Showing posts with label Cap. Show all posts
Showing posts with label Cap. Show all posts

MOSERS Benefit Cap and Social Security

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Has it ever been considered to put a "top" amount that could be paid to retirees; say, $100,000 as I note there are several that are paid more than this?  $100,000 plus Social Security should be plenty to live on as a retiree, along with any other income they may receive.  It seems folks on the lower end of the retirement scale need every penny they receive and should not be penalized by not receiving a small percentage increase from time to time.
The short answer to this question is no, MOSERS has not seen any legislative proposals to cap retirement benefits at $100,000 annually. To more fully address the question, though, please keep reading.
We presently have 16 retirees, out of more than 30,000, making over $100,000 annually in retirement benefits from MOSERS. This may be one reason why we've not seen a proposal to cap retirement benefits. Nine of the 16 receiving over $100,000 were judges when they were employed with the State of Missouri. There are several others who get very close to that amount, many of whom were also judges, university presidents, department heads, etc. Keep in mind a couple of things: these benefit amounts are based on relatively high final average salaries for these employees who function much like high level officials in private companies, and have similar levels of responsibility. And this is by no means the norm.
As you correctly point out, the retirement package for State of Missouri employees consists of the MOSERS benefit plus Social Security. A key difference between the two programs is that Social Security benefits are weighted so that lower paid employees get a higher percentage of their income replaced by Social Security than do higher paid employees.  For example, an employee retiring at age 62 earning $150,000 per year in pay could expect to have about 19% of their pay replaced by Social Security while an employee earning $36,000 would have about 47% of their pay replaced.
You can see the Social Security Administration's website for more detailed information on computing benefits. The point here is to clarify that Social Security benefits actually favor lower income workers. Consequently, through their combined benefits from MOSERS and Social Security, the higher the working pay of state employees the lower will be the percentage of their income replaced by retirement benefits.
Finally, there is a cap on the compensation considered in computing Social Security benefits - in 2010 the Social Security wage base is $106,000, meaning that any income over that amount will not be considered in calculating Social Security benefit.

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