Showing posts with label funded status. Show all posts
Showing posts with label funded status. Show all posts

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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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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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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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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MOSERS' Funding Status

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What is the status of the MOSERS fund? My wife heard on the radio that it is in fiscal trouble. Could you tell me the fund status or direct me to a site where I can review it's status. 
 As of June 30, 2017, retirement benefits for general state employees are 67.5% pre-funded. This information is contained in our Comprehensive Annual Financial Report. It was also included in our Summary Annual Financial Report, an insert in the fall/winter 2017 issue of our RetireeNews and PensionsPlus newsletters.

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. 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.)

While the dollar amount has increased, retirement benefits remain 1.5% of the total state budget. This is the same percent of the total state budget in FY2019 as it was 20 years ago in FY1999. For the past 60 years, the state of Missouri has honored its commitments to state employees and consistently funded the employer contributions recommended by our actuaries.


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MOSERS' Appropriations

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Now that the House has passed and sent to the Senate HB 2005, could you tell me whether the amounts appropriated for MOSERS ($417,959,249) include all of the amount requested by the MOSERS Board and, if not, what percentage of the request it does include.
Also, could you tell me whether the amount appropriated for MCHCP ($499,756,307) includes the amount requested by MCHCP to subsidize retired state employees' secondary insurance premiums as has been the case in past years?
Yes, the amount appropriated by the House Appropriations subcommittee in HB 2005 fully funds the employer contribution rate as certified by the MOSERS Board. HB 2005 has now been sent to the Senate and must be passed in the Senate and then signed by the Governor. Changes could still be made. We will monitor all bills related to retirement benefits and let our members know about changes, if any, that may affect them.

The House Appropriations subcommittee included $449,656,307 as the state’s contribution to MCHCP. Since health care is a benefit that we do not administer at MOSERS, we are not in a position to comment about whether or not it was the amount requested by MCHCP. Please contact MCHCP directly at (800) 487-0771 or www.mchcp.org for more information. 

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Pension Funding

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If the MOSERS retirement fund is only 69.6% funded currently and that figure does not go up or only goes up a little by the time I am eligible to retire in 5 years then does that mean I will only get
69.6 % of what I am supposed to get on my monthly pension?
No. MOSERS pays 100% of the promised benefits due to members. The funded status (technically the unfunded actuarial accrued liability or UAAL) of the retirement system is separate from the formula that is used to calculate your MOSERS retirement benefit. We are not a “pay-as-you-go” system, rather we are pre-funded through contributions from the state, contributions from members who were first employed on or after January 1, 2011, and from investment earnings. The funded status refers to the value of assets we have currently relative to all present and future liabilities.

MOSERS provides a defined-benefit pension. That means the benefit is defined by law and based on a formula as shown here:

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). We encourage you to explore the section of our website called “What Plan Am I In?” to read more about the specific provisions in each plan.

We have answered many Rumor Central questions on system funding recently that you may also find helpful.

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System Funding

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We have received some questions about MOSERS' funding related to the Buyout Program: 
I just read an article in the St Joseph News Press that states the Missouri pension system " is struggling " It then talks of the pension buyout program. Financially is the system struggling?
I saw in the editorials from the Kansas City and St Louis newspaper that MOSERS is funded only at 69%. What does this mean for the long term future of MOSERS
 As of June 30, 2016 (the close of the most recent fiscal year), MOSERS is 69.6% funded. That means that we have 69.6% of assets necessary to pay all accrued liability over the long term. Because we operate on a very long-term horizon (already analyzing and anticipating funding needs 30-50 years into the future). We will send a summary annual financial report for fiscal year 2017 to all members in December.

The MOSERS board has taken several actions to keep the retirement system solid and secure into the future. The board approved a proposal to reduce the system’s long-term liability by offering a voluntary lump-sum payment (rather than a monthly pension) to former state employees who will be eligible for a pension benefit at some point in the future. This is the Buyout Program the articles are referring to.

Also, unlike in other states, the Missouri General Assembly has consistently appropriated the full employer contribution to MOSERS as recommended by the plan’s actuary. The Governor signed House Bill 5 on June 30, 2017, which resulted in full funding of MOSERS at the contribution rate as certified by MOSERS Board of Trustees in September 2016.

You can find more information on Rumor Central about other related Board decisions and MOSERS' appropriation as well as additional details regarding MOSERS' funded status.


