Showing posts with label retirement benefits. Show all posts
Showing posts with label retirement benefits. Show all posts

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

Termination & Retirement Benefits

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If you are fired from state government, with or without just cause, do you lose your retirement benefits?
No. 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.

See the Which Plan am I In page on our website, which has information about how to determine your plan membership and links to member handbooks and summary of benefits charts for each plan. Contact a MOSERS benefit counselor to discuss your specific situation. You may also contact a MOSERS benefit counselor to request benefit estimates for various scenarios (including a scenario of leaving employment prior to retirement eligibility).

*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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Can Politicians Change Retiree Pay?

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Can state politicians change/reduce a retirees established retired pay? I have heard that MO retired state pay and benefits are going to be looked at it the near future.
No, members’ accrued benefits are protected by law. There are currently some proposed bills making their way through the Missouri legislature that would change vesting requirements for members of the MSEP 2011 only, but would not affect members or retirees under the MSEP or MSEP 2000. We do not know if any proposed legislation will pass or not but we will monitor all legislative proposals that may impact MOSERS and inform our members of any changes that become law. The 2017 legislative session ends on May 12, 2017.

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Taxes on Retirement Benefit

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Are retirement payments taxed?
Yes, retirement benefits are considered taxable income and Missouri income tax and federal income tax can be withheld from your MOSERS monthly retirement payments.

However, in a recent RetireeNews article we described the public pension exemption. Depending on a variety of factors (including, but not limited to, income, filing status, and age) you may be able to deduct some or all of your public retirement benefit on your Missouri tax return, to the extent the amounts are included in your federal adjusted gross income. MOSERS recommends you contact the Department of Revenue or a qualified tax advisor for additional information or answers to your specific questions about the public pension exemption.

At retirement, you may specify your federal and state tax withholding preferences by completing a Tax Withholding Authorization (Substitute W4-P) form, which you can do by logging into your Member Homepage on MOSERS’ website. MOSERS has a federal tax calculator on our website to help estimate your withholdings:
https://www.mosers.org/Members/Calculators/Federal-Tax-Calculator.aspx

MOSERS will withhold state taxes only for Missouri residents. If you aren’t a Missouri resident in retirement, we recommend you contact the appropriate state and local tax authorities to determine the taxability of your MOSERS benefit.

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Taxes & Retirement Benefit

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I am thinking about retiring at the end of the year (2016). Will I pay taxes on my state retirement?
It depends.  Retirement benefits, which may include the temporary benefit, are considered taxable income for individual tax purposes. Missouri income tax and federal income tax can be withheld from your monthly retirement payments.

However, in a recent RetireeNews article we described the public pension exemption. Depending on a variety of factors (including, but not limited to, income, filing status, and age) you may be able to deduct some or all of your public retirement benefit on your Missouri tax return, to the extent the amounts are included in your federal adjusted gross income. MOSERS recommends you contact the Department of Revenue or a qualified tax advisor for additional information or answers to your specific questions about the public pension exemption.

At retirement, you may specify your federal and state tax withholding preferences by completing a Substitute W4-P form, which you can do by logging into your secure Member Homepage on MOSERS’ website. MOSERS has a federal tax calculator on our website to help estimate your withholdings: https://www.mosers.org/Members/Calculators/Federal-Tax-Calculator.aspx

MOSERS will withhold state taxes only for Missouri residents. If you aren’t a Missouri resident in retirement, we recommend you contact the appropriate state and local tax authorities to determine the taxability of your MOSERS benefit.

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Missouri Lottery and Retirement Benefits

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If a person wins the lottery in Missouri, can they still get retirement benefits from Mosers?
Yes. As a general state employee, your MOSERS retirement benefit would be stopped only in the following situations:
  • You retire and later return to work in a benefit-eligible position covered by MOSERS or MPERS (MoDot & Patrol Employees’ Retirement System). Then, once you re-retired or passed away, benefits would be paid to you or, potentially, your eligible beneficiary, as appropriate.
  • You have been found guilty on or after August 28, 2014 of a felony under state law (or a substantially similar offense provided under federal law) involving stealing or receiving stolen money, property, or service valued at $5,000 or more, forgery, counterfeiting, bribery of a public servant, or acceding to corruption, in connection with your duties as a state employee. You would forfeit service credit from that point forward but would not lose credit for prior service.
  • You are a survivor or beneficiary who is charged with the intentional killing of a member, retiree or survivor without legal excuse or justification.
Good luck - let us know if you win!

