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  • MOSERS Investment Portfolio

    Jul 5, 2022, 2:41 PM By MOSERS

    How much of your investments are leveraged with borrowed funds to keep up the ability to meet retirement amount promises?  

    MOSERS has been providing retirement benefits for Missouri’s state employees for more than 60 years. Our mission is to advance the financial security of our members by providing them a secure retirement income. That is why the Board and staff work hard every day to ensure the long-term sustainability of the System.

    MOSERS trust fund assets equal approximately $8.5 billion. In providing retirement benefits, the Board recognizes that the most important determinant of long-term return and risk is the asset allocation decision. The Strategic Target Allocation (below), as set by the Board, is designed to provide the highest probability of meeting or exceeding the Plan’s investment objectives at a controlled level of risk and with an acceptable level of liquidity.

    As you can see, the portfolio is highly diversified across many different asset classes. For every $1.00 of assets that we have, MOSERS has $1.40 of market exposure. This extra exposure is primarily held in the Long US Treasuries and US TIPS portions of the portfolio. Implementing extra exposure in these asset classes works to increase the diversification of the portfolio. 

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  • Supplemental Budget Bill

    Mar 7, 2022, 10:08 AM By MOSERS
     Did HB3014 include funding for matching, up to 25.00, team members contributions? We used to get matching funds before it disappeared in early 2000.
    The $25 incentive for saving in MO Deferred Comp was not in the supplemental budget bill, HB 3014; however, it is in HB 3005. You can follow any bills that might impact MOSERS on our Legislation page. Each week, we post an updated legislative status report for your information.
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  • Your Pension is Secure

    Mar 2, 2022, 2:02 PM By MOSERS
    Is my pension secure?  Concerned about russia investments.

    Yes, your pension is secure.

    As an institutional investor, MOSERS, like many public pension funds across the country, maintains a diversified portfolio to invest the funds of the System. Within the portfolio, MOSERS utilizes external fund managers when investing in non-US securities, rather than any direct investing. As of March 1, MOSERS had approximately $9 million of indirect Russian exposure within MOSERS’ global investment funds. This exposure, which is a portion of MOSERS’ diversified investment strategy, accounts for approximately 0.07%  (seven one-hundredths of one percent) of the total MOSERS portfolio exposure of $13.3 billion.

    The MOSERS Board of Trustees will hold a special Board meeting on Thursday, March 3, at 4:00 p.m. to discuss Russian exposure within MOSERS’ asset allocation.

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  • Employer Contribution Rate

    Oct 13, 2021, 1:16 PM By MOSERS
    Could you give an example of the impact this change has?  .... Following an in-depth presentation from our independent external actuary, the MOSERS Board certified the MSEP employer contribution rate for FY23 at 26.33% of payroll beginning July 1, 2022. The employer contribution rate is the percent of pay that a MOSERS-covered employer contributes every pay period to properly fund the retirement plan. The funded ratio of the plan was calculated at 59%. You may ask, "Why is the funded ratio 59%"?

    Any change in the employer contribution rate does not impact retiree benefits. As compared to last year, the employer contribution rate certified this year by the MOSERS Board of Trustees represents a higher contribution for one year of service for active members and one year of payment on the plan’s unfunded actuarial accrued liability.

     System funding comes from three sources:

    • investment income,
    • employer contributions, and
    • employee contributions (from those first employed on or after January 1, 2011).

    For more information on MOSERS’ Employer Contribution Rate,  please see the Employer Contribution Rate infographic or feel free to contact us if you have further questions. 

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  • Budget Restriction Information

    Jul 8, 2020, 1:36 PM By MOSERS
    What impact does the July 1, 2020 budget expenditure restriction in the amount of $754,952 have?

    The budget restriction has no impact on MOSERS or on member benefits. We were able to reduce employer premiums for the long-term disability program administered by MOSERS, which resulted in a savings of $754,952 for the state.

    The Missouri legislature has historically appropriated the full amount needed from MOSERS-covered employers for pension benefits. Each year, the MOSERS Board certifies this employer contribution rate. Our external actuary calculates the rate based on various economic and demographic assumptions. All the calculations go into our annual actuarial valuation. The actuary also conducts an experience study at least once every five years, which compares current assumptions with the most recent actual data. You can read our Employer Contribution Rate infographic for more information.

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  • MOSERS' Investments

    Mar 17, 2020, 10:06 AM By MOSERS

    Hi, In light of the of the fact that funding for our pension plan ( retired faculty 2005) is 58% tied to investments, I am confident that many of us are deeply concerned about the free-fall of the stock market. Do you folks have any action plans to address this and do you folks plan to put out any statement addressing this crisis?

    The MOSERS Board, our leaders, and our professional investments staff are committed to managing MOSERS’ assets in a prudent manner to ensure the security of your benefits and the sustainability of the system.

    MOSERS’ investments have been negatively impacted during the first quarter of CY 2020. However, unlike individual retirees, MOSERS invests over a very long-term time horizon. Our portfolio is well-diversified and designed to weather the volatility of the financial markets. Our assumed rate of return is 7.1%. Over the long term (since 1981- first available data) our return average is 9.5%, which includes other major downturns in the market such as in 1987,  2000-2002, and 2008. Each year, an independent actuary evaluates what our funding needs are and our Board certifies an employer contribution rate. The state of Missouri has consistently contributed the full amount that the actuary has determined is needed, which is key to MOSERS’ long-term sustainability.

    Ultimately, your benefits are an obligation of the state and they are secure. We encourage you to visit our Funding page to learn more.

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  • Pension Plan Funding

    Feb 20, 2020, 11:32 AM By MOSERS

    What percent is the pension plan currently funded at for new employees. Is there a concern to be had that it's not fully funded?

