, which fully funds the Board certified employer contribution rate. Pension systems that are in trouble are generally those that have a consistent pattern of not receiving the full amount of employer contributions.

2. Employee Contributions: Members first employed in a MOSERS or MPERS benefit-eligible position on or after 1/1/2011 contribute 4% of pay to their retirement system.

3. Investment Returns: Over that past 20 years, 61% of the assets in the MOSERS Trust Fund have come from investment returns. MOSERS earned approximately 7.5% for Fiscal Year ending June 30, 2018, which added approximately $600 million to the MOSERS trust fund.

Please see Key Facts Regarding Funding for more information. We will send a summary annual financial report for Fiscal Year 2018 to all members in December as part of the fall/winter newsletter.

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State Contribution to Retirement?

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Does the State of Missouri contribute any matching funds to the retirement program?
I am receiving conflicting information, that there are and are not matching funds. I've been told 0 and "up to 3%."
As a MOSERS benefit-eligible member, you have a defined benefit pension plan, which provides lifetime monthly benefit payments to you after you retire. It is based on the formula: 

Final Average Pay x Credited Service x a Multiplier = Your Monthly Base Benefit.

Remember, it is this formula, NOT contributions, that determines your monthly retirement benefit. 
There are three sources of income that fund your MOSERS defined benefit pension plan: 

1. Contributions from members of the MSEP 2011 and the Judicial Plan 2011, which are 4% of pay,
2. Your employer’s contributions, which are currently, 20.21% of covered payroll, and 
3. MOSERS’ investment income. 

You can read more about plan funding on our website. If you leave state employment prior to normal retirement eligibility, you may request a refund of your member contributions plus interest. (Your member contributions consist of #1 above; #2 and #3 remain in the MOSERS trust fund.) Interest on member contributions is calculated using the 52-week treasury bill rate. 

You may also participate in the State of Missouri Deferred Compensation Plan (MO Deferred Comp), which is a supplemental retirement savings program. Currently, the State does not match any contributions to MO Deferred Comp, but there are many other reasons that MO Deferred Comp is an important part of your benefit package. 

Watch our New Employee Orientation video for a quick overview of your MOSERS benefits. 

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COLA for 2019?

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When we will I know when I am getting an annual COLA for 2019? I thought it was mid-July when MOSERS announced it.
 MOSERS will be able to determine the 2019 COLA in January 2019. The rate calculation is based on 80% of the percentage increase in the average Consumer Price Index from one year to the next with a maximum increase of 5% (minimum 0%). The information necessary to make that calculation will be available in January 2019 and based on a comparison of changes from 2017 to 2018.

In January 2018, we determined that the COLA for 2018 is 1.704%. Each year, you will receive a COLA 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.

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.

*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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BackDROP Payment

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If you opt to have the cash pay-out of your backdrop, how long does it take after your retirement date to receive it?
Your BackDROP* payment (either cash or rollover) will be paid on the last working day of the month your retirement is effective, along with your first monthly retirement benefit payment. For example, if your retirement date is May 1, your BackDROP payments will be made on the last working day of May. This is assuming you have completed all necessary forms, including your BackDROP Distribution form, when you retire online or on paper.

Please be sure to read the Special Tax Notice brochure on our website to learn about various tax consequences if you take some or all of your BackDROP payment in cash.

*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.   Print Friendly and PDF

MOSERS Board of Trustees

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Do Board Members receive any compensation for there time?
No, they do not receive compensation for serving on the board, but are reimbursed “for necessary expenses incurred in the performance of their duties for the system” per chapter 104.470 (3) of the Revised Statutes of Missouri.

As a reminder, there is an election this year for 2 new MOSERS board members to represent active members and one member to represent retired members. These members will serve 4-year terms beginning in January 2019. We have posted the candidate statements on our website and Election America will send ballots to eligible members in August to notify them about voting by mail, phone or online. 
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Overtime & Final Average Pay (FAP)

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Given the extreme amount of overtime currently being worked by corrections officers (over 1 million hours so far in 2018, and 1.6 million last year), how will this effect the long term funding available for pensions? Their pension is based off their 3 highest consecutive grossing years of service. Many officers have been grossing 2-3 times their base pay due to the inordinate amount of overtime. This has been ongoing now for two-three years. This will make a huge impact on their pension monthly benefit, increasing it exponentially. Has there been any comprehensive study done on how this will effect our pension funding in the future?
Calculating Your Benefit

You are correct, retirement benefits for general state employees are calculated using a three-part formula:

Final Average Pay (FAP)  x  credited service  x  a multiplier =  Monthly Base Benefit

As you referenced, 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. In other words, any pay or service during your BackDROP period doesn’t count toward your monthly benefit payments.

