Showing posts with label COLA. Show all posts
Showing posts with label COLA. Show all posts

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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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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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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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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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.

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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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COLA Cap

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With regard to the following statement in the most recent MOSERS emailed information:
If you retire under the MSEP and were hired before August 28, 1997, you will receive a COLA of at least 4% each year (maximum 5%) until you reach your COLA cap. The COLA cap is when the sum of your COLAs equal 65% of your initial benefit amount.
Question: Please explain in more detail how the COLA cap is figured.
Is the amount of the annual COLA, for example, a 4% COLA in 2015, again in 2016, again in 2017, and again in 2018 (that amounts to about $40/month in each of those years) multiplied by 12 to get the total annual COLA ($480) for each of those years and then all of the annual totals are added together to determine when the 65% limit has been reached?
For ex.: $40 X 12 X 4 = $1920
Or perhaps it’s figured as follows: $40/mo. COLA x 8, 9, 10, 11, 12 years etc.
If not, please explain in detail how the COLA cap of 65% is figured. Thank you. 
The COLA cap* is calculated based on the initial base benefit amount, rather than on the COLA itself. Your estimated date to reach the COLA cap can be found on your annual benefit statement in the COLA section. It says “Estimated Date to Reach 65% COLA Cap….” and a date. Typically, it is around 12-13 years after you’ve retired.

Example of Calculating the 65% COLA Cap:

$1,000 (Initial Base Benefit) x .65 (65%) = $ 650 (COLA Cap) 

So, when you look back at your initial base benefit, once it has increased by 65% due to COLAs, you will no longer get the minimum 4% COLA; instead, your COLA will be based on 80% of the increase in the CPI and be between 0 and 5% each year. For example, for those who have their COLA calculated this way, it is 1.704% in 2018.

*The COLA cap does not apply to MSEP 2000 members; it applies only to members of MSEP hired prior to 8/28/97, who receive a minimum 4% COLA until meeting their COLA cap.

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Comparison of MSEP & MSEP 2000

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What are the major differences between MSEP & MSEP 2000?
The MSEP and the MSEP 2000 have various differences including different multipliers in the formula used to calculate your monthly payment, different benefit payment options, different cost-of-living adjustments (COLA), and different eligibility criteria. To compare the provisions in each of these plans, there is a helpful document on our website: MSEP & MSEP 2000 Summary of Pension Benefit Provisions - General State Employees.  Also see the Which Plan Am I In section of our website for more information about each plan.

We have a helpful Comparison Calculator on our website where you can compare the long-term impact of electing MSEP versus MSEP 2000, different BackDROP* periods under the different plans, and various other options. The Comparison Calculator videos are helpful in demonstrating how to use this tool. Or, you can ask a MOSERS benefit counselor to provide you with various benefit estimates and Comparison Calculator results.

We also encourage you to attend a MSEP/MSEP 2000 PreRetirement Planning Seminar when you are within 5 years of eligibility. This free full-day seminar includes information on differences in the plans, benefit payment options, and BackDROP, among other topics.

Your defined benefit retirement plan through MOSERS includes a lifetime benefit, regardless of the plan or payment option you elect at retirement.

*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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Base Benefit & COLA Cap

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Where can one find one's base benefit for the purpose of determining the 65% of base benefit when COLA's will end?
Your COLA does not end once you meet your COLA cap*—it is simply calculated differently. If you retire under the MSEP and were hired before August 28, 1997, you will receive a COLA of at least 4% each year (maximum 5%) until you reach your COLA cap. The COLA cap is when the sum of your COLAs equal 65% of your initial benefit amount. Then, your annual COLA will be equal to 80% of the percentage increase in the average Consumer Price Index (CPI) with a minimum of 0% and maximum of 5%.

Your estimated date to reach the COLA cap can be found on your annual benefit statement in the COLA section. It says “Estimated Date to Reach 65% COLA Cap….” and a date. Typically, it is around 12-13 years after you’ve retired.

*The COLA cap does not apply to MSEP 2000 members; it applies only to members of MSEP hired prior to 8/28/97, who receive a minimum 4% COLA until meeting their COLA cap.
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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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    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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    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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    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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    SB 228 & Current MOSERS Retirees

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    I am writing in regard to Senate Bill 228. I am concerned how this will impact current retirees, who chose the MSEP 2000 plan. I am especially concerned about what this says on page 6, line 52, #7. This would affect the COLA rate and cap it at 2% rather than the current 4%. Will this affect those of us, who are currently retired under the MSEP 2000 plan or future retirees? 
    No. SB 228, in its current form, would NOT affect current retirees. It would affect only future retirees who first begin state employment on or after January 1, 2018 (see lines 1-4 on page 5). We will continue to monitor any pension-related legislation throughout the rest of the legislative session, which ends on May 12. Print Friendly and PDF

    2017 Cost-of-Living-Adjustment

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    Will I get a raise this year?
    Yes, if you are referring to the cost-of-living-adjustment (COLA) for eligible retired members and their surviving beneficiaries. As we announced in January, the COLA for 2017 is 1.010%. This will be effective for MSEP retirees who have reached their original 65% COLA cap, or who were first hired on or after August 28th, 1997, and for members retired under MSEP 2000 regardless of date of hire.