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MOSERS' Funding Rate

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I retired in 2010 and, at the time, recall hearing that MOSERS was 82% funded. However, the latest report is that MOSERS is 69'6% funded. That seems an alarming decrease during a time that both stocks and bonds have generally done quite well. What is the cause of the decline?
The MOSERS Board of Trustees and the Missouri General Assembly have established a long-term plan relative to the actuarial funding and status of the system.  The MOSERS’ Board has, and continues to, implement a multi-year policy that reduces the assumption used by the system relative to investment returns, to address future capital market expectations.  In 2010, the Missouri General Assembly passed pension reform that established a new benefit tier within MOSERS (MSEP 2011).  This new tier is annually reducing the costs of the plan and will, over time, work to allow MOSERS to be a very viable, low-cost plan for all stakeholders.

While short-term experience may result in seemingly negative outcomes, such as a reduced funded status of 69.6%, the long-term strategies, in place, are solid and the objective data supports that conclusion.

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Pension Underfunding

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In light of Illinois' issue with their underfunded pension, how much is Missouri's pension underfunded?
As of June 30, 2016 (the close of the most recent fiscal year), MOSERS is 69.6% funded. That means that we have 69.6% of assets necessary to pay all accrued liability over the long term. Because we operate on a very long-term horizon (already analyzing and anticipating funding needs 30-50 years into the future), our funded status is expected to go down somewhat over the next few years and then begin to go back up. We will send a summary annual financial report for fiscal year 2017 to all members in December.

The MOSERS board has taken several actions to keep the retirement system solid and secure into the future. The board approved a proposal to reduce the system’s long-term liability by offering a voluntary lump-sum payment (rather than a monthly pension) to former state employees who will be eligible for a pension benefit at some point in the future. This is contingent upon the Governor’s action on SB 62. The Governor has until July 14, 2017 to take action on the bill (sign it, veto it, or allow it to become law without his signature). If SB 62 is approved by the Governor, we will contact eligible members.

Also, unlike in Illinois, the Missouri General Assembly has consistently appropriated the full employer contribution to MOSERS as recommended by the plan’s actuary. The FY18 employer contribution contained in HB 5 was no exception and was Truly Agreed to and Finally Passed and sent to Governor Greitens on Thursday May 4th. The Governor has until July 1 to take action on HB 5, which includes MOSERS’ appropriation. You can find more information on Rumor Central about other related Board decisions and MOSERS' appropriation as well as additional details regarding MOSERS' funded status.

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MOSERS 2018 Funding

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We recently received two questions on this topic:
Was MOSERS fully funded for 2018?

Does the budget that the legislature passed and sent to the governor contain an appropriation for the full amount requested by MOSERS to fully fund the retirement system?
Yes, the budget committee agreed to fully fund MOSERS’ budget request for FY18. The appropriations bill was Truly Agreed to and Finally Passed and sent to Governor Greitens on Thursday May 4th.

For background information about our funding, see the Rumor Central posts Appropriations for Pension Funding  from February and FY18 Funding for MOSERS from March.

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News Tribune Article

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 news tribune article dated april 9, 2017 - "Schmitt promotes mosers revisions" quote from board member and state treasurer Schmitt "Missouri's troubled pension system is the single greatest threat ...long term solutions to fix the problem of our insolvent public retirement system before it's too late". from a post dated feb 7,2017 "is mosers properly funded" states the mosers board of trustees monitors all financial aspects of the plan...to stabilize plan funding and provide sustainability for the future. our long term plan is SOLID and the objective data supports that conclusion. confused - is the system a "troubled pension system with problems of a insolvent retirement system" or a system that is SOLID and secure.
The MOSERS board and staff are working to KEEP the retirement system solid and secure. The April 9 article in the News Tribune references a proposal to reduce the system’s long-term liability by offering a voluntary lump-sum payment (rather than a monthly pension) to former state employees who will be eligible for a pension benefit at some point in the future. On average, these terminated-vested members left state employment at age 38 with about 10 years of service, and they will become eligible to begin receiving a MOSERS benefit at age 62. The specific details of this potential offer must still be determined but it will be designed to reduce the system’s long-term liability.

The lump-sum proposal is in addition to other recent action taken by the MOSERS board regarding future assumptions about investment income and retiree life expectancy which will result in increased costs to the state in the short-term but keep the system on solid ground for the future. Additionally, in 2010, the Missouri Legislature changed plan provisions for all new employees hired on or after January 1, 2011. Changes include 4% contributions from employees, a later retirement age, and discontinuation of subsidized service purchases, which significantly reduce costs going forward.

Currently, the Missouri Legislature is making decisions about the FY18 budget. MOSERS submitted our budget request for FY18 as we do as part of the normal process each year. The amount determined by the actuaries and certified by our board was $393 Million. The amount the House funded is $361 Million – about $32 Million less than requested. The budget now moves to the Senate. If the Senate approves the full amount we requested, or any amount other than the amount approved by the House, the House and Senate will go to conference committee to come to agreement on the appropriation amount.