Overtime pay can increase your retirement benefits if there is a pattern of overtime pay. We don’t count one-time payments or any payments from your employer after you terminate state employment such as for unused vacation/annual leave.

Pension Funding

With regard to your question about how all this overtime will affect pension funding, you can rest assured that it is all being factored in to our funding process, we have made our external actuary aware of it, and we will continue to monitor it.

In setting funding policy, our Board of Trustees works with our external actuary to review and set assumptions about a variety of economic and demographic factors including payroll growth, inflation, life expectancy, and several other factors.

We conduct an annual “valuation” which is collecting all the above data (and more) and sending it to our external actuary. Our actuary does an “experience study” every 5 years to compare our assumptions to our actual experience with our members and with other economic factors. Then, we make adjustments accordingly. All that (and more) goes into the calculation of employer contribution rates going forward.

The Department of Corrections (DOC) is a large employer but is one of several that we cover. While there may have been increases in payroll at DOC, they are offset elsewhere. For the year ended 6/30/17, the overall pay increase for state employees we cover was slightly less than assumed (p. 20 of FY17 Valuation). We will have the data for FY18 soon. Each of the 39 state departments, agencies, colleges, or universities that we cover makes employer contributions as a percentage of their total actual payroll, which includes overtime pay. So, paying overtime also increases the amount of employer contributions that DOC has already been making to MOSERS. As mentioned above, we will continue to monitor overtime at DOC and factor it into our funding calculations.

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Going Back to Work to Become Vested

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I had 4 years and 7 months in the MOSERS retirement system before changing employment and as I'm now approaching retirement age, would like to go back and pick up one more year of MOSERS eligibility to become vested.

Can you provide me with a list of Employers near Springfield Missouri that have MOSERS retirement?

How would I go about estimating what my potential benefit would be after working 12 consecutive months to become vested to see if it's even worth it.

You are correct in your understanding of the requirement to become vested. Since you left state employment with less than 5 years of service, you forfeited your accrued service credit and all rights to benefits from the MOSERS. If you return to work in a MOSERS-covered position, your forfeited service will be restored and combined with your new service after you have completed 12 continuous months of employment. You can find a list on our website of state agencies who employee workers in MOSERS-benefit eligible positions.

The amount of your potential MOSERS benefit will be determined by this formula: Final Average Pay x Credited Service x Multiplier = Monthly Base Benefit
Let’s assume:
•    Your final average pay is $3,250 per month (an approximate average of state employees)
•    You end up with 6 years of credited service
•    You are in the MSEP 2000 and the multiplier is 1.7%

The formula would be $3,250 x 6 x 0.17 = $331.50 per month. This would be a lifetime monthly benefit for you.

Keep in mind that your benefit will be based on your actual data and could be higher or lower.  Working longer would increase your benefit. You can request an individualized benefit estimate from a MOSERS benefit counselor, and in most circumstances by logging in to your MOSERS Member Homepage through our website.


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Medical Premiums & MOSERS Retirement Benefit Check

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My husband and I both retired in our late 50's and still have 5 years to go before we reach medicare age. Hopefully this won't happen, but if insurance keeps going up what would happen if the amount of our insurance exceeds the amount of my benefit check? Both of our premiums are taken out of my check. I'm worried about the increasing cost. As we don't want to lose the insurance would we be able to pay the amount not covered by my benefit check directly to MOSERS?
Note: MOSERS administers retirement, life insurance and long-term disability insurance benefits. For most state employees, health care is administered by Missouri Consolidated Health Care Plan (MCHCP). They provided us with a response for this question below. 

MCHCP will not deduct partial premiums from a retirement benefit check.  If the MCHCP premium is more than the retiree’s benefit check amount, then MCHCP will automatically set up the member on direct bill payment. MCHCP will mail a billing statement to the retiree/member showing the premiums due and the date payment is due. Members on direct bill have other payment opportunities including automatic (ACH) withdrawal from a bank account or online bill pay. The automatic withdrawal authorization form is available can be found on the MCHCP website: http://www.mchcp.org/forms/st_autoWithdraw.pdf.

Also, members on direct bill may choose to pay premiums online through their myMCHCP account using a debit or credit card. Please note the bank which administers the online payment process for MCHCP charges a service fee when a member uses this payment option.