    MOSERS is 62.9% funded, as of June 30, 2019, with regard to pension plan benefits for members of MSEP, MSEP 2000, and MSEP 2011. That means MOSERS currently has 62.9% of the assets needed to pay all current and future pension benefits for members in these plans.

    The state of Missouri, as the employer, has demonstrated its commitment to providing pension benefits by consistently paying the full amount of employer contributions as determined by the independent actuary and certified by the MOSERS Board. This commitment to funding is key to the long-term sustainability of the System. See our funding pages and Key Facts flyer for more information. 

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  • MOSERS' Funding Ratio

    Feb 14, 2019, 8:56 AM By MOSERS

    So I read on here that the Funding Ratio for Mosers was around 82% in June of 2010. Looking at the most recent Fund Ratio:59% (correct me if I’m wrong). Should I be concerned about this considering the 20-22% drop in just 8 years when I plan on retiring in 28 years? What is the reason for this significant drop?

    If the drops related to poor investments why when the overall market has recovered and has been doing well during this period?

    If because of liabilities continue to grow faster than contributions/investment returns what steps are being taken for this? Is the lump sum option presented to former employees that left the state going to help this?

    If it continues to go down wont employee/employer contributions continue to go up? The employer contribution rate has steadily been rising correct? Isn’t this a bad sign for sustainability of the fund.

    What steps are being taken to prevent the pension fund from ending up like California or Arizona in the next decade or so? Is any research being done in relations to these funds on why they are failing and how to prevent similar outcomes for Missouri? I’m just asking as I have been very concerned for my future retirement as I’m sure many others are.

    Thank you for your insightful questions and your interest in these very important topics.;

    Certainly, one factor that spurred the decrease in MOSERS’ funded status was the Great Recession of 2009. In our fiscal year 2010 annual report (FY10 Comprehensive Annual Financial Report), it says, “During the year ended June 30, 2010, the funded ratio (of …the MSEP…) decreased from 83% to 80.4%, primarily as the result of the previous years’ unfavorable investment experience” (p 12 FY10 Comprehensive Annual Financial Report).

    Consequently, Missouri was among the first of many states to pass legislation making changes to their retirement benefits. In 2010, the Missouri General Assembly created the MSEP 2011. By requiring employee contributions and increasing the retirement eligibility age (among other changes), this action assists in long-term plan sustainability, retained the defined benefit retirement plan structure for state employees, and provides stability for future generations. While the impact of these changes will grow over time, as of January 30, 2019, already 45.72% of active state employees are in the MSEP 2011.

    However, the primary reason that MOSERS’ funded ratio has dropped so significantly is that our Board of Trustees has taken action over the past four years to incrementally reduce our assumed rate of return (ARR) on investments. This reduction is to more accurately reflect capital market expectations. The Board has also indicated their intention to further reduce the ARR going forward:

    MOSERS Assumed Rate of Return

    • Effective 6/30/2011: 8.5%
    • Effective 6/30/2012 - 6/30/2015: 8.0%
    • Effective 6/30/2016: 7.65%
    • Effective 6/30/2017: 7.5%
    • Effective 6/30/2018: 7.25%
    • The MOSERS Board has indicated an intention to reduce the ARR to 7.10% for the June 30, 2019 actuarial valuation.
    • The MOSERS Board has indicated an intention to reduce the ARR to 6.95% for the June 30, 2020 actuarial valuation.

    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 automatically result in higher employer contributions and a lower funded status in the short term but work to ensure MOSERS’ sustainability over the long term. Each year, the MOSERS Board certifies an employer contribution rate which results in an appropriation request within the state budget. The employer contribution is calculated by our external actuary as the amount needed from the state, as the employer, (in addition to investment income and employee contributions) to systematically and appropriately pay current and future benefits. In other words, if we assume that, in the future, we will receive less income from investments and not change employee contributions, the difference must come from increased employer contributions.

    As you inquired about, the voluntary Buyout Program, authorized by state law, was offered by the MOSERS Board of Trustees in 2017 and 2018 to eligible vested former state employees of the system in an effort to reduce MOSERS pension liability. It eliminated $41 million in net liability for the system.

    Additionally, our investments staff reduced investment fees by $36 million in FY18 and the MOSERS Board adopted a new asset allocation, which began in January 2019 and will be fully implemented over a 36-month period. While MOSERS’ investment returns have not always met assumptions in recent years, our long-term investment results, of 9.4% (since first tracking this data in 1981), exceed our current assumed rate of return. This, combined with the new investment portfolio, put us in a good position to meet our assumptions in the future.

    It is important to remember that a pension system, such as MOSERS, operates on a very long-term time horizon. While our actuaries expect that employer contributions will increase and our funded status will decrease over the next few years, they also expect that throughout your career, our funded status will improve and MOSERS will be well-funded by the time you retire – allowing us to keep our promise of helping to provide retirement security for you and all of our other current and future retirees.

    For more information on the above, see our FY18 Summary Annual Financial Report and our Actuarial Valuation Report as of June 30, 2018 (p 32, column 6).

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  • Employer Contribution Rate

    Oct 5, 2018, 8:04 AM By MOSERS

    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?

    See our Employer Contribution Rate infographic for a summary of contribution rates.

    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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Disclaimer

We strive to provide the most accurate information possible in our answers to Rumor Central questions. However, occasionally, laws, policies or provisions change and individual circumstances may vary. Please contact a MOSERS benefit counselor or see the handbooks in our website Library for more detailed information. If there is any difference between the information provided in this blog or on the MOSERS website and the law or policies that govern MOSERS, the law and policies will prevail. See our Privacy, Security & Legal Notices for more information.