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Garnishment of Retirement Benefits

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Can MOSERS retirement benefits be garnished?
Your benefits from MOSERS are not subject to execution, garnishment, attachment, writ of sequestration, or any other process or claim, except with regard to the collection of child support or maintenance, payment made to a former spouse pursuant to a division of benefits order, or an IRS levy. Print Friendly and PDF

Lifetime Retirement Benefit

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Is the retirement benefit for a lifetime? Had heard that you would only receive the benefit for 20 years.
Yes--once you meet retirement eligibility, your MOSERS retirement is a lifetime benefit based on your final average pay and credited service. MOSERS is a defined benefit plan, which provides a set benefit for life once you meet the age and service requirements for retirement. If you aren’t sure what retirement eligibility is for your plan, see the Which Plan Am I In? section of our website. More information can be found in our retirement handbooks. Print Friendly and PDF

MOSERS & Marriage

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I am fortunate to be single and I wonder what happens to my pension if I do get married after retirement. If I marry before retirement, will my spouse have a bigger pension if I die or does it make any difference at all? Many future retirees would like to know this answer.
The benefit payment options available to you at retirement depend on which plan you belong to and if you are married or single at retirement. If you aren’t sure which plan you belong to, check the Which Plan Am I In? section of MOSERS’ website. If married at retirement, you will have five benefit payment options to choose from; if single, you will have three (except for members of the Judicial Plan prior to 1/1/2011*). The joint & survivor options are available only if married.  See page 13 of the Retirement Guide or the Benefit Payment Options Summary on p. 17 of the PreRetirement Planning Reference Book for more information about benefit payment options. Regardless of the option you elect, you will receive a benefit payment each month for as long as you live.**

In general, once the first retirement benefit payment has been issued by MOSERS, you can’t change the benefit payment option you elected at retirement. One exception is if you are single at retirement and choose the life income annuity payment option but later marry. If this happens, you may change your payment option to one of the joint and survivor options if you make this election within one year from marriage. The new spouse must be designated as your beneficiary by submitting a Designation of New Spouse as Beneficiary for Retirement Benefits form to MOSERS.

If you marry and die before retirement, your surviving spouse would be eligible for a survivor benefit. 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 payable for the remainder of your spouse’s life. If there is no survivor spouse, 80% of your monthly base benefit will be paid to your natural or legally adopted child(ren) who are younger than age 21. If there are no dependent children, no survivor benefit will be paid.

If you marry and die after retirement, your surviving spouse would be eligible for a survivor benefit based on the election you made upon retirement, e.g., 50% Joint &Survivor or 100% Joint & Survivor.   

*Different provisions apply to judges who were members of the Judicial Plan prior to January 1, 2011.  Please see your Judge’s Retirement Handbook for more information.
**Unless you return to work in a MOSERS benefit-eligible position or forfeit your pension benefits due to felony conduct in connection with your duties as a state employee. 

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Hybrid Retirement Legislation

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In the March 14 Keeping Up I noted the article in which Rep. Andrew Koenig wants lawmakers to approve a "hybrid" retirement system. Is there a bill on this proposal? If so, will it affect those already retired? What would be the effective date?
The bill you are referring to is HB 1682 that would establish a hybrid plan for members hired for the first time on or after 1/01/15. As it is currently stated, this bill would not affect existing retirees. We have no way of knowing what might happen with individual bills during the current legislative session, but as always, we will monitor all legislation impacting MOSERS, and inform our members of any changes that become law. You can follow the status of all public retirement bills on the Joint Committee on Public Retirement’s website at www.jcper.org.
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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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Reemployment After Retirement and Your Pension

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A coworker retiree tells me that he is allowed to work only a certain number of hours per year (50%) because if he works more, his pension will stop. Please clarify.
If you retire and later return to work for the state of Missouri, in a benefit-eligible position covered by MOSERS, your retirement benefit will be stopped. Your employer determines if you are working in a benefit-eligible position.