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Pay Raises

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are we possibly getting a raise in January
If you are asking about a pay raise for active state employees (versus a cost-of-living adjustment for MOSERS retirees), please understand that MOSERS is not involved in any decision making related to state employee pay. As a courtesy, we can pass along the following information:

Information about the Governor's Fiscal Year 2019 budget is on the Governor’s website. It includes appropriation authority for a pay raise for state employees. The amount of the pay raise depends on how much the employee makes. However, we caution all employees to talk with your supervisor or human resources staff to find out if, how, and when this may apply in your individual situation.

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Last Day of Work

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I was told: When retiring. You MUST work your last day before retirement. I was told that you cannot use comp or vacation time on your last working day.
 Just to clarify—your last day at work 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.

Your retirement date must be the first day of the month. You will need to contact your Human Resources representative regarding if you need to be present on your last day of work.

Annual leave has no effect on your MOSERS benefit. Please contact your agency’s human resources representative to determine your agency's procedure for using annual leave prior to retirement.

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Merit Positions and Reemployment

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It is my understanding that if you are currently employed in a merit position & you retire & begin drawing your MOSERS pension that you are not allowed to gain full-time employment in another merit position. Is this true?
Yes, the concept of what you say is true but the key word is “benefit-eligible” rather than “merit” (some benefit-eligible positions are not merit positions). As a general state employee, your MOSERS retirement benefit will stop if you retire (or are already retired) and later return to work in a benefit-eligible position covered by MOSERS or MPERS (the MoDot & Patrol Employees’ Retirement System).

Your employer determines if the position is benefit-eligible. MOSERS administers pension 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 accepting a position with the state will affect your MOSERS retirement benefit, we advise you to check with your potential employer.


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4% Contribution for MSEP 2011

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My daughter is considering becoming employed for a state agency and is curious if she will be required to put a % of her pay check towards her retirement since she will be hired after the 1/1/2018 and the new rule that is in place.
Yes, anyone who is first employed in a MOSERS or MPERS benefit-eligible position on or after January 1, 2011 must contribute 4% of pay to the retirement system. Your daughter's 4% contribution is used to help pay the cost of her future defined benefit retirement plan and could potentially pay her back far more than she contributes. See a simplified example in The Value of Your Retirement Benefit. When she retires, she will receive a benefit payment every month for as long as she lives. This means she can never outlive her MOSERS retirement benefit.

If she leaves state employment prior to becoming eligible for normal retirement, she may request a refund of her contributions plus credited interest. Or, she may leave her contributions with the system if she thinks she might return to work for the state at some point in the future and would like for those years of service to count toward an eventual retirement benefit. See our Member Contributions brochure for more information.


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MSEP 2000 Retirement Eligibility

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i started working for the state at the age of 51 I started in dec 2010 I want to retire at the age of 62 but I won't have 80 and out, will I still get my state check even if I don't have 80 and out?
Yes, you may be eligible for retirement at age 62 even if your age and service don’t add up to 80. The Rule of 80 (also known as “80 & Out”) is not the only way to meet retirement eligibility. If you first worked in a MOSERS benefit-eligible position in 2010, you are a member of the MSEP 2000.  The other way to meet normal (unreduced) retirement eligibility in the MSEP 2000 is to be at least age 62 with at least 5 years of service. Visit our Ready to Retire page to learn about the 2-step retirement process, which you must complete to begin receiving monthly retirement payments.

For more information:

The “Which Plan am I In?” page on our website has information about MSEP, MSEP 2000, and MSEP 2011 retirement eligibility requirements and other plan provisions.
You can call a MOSERS benefit counselor to discuss your specific situation and they can provide you with a retirement benefit estimate.
When you are within 5 years of retirement eligibility, it is helpful to attend a free PreRetirement Planning Seminar.

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Retirement Due Dates

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I am planning to retire the end of this year, with my retirement date of 1/1/19. How far in advance do I need to submit my retirement forms?
You can submit your retirement application as early as 4 months (120 days) prior to your retirement date.  However, there are specific due dates required—for example, if your retirement date is January 1, your Retirement Application is due no later than November 30 and the Retirement Election Form is due no later than December 31st.

The Ready to Retire page on our website is a one-stop shop for all of our retirement resources. 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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Merit System & Reemployment

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Since the Merit system has been removed (by the newly signed law), does this mean that someone who retired from a Merit job could go back to work for the State and still collect their pension?
No. SB 1007, which had the “merit system” language does not contain any changes to any MOSERS benefit provisions. SB 1007 modifies and repeals several provisions relating to the State Personnel Law (SPL), commonly referred to as the Merit system.

