September 2019 Board Meeting Summary

Oct 8, 2019, 08:57 AM
News

September 2019 Board Meeting Update

The MOSERS Board of Trustees met for their quarterly meeting on September 19, 2019. Since the official minutes of that meeting won't be available until after they are approved at the next quarterly board meeting, we are providing this summary in order to get information to you more quickly. Please watch the video above and read the information below to learn more.

At their recent quarterly meeting, the MOSERS Board of Trustees certified the Fiscal Year 2021 employer contribution rates for the Missouri State Employees' Plan (or MSEP) and the Judicial Retirement Plan.

Beginning July 1, 2020, the certified employer contribution rate for MSEP will be 22.88% of payroll - up from 21.77%. The employer contribution rate is the percent of pay that the employer sends to MOSERS every pay period to properly fund our retirement plan. This rate has increased over the last several years and will continue to do so.

These increases are a calculated result of the Board's funding policy adopted in 2018. This funding policy is designed to reflect investment expectations and to ensure the long-term sustainability of MOSERS.

It is important to know that more than 58% of the money in the MOSERS trust fund has come from investment returns, 41% has come from the employers, and 1% is from employee contributions (those first-employed since 2011).

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The Board also received an update on the status of the plan's funded ratio. As of June 30, 2019, the funded ratio of the MSEP is 62.9%. This is a ratio of plan assets to plan liabilities. The funded ratio is projected to decrease over the next 5 years but is then projected to steadily increase.

Projection of Funded Ratio

Projected-Funded-Ratio 
Valuation as of June 30, 2019

A key component of the employer contribution rate and the plan's funded ratio is the assumed rate of return on investments. The Board has been systematically reducing the MOSERS investment return assumption. This reduction results in an increase in the employer contribution rate and a decrease in the plan's funded ratio.

For example, the Board's adopted investment assumption of 7.1% contributed to the 22.88% employer contribution rate and the 62.9% funded ratio. If the Board had adopted a higher assumed investment return, such as 8.1%, then the employer contribution rate would be closer to 18% and the funded ratio would be almost 70%.

Investment Return Assumption 7.1% 8.1%
Employer Contribution 22.88% 18.18%
Funded Ratio 62.9% 69.5%

While a lower employer contribution rate and a higher funded ratio might make some "feel" better, the current investment assumption is a more conservative approach to ensuring the long-term sustainability of MOSERS.

Executive Director's Comments

These are complicated topics, no doubt. Please know that your Board of Trustees is deeply engaged in these topics and is focused on the future. Together, we continue to work hard for your benefit.

Thank you for watching this edition of A Moment with MOSERS. In this life, we only have so many moments, please know we appreciate you spending THIS moment with us. Have a great day and a wonderful autumn.

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