A benefit-eligible position is one that is permanent and normally requires the performance of duties during not less than 1,040 hours per year. If you return to work for the state in a benefit-eligible position:
  • Your monthly retirement benefit from MOSERS stops for ANY month which you are actively employed in that position.

  • You will accrue additional service credit for periods of reemployment greater than 12 months.
When you retire again, your benefit will be equal to the monthly benefit you were receiving PLUS an additional monthly benefit for the service earned during reemployment periods of 12 months or more.

Working for the state in a position that is not deemed benefit-eligible does not have any impact on your eligibility to continue receiving a retirement benefit. You may work in that position and receive a retirement benefit from MOSERS. 

If you have a question about whether or not a position will affect your retirement benefit we advise you to check with your employer.

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Rumored Legislative Changes to Pension/Health Care Benefits for Future Retirees

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I've heard that as of 2013 the legislature will be cutting the pension and health care benefits of future retirees? Is this true?

We are not aware of any proposals that might be made in the 2012 or any future legislative session that would cut the pension and health care benefits of future retirees. Keep in mind that the Missouri State Employees' Retirement System (MOSERS) administers retirement, long-term disability and life insurance benefits for our members. Health care is managed by the Missouri Consolidated Health Care Plan (MCHCP)
You can read a couple of other posts about this topic on our Rumor Central blog. As always we will monitor all legislation that impacts MOSERS members and notify you of anything that might pass. Legislators can begin filing bills in December for the upcoming 2012 legislative session.
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Quit/Move Away and Impact on Retirement Benefit

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If I quit my job and move to another state, how will that affect my MOSERS state retirement?
If you are a vested member of MOSERS when you quit (5 years for MSEP and MSEP 2000; 10 years for MSEP 2011) then your MOSERS retirement benefit will be available to you at the time you are eligible to retire, no matter where you live or what job you have. Just make sure MOSERS always has your current contact information. MOSERS will contact you when you are eligible to begin receiving your retirement benefits.
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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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BackDROP

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I've heard that backdrop may be going away. If so, how will this affect those already in the process of earning backdrop?
BackDROP is not going away for current state employees or anyone who is currently in the process of working toward their BackDROP. What is likely being referred to is the legislation that was passed impacting retirement benefits during the special session of the legislature that was held this past summer. In addition to several other changes made to retirement benefits only for those hired on or after January 1, 2011, this legislation also eliminated the BackDROP going forward, for those new employees. You can read more about this legislation on our website.
Again, this legislation does not impact current employees.
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Who Makes Proposals to Change Retirement Benefits?

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Every year there seems to be proposals submitted to the legislature that could influence retirement decisions, such as the proposal this year to give a $2,000 bonus per year of employment. Who makes these proposals?
Only members of the legislature can propose new laws or changes to existing laws in the form of bills that make their way through the legislative process. The proposal this past legislative session, which did not pass, was to offer $1,000 cash for each year of service up to 20 years. These types of proposals are designed as incentives for employees to leave state employment, thereby reducing the state’s payroll and fringe benefit obligations. The Missouri House of Representatives offers a chart detailing how a bill becomes law, which may aid in understanding the process.

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Financial Health of Plan

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Recently we’ve heard from members in the field who’ve expressed concern about the financial health of MOSERS. Hearing of the System’s 84% funded status has raised questions among some members who then wonder if this will impact the state’s contribution rate for FY2012. Some are even hearing rumors that the contribution rate would be 20% next year, and the difference (between the FY2011 rate of 13.81% and 20%) would be paid by the employee.
First, and most importantly to you, no employee contributions are being considered for present employees. We are definitely on an economic roller coaster ride, but our returns are exceeding expectations so far this year. The state’s contribution rate, which was certified by the MOSERS board for FY 2011 to be 13.81% of payroll, fully recognized our funding ratio of 84% (which is viewed by the industry as a healthy position). We have no idea what would have prompted someone to suggest that the rate is going to 20%.
These and other rumors may have stemmed from press reports on the recent Pew report. That report, unfortunately, had a misleading title, and the data they used included the Public School Retirement System’s (PSRS’) liabilities in their calculation. There are still a few PSRS members who are state employees and because of that the preparers of the Pew report included PSRS’ total liabilities in their report on the state of Missouri. That’s not just misleading – it’s simply wrong. You can read MOSERS’ response to the Pew report
here.
Also, the state cannot require contributions from any employees without a change in the law. SB 714 (which is now also attached to HB 2357) has a provision which would require a 4% of pay contribution rate for new employees only, who are hired for the first time on or after January 1, 2011. While the University of Missouri recently established a contribution rate for current employees, their plan specifically allows the Board of Curators to make those types of changes without a law change. Our statutes do not.
The fact that the funded status is not higher than it is currently can reasonably be attributed, in part, to significant benefit increases that have been enacted over the years. Benefit changes enacted in the 1990s that resulted in material increases in unfunded liabilities are described below.
Benefit Changes Since 1992


