Showing posts with label changes to current employee benefits. Show all posts
Showing posts with label changes to current employee benefits. Show all posts

Changes to Retirement Benefits?

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In a conversation after the open enrollment meeting for health care, I was encouraged by others to join the Association of Retired Missouri employees because they had been in a meeting where they had been told that the legislature was trying to "take away our retirement benefits". When I said that wasn't possible because it was a "defined benefits program", I was told that they had been told that there was a legislator who was attempting to "get his hands" on the pension fund because it had done so well. And that this legislator also wanted investments to only be made in Missouri companies. Can you shed any light on this?
Thank you for your inquiry.  We are not aware of any current proposals to change retirement benefits administered by MOSERS. However, you are correct in your statement that retirement benefits for Missouri’s state employees/retirees are “defined” by state law.  Before any change can be made to retirement benefits, the Missouri General Assembly must pass a bill and have that bill signed by the Governor.  Typically, as was the case in 2010 with the passage of the MSEP 2011, the plan changes made by the General Assembly would affect new hires as of a certain date.  For example, the MSEP 2011 affects state employees hired for the first time on or after January 1, 2011.

There are many proposals offered each legislative session that would impact public pension funds. In the past, some of those proposals have included in-state investment requirements.  To track pension related proposals, you may be interested in accessing the Legislative Status Report maintained by the Joint Committee on Public Employee Retirement (JCPER) at http://www.jcper.org/legsheet.pdf which is updated daily once bills are pre-filed on December 1.

It also is important to remember that assets at MOSERS (as are all Missouri pension fund assets) are held in a trust for the exclusive benefit of members and cannot be commingled with any other funds pursuant to state statute (Section 105.662 - http://www.moga.mo.gov/mostatutes/stathtml/10500006621.html ).

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Are MOSERS Members Likely to Lose Benefits?

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After hearing of all the cutbacks, especially the town where their paycheck was cut to minimum wage, how likely are we to be to lose some of our benefits? And, I saw where the investment part didn't do so well this past year so will that change the 'bonus' employees of MOSERS receives? Just wondering.
With regard to your comment about the town whose city workers' pay was cut to minimum wage, we assume you’re referring to Scranton, PA, where the mayor there did reduce the pay of those public workers. While that obviously has nothing to do with MOSERS or even the state of Missouri, we can certainly understand why this might cause some alarm.

To answer your question, it is very unlikely that members of MOSERS would lose pension benefits. In 2010, the Missouri Legislature made changes to the law regarding the retirement benefits for newly hired employees. These changes result in a lower cost to the state for employees first hired after 2010. These changes were made, in part, in order to preserve the retirement plan for future members of MOSERS.

Investment returns are in large part reflective of the financial markets. The MOSERS’ investment returns were 5.4% for 1 year ended March 31, 2012, which exceeded the returns available from the financial markets (MOSERS’ “policy benchmark”) by 1.1%.  That 1.1% over the market return amounts to approximately $85.7 million for the year over and above the amount that would have been earned if the MOSERS trust fund had been invested passively without the decisions made by the staff.  Also, recently MOSERS’ 10 year investment returns were called “Best Performing” by Cliffwater, an alternative investments consulting firm. MOSERS was the best performing state pension plan for the 10 years ended June 30, 2011, with a 7.1% annualized return.

Eligibility for compensation incentives will be determined based on the 1-, and 5-year period investment performance ending June 30, 2012.  

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Decreasing Current Employee Retirement Benefits

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Have you heard of any bills/discussions for the current legislative session seeking to decrease the retirement benefits of current retirees as a means to cut state spending? I have heard this is the next step, since the door was opened last session with the changes for new employees.
No such bill has been files to date. Unfortunately, we have no way of knowing what, if any, changes to the retirement plan might be proposed in the 2011 legislative session. We, like everyone else, will just have to wait and see what happens as the 2011 legislative session progresses.
The Missouri State Employees' Retirement System (MOSERS) administers retirement, Long-Term Disability and Life Insurance according to state statutes. Staff at MOSERS administers the program we have responsibility for according to state law.  We can provide information to legislators and show the impact on employees and the trust fund, but ultimately, decisions about making changes to the retirement plan rest with the legislature and the Governor's office.
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Is the legislature and/or MOSERS considering changing retirement benefits for current state employees?

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I read with interest the recent article in the Jefferson City News Tribune regarding pension reform for Missouri State employees. This has prompted a number of questions in my office and I would very much appreciate if you would address them. 1. Is the legislature and/or MOSERS considering changing the pension/retirement benefit for current Missouri State Employees? During the recent special session, all communication from the legislature/MOSERS clearly indicated that changes would be directed at new hires only. However, the mentioned news article would seem to indicate that these earlier statements were not completely true and attempts will be made to impact benefits for current employees in upcoming sessions. Is this the case, and if so, what changes are being considered?
2. Is it legally possible for pension/retirement benefits that are held by vested Missouri State Employees to be changed or taken away?
3. Does state law protect the retirement benefit of a vested Missouri State Employee?
4. Does Missouri State law view state employee retirement/pension benefits as Gratuity, as Contract, as Promissory Estoppel, or as Property Interest?
5. Are there any court cases that establish legal precedent for what changes are can and can't be made to the retirement/pension benefit of a vested Missouri State Employee?Finally, I would suggest that you put more information on your website that speaks honestly and directly to this issue. This is a topic of great interest to most state employees with over 10-15 years experience. There is much discussion and rumor surrounding the issue.

We also read the article to which you refer with great interest and responded with a letter to the editor of the Jefferson City News-Tribune that was published in the August 15, 2010 edition of that paper. We also posted the letter on our website.
Regarding the first question, we are not aware of any proposals to make changes to the retirement plan’s present benefit provisions that would in any way diminish or impair benefits accrued to date or that will be accrued in the future by present active and retired employees.
Your remaining questions are generally addressed in the Revised Statutes of Missouri in sections 104.540 (MSEP) and 104.1054 (MESP 2000) which, in pertinent part, read as follows:
Benefits are obligations of the state—benefits not subject to execution, garnishment, attachment, writ of sequestration—benefits unassignable—reversion of benefits, when—refund received, when.—
1. The benefits provided to each member and each member's spouse, beneficiary, or former spouse under the [law] are hereby made obligations of the state of Missouri and are an incident of every member's continued employment with the state. No alteration, amendment, or repeal of the [law] shall affect the then-existing rights of members, or their spouses, beneficiaries or former spouses, but shall be effective only as to rights which would otherwise accrue hereunder as a result of services rendered by a member after such alteration, amendment, or repeal.

If legislation were enacted that might be construed to be a diminishment or impairment of benefits, it is highly probable that resolution of the matter would ultimately be determined by our court system.
In the absence of any specific proposal to change plan benefits for present members, we are not positioned to offer opinions regarding how any benefit law change might be viewed by the courts. However, if any such proposals are forthcoming you can rest assured that they will be comprehensively vetted and the results will be presented to the policy makers who are proposing or considering plan changes.
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