As a general state employee, your MOSERS retirement benefit will stop if you retire (or are already retired) and later return to work in a benefit-eligible position covered by MOSERS or MPERS (the MoDot & Patrol Employees’ Retirement System).

Your employer determines if the position is benefit-eligible. MOSERS administers pension 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 accepting a position with the state will affect your MOSERS retirement benefit, we advise you to check with your potential employer.

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Using Leave After Applying for Retirement

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Once you submit retirement papers with a date for retirement are you allowed to take any annual or sick time?
Check with your agency’s human resources office about your specific guidelines for annual and sick leave accrual and usage before retirement.  However, please be aware that MOSERS converts unused sick leave hours into months of service credit to be used in your retirement benefit calculation.  So, any usage of sick leave near your retirement date may affect previous benefit estimates you have received.  Annual leave has no effect on your MOSERS benefit. You can learn more about how unused leave hours affect your retirement benefit here.    

We have also answered many related questions on sick leave on Rumor Central under the category heading Unused Sick Leave: http://mosersrc.blogspot.com/search/label/unused%20sick%20leave.  

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Merit System Bill

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How does, if at all, the removal of the Merit program affect my retirement?
SB 1007 does not contain any changes to any MOSERS benefit provisions so it should have no impact on your retirement. It modifies and repeals several provisions relating to the State Personnel Law (SPL), commonly referred to as the Merit system. It is our understanding that it was signed into law today.

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MSEP 2011 Legislative Changes from 2017

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Correction Officers have been hearing that the State of Missiouri Retirement System is bringing back the "80 and out" rule or 80/80 and the Employee is vested after 5 years of service?
For members of MSEP 2011 who are actively employed on or after 1/1/2018, yes, the vesting requirement did change to 5 years, effective 1/1/2018. This change was part of Senate Bill 62, which was passed during the 2017 legislative session. The changes were summarized on our legislative page. You can read more about the vesting change in our news article from 2017, The Change from 10 to 5-Year Vesting for MSEP 2011 Members.

However, requirements for retirement eligibility were not changed. Members of MSEP 2011 reach normal retirement eligibility when they have at least 5 years of service and are age 67 or under the “Rule of 90”. Under the “Rule of 90”, they must be at least age 55 and their age plus years of service equal 90 or more. For example, if someone is age 60 and has 30 years of service, they would meet the Rule of 90.

Not sure if you are in MSEP, MSEP 2000, or MSEP 2011? See Which Plan Am I In?

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Credited Service for Army Reserve?

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I just have a question regarding having Served in the Army Reserve. Can a state employee receive any credit for having served as a Reservist? 
Yes, it is possible, depending on when your military service was performed relative to your state employment. There are provisions that allow you to 1.) purchase or 2.) receive automatic credit at no cost* for your eligible active-duty military service. Short duration active-duty military service such as two-week annual trainings in the reserve forces may qualify for service credit. This additional service credit will be used in determining your eligibility for retirement and calculating the amount of your benefit.

We encourage anyone interested in purchasing prior active-duty military service to speak to a MOSERS benefit counselor, who can provide cost estimates. The primary timing issue for you to consider when making a service purchase is that, the longer you wait, the more it will cost. In other words, it is often to your advantage, in terms of cost, to purchase service sooner rather than later to avoid additional interest costs. See the Acquiring Service MSEP/MSEP 2000 brochure (page 6) for more information. Any eligible purchases must be applied for and paid for in full prior to applying for retirement. 

*Note: Members of the MSEP 2011 may get automatic credit if they were employed by the state immediately prior to entering the armed forces and return to state employment within the timeframe specified by USERRA. However, purchase of prior active-duty military service credit is not available to members of MSEP 2011.

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BackDROP Decisions

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I was eligible for retirement on 06/01/2017 on the 80 and out. I am just getting one year of backdrop in. Do I need to submit any paperwork advising of my intentions of working on the backdrop? 
The answer is no. You just keep working. You don’t need to notify MOSERS of any decisions about BackDROP until you retire. If you retire online, you may make your BackDROP election when you choose your benefit payment option. 