  • 8/28/94 - Permanent Rule of 80 adopted (It had previously been put in place for a one
    year window period commencing 8/28/92)
  • 1/1/95 - Benefit multiplier increased from 1.5% to 1.6% (applied to active and retired
    members)
  • 8/28/97 - COLA made permanent for life rather than temporary period (applied to active and retired members)
  • 8/28/97 - “Free 50” survivor benefit enacted (applied to active and retired members)
  • 7/1/2000 - Year 2000 Plan became effective but this was cost neutral. (However, the
    other changes identified here resulted in significant additional liabilities and related
    contribution rate increases.)
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Legislation and plan changes

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Rumor has it that the existing defined benefit plan is in danger of being closed to create a new defined contribution plan or some other plan. Is there any truth to this and how would it affect current state employees or retirees?
Several pieces of legislation have been introduced this session that may affect retirement plan provisions administered by MOSERS. Primarily we are talking about three bills:
  • SB 896 – establishes a defined contribution plan for individuals first employed on or after January 1, 2011.
  • SB 1048 – establishes a new tier of benefits for the Missouri State Employees’ Plan 2000 (MSEP 2000) for those individuals first employed on or after January 1, 2011. This bill modifies vesting, age for eligibility, and requires member contributions of 4%. It would also require a 4% contribution for existing members earning $100,000 or more. No other current members would be affected by this bill.
  • SB 1049 – establishes a new tier of benefits for the Missouri State Employees’ Plan 2000 (MSEP 2000) for those individuals first employed on or after January 1, 2011. This bill modifies the age for eligibility requirements and requires member contributions of 5%. This bill does not affect existing members whatsoever.
With the exception of those individuals earning $100,000 or more (under SB 1048) these bills do not affect existing members (active or retired) whatsoever. If legislation that affects existing members gains momentum or is passed by the legislature, rest assured MOSERS will keep members informed. If you are interested in the specific provisions included in each bill, you may view bill text or track their progress at the general assembly’s joint bill tracking website.

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Funding the plan

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We heard on the local news this morning that the state retirement is underfunded by a “Trillion” dollars. Is this fund underfunded?
What you heard was prompted by a report distributed by the Pew Center on the States, a division of the Pew Charitable Trusts. The information in the report covered all state retirement systems in the country, so “trillion” dollar shortfall you noted was not specific to Missouri. Once you get past the sensationalistic title, “The Trillion Dollar Gap: Underfunded State Retirement Systems and the Roads to Reform,” you will see that most states have ample assets in reserve to pay pensions over the near and long term. The study notes that in the aggregate, the states’ retirement systems are 84% funded, and most experts advise at least an 80% funding level. MOSERS is currently 83% funded and, like most of the other states, has ample assets in reserve to pay pensions over the near and long term. While the report does identify states that have failed to make the required pension contributions in a consistent manner, you can be assured that the MOSERS required contributions have been appropriately funded by the legislature.
The vast majority of the financing gap noted by the Pew report is not attributable to pensions, but to retiree health care programs. Funding retiree healthcare is a reasonably recent phenomenon that was prompted by a change in accounting standards and MOSERS does not administer health care benefits. Combining these two very different benefits in this report has created confusion.
In MOSERS case, the plan is well funded and has always received the necessary state contributions to assure financial soundness of the plan. While we were affected by the unprecedented market decline of 2008, we earned $1.1 billion on investments in 2009, and have regained a good deal of the losses incurred in the previous year. Your retirement plan is supported by a professionally managed, well diversified portfolio of securities and the state’s legally binding commitment to contribute the amounts necessary to support the retirement benefits provided by law.
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