Treasurer Schmitt has emphasized how important it is for the legislature to fully fund the pension system. NOT funding MOSERS could be a threat to the state’s AAA bond rating. If the legislature decides to not fully fund MOSERS’ FY18 budget request, it will have no immediate impact on benefit payments to retirees, however, a pattern of inadequate funding certainly could have negative long-term consequences for the retirement system.

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FY18 Funding for MOSERS

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 This week, we received the following questions from different members:
I read an article in the newspaper discussing how some legislators are not wanting to fully fund MOSERS retirement in the new budget. If that were to happen, what implications does/could that have for employees who have already retired or who are close to retirement? Also, would that create the possibility that retirement benefits for MO state employees could be cut in the future as they have been for retirees in certain municipalities with underfunded retirement plans.

My husband said he viewed a newscast that said that the MO Retirement fund has a shortfall of $45 million. Is that true? If so what affect will that have on our retirement?

Today on KY3 noon news, I caught a sentence only, re: MO State Employee Pension fund being under funded. Republican Leg is suggesting even less funding? Since this pension is the majority of my retirement income, what did I really hear? I'm am concerned!

In light of the budget crisis and the shortfall in the pension fund, are state retirees at risk of having their pension amount cut or losing the pension entirely? I would appreciate a heads-up in case I need to start looking for employment.
As we do each year, MOSERS submitted its Fiscal Year 2018 (FY18) budget request to the State. In the initial phase of the budget process, the House Budget Committee chose to not fully fund the amount that was determined by the actuary and certified by the MOSERS Board. Our budget request is still pending in the House. Once the full House has finalized its version, the Senate will weigh in with its budget recommendations. If the legislature decides to not fully fund MOSERS’ FY18 budget request, it will have no immediate impact on benefit payments to retirees, however, a pattern of inadequate funding certainly could have negative long-term consequences for the retirement system.

For additional information, see this Rumor Central post from February, Appropriation for Pension Funding, and our Key Facts about MOSERS’ funding principles. Print Friendly and PDF

Impact of House Bill 729

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Please explain the impact HB729 would have on state employees and retirees if it were to pass. Thank you.
HB 729 contains provisions affecting members of the MSEP 2011* only. This bill decreases the vesting period for retirement benefits for MSEP 2011 members from 10 years to 5 years.

Because MOSERS and MPERS** do not currently have a funded ratio (assets divided by liability) of at least 80%, state statute requires the bill to contain cost-saving provisions to offset the increase in plan liability associated with the reduced vesting period. Offsets contained in HB 729 affect only MSEP 2011 members who leave state employment after becoming vested (but prior to attaining retirement eligibility).

It is important to note this bill will not affect active state employees or retirees except that MSEP 2011 members will become vested in a retirement benefit in 5 years rather than 10 years. If an MSEP 2011 member separates from state service after becoming vested, then offset provisions will apply to that individual. For more detailed information you can follow all HB 729 actions on the Missouri House website.

Please note that this is proposed legislation. It must be passed by the Missouri House and Senate and approved by the Governor. If it is passed, it could change during the process. We do not know what might happen with individual bills during the legislative session but we will monitor all legislation impacting MOSERS and inform our members of any changes that become law. The 2017 legislative session ends on May 12, 2017.

* MSEP 2011 members are those hired for the first time in a MOSERS or MPERS benefit-eligible position on or after January 1, 2011.
**MPERS is the MoDOT & Patrol Employees’ Retirement System

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Appropriation for Pension Funding

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

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

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

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

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

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Is MOSERS Properly Funded?

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In response to the op-ed in the Kansas City Star on Feb 5, 2017 titled “Underfunded state pensions are Missouri’s crisis on the horizon,” we have received some questions from members asking if MOSERS is properly funded.
The MOSERS Board of Trustees monitors all financial aspects of the plan and continues to take necessary action to stabilize plan funding and provide sustainability for the future. Our long-term plan is solid and the objective data supports that conclusion.
In 2010, the legislature made changes to state employee pensions which, among other cost-saving measures, requires employees to contribute 4% pay and increases the retirement age from 62 to 67. As of January 2017, nearly 38% of active state employees are in the MSEP 2011.
The MOSERS Board certified a contribution rate for FY18 of 19.45% of covered payroll which results in an increase of approximately $46 million in funding for MOSERS (compared to FY17). The Governor’s FY18 budget fully funds the MOSERS budget request. The budget summary said, Governor Greitens is “committed to maintaining the state’s benefit package for its hard-working public servants” and “[o]ther states across the country are jeopardizing state employee retirement benefits by not adequately funding their pension systems.”
The legislature has consistently appropriated the full amount needed to fund the system over the long-term, as determined by independent actuaries, which contributes to Missouri’s AAA credit rating.
State employee pensions represent 1.45% of the total state budget. The cost, as a percentage of the total state budget, has remained level for decades.
The average pension for general state employees retired from MOSERS is approximately $15,000 per year.
Accrued pension benefits from MOSERS are protected by law and cannot be reduced or modified.
Any future changes to MOSERS pension plan provisions would require passage by the Missouri legislature and approval by the Governor.