    The COLA is payable on the anniversary of your retirement date, except for:
    Retirees who converted from MSEP to MSEP 2000 during the conversion window in 2000 will have COLAs payable in July
    Retirees who elected a BackDROP* will have COLAs payable on the anniversary of the BackDROP date

    For more information, including how the COLA rate is calculated, and a helpful video, please see the COLA page on our website.

    *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 & COLAs

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    If you are over the age of 62, have completed 5 years of backdrop, and go out under the old MSEP plan, do you get the 4% COLA until you reach 65 yrs? The rumor is that once you reach age 62 the 4% COLA stops.
    If you retire under the MSEP and were hired before August 28, 1997, you will receive a COLA of at least 4% each year (maximum 5%) until you reach your COLA cap. The COLA cap is when the sum of your COLAs equal 65% of your initial benefit amount. COLAs earned during the BackDROP period do count toward the 65% cap. In general, it takes approximately 12-13 years to reach the COLA cap. Then, your annual COLA will be equal to 80% of the percentage increase in the average Consumer Price Index (CPI) with a minimum of 0% and maximum of 5%.

    The cost-of-living adjustment (COLA) for 2017 is 1.010%. This will be effective for MSEP retirees who have reached their 65% COLA cap or who were first hired on or after August 28th, 1997 and for members retired under MSEP 2000, regardless of date of hire. You can see a history of annual COLA rates on MOSERS’ website and also watch a short video on COLAs.

    You may be confusing COLAs and the “Temporary Benefit”.  The temporary benefit is NOT available to members who retire under MSEP but IS available to members who are eligible for and retire under the Rule of 80/”80 & Out” in MSEP 2000. In addition to their base benefit, such members receive a temporary benefit until they reach age 62.  At age 62, the temporary benefit ends, but the base benefit continues for life.  You can compare plan provisions in the MSEP and MSEP 2000 Summary of Plan Provisions chart. Often members must weigh the value of the guaranteed minimum COLA in the MSEP against the value of the temporary benefit in MSEP 2000 to see which is best for them. You can use our Comparison Calculator to see how the dollar value of each adds up over time.

    All plan provisions are based on state law. We understand they are rather complicated and we are available to help explain further over the phone or during and in-person appointment. We can also help you compare benefit estimates based on different termination dates. View our Contact Us page to reach a MOSERS benefit counselor.

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    House Bill 729 Update

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    What is the status and impact of HB 729? The bill summary looks like it guts benefits even for employees that are already vested.
    As of today, the status of HB 729 is that it (as a House Committee Substitute, but materially the same) was voted out of the House Pensions Committee “do pass” on March 13, 2017. A similar bill, introduced in the Senate as SB 333, was also voted out of committee “do pass” and is on the Senate calendar for perfection.

    As it is written in both the House and Senate versions, it has no impact on members of MSEP and MSEP 2000. (See Which Plan Am I In? for membership information.)

    If passed by the General Assembly and approved by the Governor, HB729 &/or SB 333 would reduce the vesting period for current and future active members of MSEP 2011 (those employees hired for the first time on or after January 1, 2011) from 10 years of service to 5 years of service.

    To offset the cost of doing so, the proposed legislation would modify some provisions regarding when COLAs are payable, when survivor benefits are payable, and disallow service credit for unused sick leave at retirement for new terminated-vested members of MSEP 2011 only, but have no impact on current employees, retirees, or members of MSEP 2011 who retire directly from active state employment. Please see a similar recent question and answer about HB 729 on our Rumor Central blog for more information.


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    Retiree COLAs for 2017?

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    Will we receive a raise in 2017?

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

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

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

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

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

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

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    BackDROP Estimate Decrease

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    Is it true that is you work past your normal retirement (80 & out) that your pension amount decreases? I noticed a decrease since last year.
    If you are referring to your retirement benefit estimates including a BackDROP estimate that has decreased, we have addressed this question in an article on our website:
    https://www.mosers.org/MOSERS-News-Archive/2016/Why-is-My-BackDROP-Estimate-Lower.aspx.

    Generally, the longer you work, the higher your benefit and BackDROP. However, there are cases where working longer could decrease your BackDROP lump sum. The reason for the decrease could be due to a number of factors, among them, a lower COLA rate the year you retire as opposed to the previous year, or less or no temporary benefit calculated into the distribution if you are over 62 and are electing the MSEP 2000.

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