However, you must work at least two years beyond when you are first eligible for normal retirement to be eligible for BackDROP. BackDROP provides a lump-sum payment in addition to your ongoing monthly benefit payment in retirement. MOSERS has many different resources to find out more about BackDROP.* Besides the member handbook, there is a BackDROP page with links to many resources on our website, including the BackDROP brochure.

* Note: The BackDROP is available only to general state employees in the MSEP and the MSEP 2000.

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Sick Leave & BackDROP Period

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Questions regarding sick leave. I have around 22 months of employment remaining before I reach the 80 and out. I have around 1900 hours of sick leave currently. Does sick leave still contribute towards your credible service period? If I elect to backdrop, does this apply to the backdrop period if I do not count this towards credible service? Thank you!
 Yes, you will get one month of credited service for each block of 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 once you have retired. Print Friendly and PDF

70 & Out Rumor

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I was hearing that there may be a 70 & out for one to retire from Corrections? Is this true or another rumor....
 No, this is not true. MOSERS administers retirement benefits but we do not have the authority to change plan provisions. Any change to the Rule of 80/”80 & Out” (or any other state employee pension provisions) would require a change in the law. The 2018 regular legislative session ended on May 18th and there were no such proposed changes. Keep in mind that the Rule of 80/”80 & Out” is not the only way to reach normal retirement eligibility.

General state employees become eligible for normal retirement once they meet one of the following sets of age and service criteria:

MSEP Members
•         Age 65 + 5 years of service
•         Age 60 + 15 years of service
•         “Rule of 80” – (at least age 48) when age + years of service = 80 or more.

MSEP 2000 Members
•         Age 62 + 5 years of service
•         “Rule of 80” – (at least age 48) when age + years of service = 80 or more

MSEP 2011 Members
•         Age 67 + 5 years of service
•         “Rule of 90” – (at least age 55) when age + years of service = 90 or more at time of termination

You can view additional information for each plan on the Which Plan Am I In page of our website.

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Final Average Pay & Rule of 80

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Note: we receive this question a lot, so we thought it would be helpful to repost it as a reminder.
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 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.

*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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Becoming Vested

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When do you become vested? Is the 5 years calculated by your date of hire (to the exact date?) or the end of month in which you were hired? 
Vesting occurs 5 full years from your date of hire in a benefit-eligible position. Therefore, barring any non-creditable leave periods, a member who began employment on February 21, 2018 would become vested on February 21, 2023. Once you are vested with MOSERS, even if you leave state employment, you will be eligible for lifetime monthly benefit payments once you also meet the age requirement (and any other legal requirements) and retire under a MOSERS defined benefit pension plan.

The 5-year vesting for MSEP 2011 members went into effect on 1/1/2018 and MSEP 2011 members must be actively employed on or after 1/1/2018 to be covered by this change.

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Non-Missouri Retirees & Taxes

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Are Public Pension benefits taxable if the MOSER retiree now resides in a state other than Missouri? I understand Missouri does not tax MOSER pensions.
MOSERS withholds state taxes only for Missouri residents. If you aren’t a Missouri resident in retirement, contact the appropriate state and local tax authorities to determine the taxability of your MOSERS benefit.

As we reminded our retirees in the Fall/Winter issue of RetireeNews, remember that pension benefits are subject to federal taxes.

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Sustainability of MOSERS

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I have recently read articles that indicate a decline in MOSERS viability, ie. their ability to cover promised benefits into the future. I am also concerned about the increased incentives for early retirement. So I wonder how much I should be concerned.
There have been no recent incentives for early retirement for active state employees. Any such incentives would require legislative action.

With regard to MOSERS’ ability to cover promised benefits into the future, we received a similar question and have a May 1 post about MOSERS’ funding status on Rumor Central. As of June 30, 2017, retirement benefits for general state employees are 67.5% pre-funded. Money to pay retirement benefits comes from:

employer contributions
employee contributions (if first employed on or after 1/1/2011), and from
investment returns.

Over that past 20 years, 61% of the assets in the MOSERS Trust Fund have come from investment returns. Beginning in FY17, the MOSERS Board adopted a funding policy to gradually lower MOSERS’ investment return assumption. This more accurately reflects capital market expectations and confirms the Board’s commitment to sound financial practices. (In other words, the board decided that we should expect less income from investments. So, the income that we are not expecting from investment income will have to come from the employer/the state.) It results in higher annual employer contribution requirements (and a lowered funded status) in the short-term. However, it is the board’s expectation that these changes will strengthen MOSERS’ financial position and will ultimately enhance the retirement security of our members. (See Chairwoman’s Message for more information.)

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