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Pension Funding

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Very concerned, if Mosers is asking the Legislators for more money, what's to keep them from saying they don't want to fund our retirement any longer and we end up with reduced benefits, like Kansas. I planned my retirement based on this, this is the reason I worked for lower wages, I'd like it to be there when I do retire. Thank you for your insight.
The state of Missouri has been consistent in fully funding the contribution rate recommended by the actuary and certified by the MOSERS Board of Trustees. You may be interested to read a similar question we answered last Friday.

As a vested member of MSEP/MSEP 2000, your accrued pension benefits are protected by law and cannot be reduced or modified.

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What does MOSERS' funding level mean for you?

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An article in the Springfield News Leader on Sunday discussed state public employee pension funds and their "funded percentage." It stated that it was desirable for pension funds to be funded at an 80% or higher level. It stated that the MOSERS fund was currently funded at 73%. Could you explain this shortfall and how it might affect my future pension income? Thanks!
The keys to successful retirement system financing are independent actuarial valuations, the employer’s commitment to contributing at rates recommend by the actuary, and a sound investment program. MOSERS has all three of those characteristics and is thus positioned to weather storms like the credit crisis that impacted all investors in the fiscal year ended June 30, 2009.  Over time, we have been smoothing in the losses sustained that year and that has resulted in the appearance of a declining funded ratio. Now that we are through with phasing in those losses, the system is experiencing increasing funded status.  For example, as of June 30, 2014, the funded ratio was 75% based on smoothed asset values and almost 80% funded based on the market value of assets. While there are impressions about the importance of being at least 80% funded, it is not nearly as important as the board’s and the state’s commitment to assuming that the system remains adequately funded as mentioned at the outset.  The state has always fully funded the required contribution as calculated by the system's actuary. The shortfall you referenced will not have any impact on your future pension income.

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MOSERS Retirement Fund

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My daughter heard on the radio that Missouri retirement fund is over 11 billion in the hole. Is this true?
We are unfamiliar with the report you reference but often reports like this may lump together the four largest public pension plans or all 130 public pension plans in the state and may include the unfunded liability for retiree healthcare which is something that is completely separate from MOSERS.  If you can direct us to the report we would be happy to address it specifically as it relates to MOSERS.

It is important for you to know that MOSERS is financially sound and the defined benefit pension plans are sustainable as illustrated by the facts below:
  • The state of Missouri has consistently funded 100% of the annually required contribution (ARC) as determined by the system’s independent actuary and the employer contributions to MOSERS account for 1.13% of the state budget.
  • MOSERS has a solid 56-year track record of responsibility, reliability and reputation with excellent investment returns, outstanding customer service and efficient administration.
  • Over the past 20 years, investment earnings have accounted for more than two-thirds of MOSERS’ revenues.
  • As of June 30, 2013, MOSERS’ funded ratio is 72.7%  and the MOSERS trust fund has $8.1 billion in assets.
We hope you find this information helpful. 
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MOSERS Funded Status

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Now can someone please reply so the average person who doesn't have an accounting degree can understand...? Should current retirees be concerned about losing our monthly pension?
MOSERS retirees have no need to be concerned about their pensions. MOSERS is a defined benefit plan. That means the benefit is defined by law and based on a formula that includes credited service and final average pay. Once members meet retirement eligibility and complete the retirement process, they receive a secure, lifetime benefit. The benefits provided to retirees are obligations of the State of Missouri. Money comes into the fund in two ways 1) Contributions by the employer (and employees in MSEP 2011), and 2) Investment earnings. Unlike some other states, the state of Missouri has consistently fully funded the amount determined by independent actuaries to be the contributions required to properly and responsibly fund the pension plan. Over the past 20 years, investment earnings have accounted for more than two-thirds of MOSERS revenues. This saves money for the state, but regardless of investment returns, your benefit is secure. Print Friendly and PDF