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  • High 36

    Aug 3, 2018, 1:52 PM By MOSERS

    My five year BackDROP period is complete. I know my retirement check is based on my best 36 months. If I do not elect BackDROP, Can I use my best 36 months throughout my entire career, or only the period prior to my original BackDROP date?

    Yes, if at retirement you do not elect BackDROP, we will review your entire pay history and find the 36-month period with your highest pay, which may be in your final years of employment, and will use that in calculating your monthly benefit.

    Background for Other Readers: Any pay or service you get during your BackDROP period is not counted when calculating your monthly benefit payment. 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.

    But keep in mind, you are not required to take BackDROP, regardless of how long you work beyond normal retirement eligibility, and you don’t have to notify MOSERS of any decisions about BackDROP until you retire. You may elect not to take BackDROP if you want all your service and pay to count and, likely, increase your monthly benefit.

    Our BackDROP page, with a BackDROP graphic near the bottom, may help you visualize how it works or you can read the BackDROP brochure for more information. BackDROP can be complicated to understand, so MOSERS benefit counselors are available to help by phone or through an in-person appointment. Call (800) 827-1063 to discuss your options. Counselors can also provide you with benefit estimates with and without the BackDROP so you can compare.

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  • Rule of 80 & Age 55

    Aug 2, 2018, 3:57 PM By MOSERS

    One of my coworkers informed me that state employees who are retirement eligible per the rule of 80 will be penalized if they are under the age of 55. I am not aware of any such penalty but wanted to ask. 

    No. There is no penalty or reduction to your MOSERS pension benefit if you meet both the age and service requirements for normal retirement eligibility before the age of 55. To be eligible to retire under the Rule of 80 in the MSEP and MSEP 2000, you must be at least age 48 and your age and years of service must equal 80 or more.

    Taxes &/or penalties related to other distributions:


    • There may be a 10% IRS tax penalty if you are younger than age 59 ½ at the time of payment, elect BackDROP*, and take a lump-sum cash payment. If you terminate employment in or after the year you reach age 55, this penalty will not apply. Additionally, MOSERS is required to withhold 20% of a BackDROP cash payment for federal taxes. More details are available in the Special Tax Notice brochure on our website. In such a situation, you can avoid the IRS tax penalty by rolling over the BackDROP payment to a qualified retirement account such as with MO Deferred Comp and not withdrawing it until you meet all IRS regulations (generally speaking, that is after you attain age 59 1/2 but there are exceptions, see page 4 of the Special Tax Notice brochure (BackDROP and Refunds), including one for public safety employees).
    • If you have made pre-tax contributions to the MO Deferred Comp plan (an internal revenue code section 457(b) plan), distributions from that plan following retirement or termination of service at any age are subject to ordinary income tax only.
    • Employer “match” contributions made on behalf of an employee to a 401(a) plan are subject to an additional 10% penalty if withdrawn prior to age 59 1/2.

    Be sure to check with your financial institution or a tax advisor for information about your tax liability when you begin withdrawing your funds.

    *BackDROP is available only to general state employees who are members of MSEP & MSEP 2000 and who work at least two years beyond normal retirement eligibility.

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  • Break in Service

    Aug 1, 2018, 1:21 PM By MOSERS

    If I want to take a break from working right after retirement and not do the backdrop at that moment, how long can that break be before I decide to go back to work in a MOSERS-covered position? Or can that be done? And will that be considered backdrop then?

    Per MOSERS board rule, a break in service is being off payroll for an entire calendar month. It looks like you have three options.

    1. If you retire and return to work in a benefit-eligible* position, your monthly retirement payment will stop as soon as we are notified that you are re-employed. Once you have worked for at least 12 continuous months in your new benefit-eligible position, you will begin accruing additional retirement benefits. Once you re-retire, your benefits will be recalculated and your benefit payments will resume. You are not allowed to elect BackDROP after you have first retired. In other words, you will not be eligible for BackDROP if you return to state employment after having already retired from the state.
    2. If you retire and return to work in any position not covered by MOSERS or MPERS (including work for the state in a non-benefit-eligible position), you may continue receiving your MOSERS pension benefits and earn as much as you wish. Such employment will have no effect on your MOSERS benefit.
    3. If you leave state employment but don’t retire and then, after a break in service, return to state employment in a benefit-eligible position, you may become eligible for and elect BackDROP.

    Visit our website for a list MOSERS covered employers. Be sure to discuss your situation with the human resources staff at the agency where you are considering employment. They will be able to tell you whether or not the position is eligible for benefits.

    You may contact a MOSERS benefit counselor to get more information about your individual situation and options.

    *A benefit-eligible position is one that normally require at least 1,040 hours of work per year, is permanent in nature, and is covered by MOSERS or the MoDOT and Patrol Employees’ Retirement System (MPERS). Your employer, not MOSERS, determines if you are working in a benefit-eligible position.

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  • Final Average Pay & BackDROP

    Aug 1, 2018, 12:53 PM By MOSERS

    Note: the question below refers to a previous Rumor Central question from July 2018:

    "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."
    Okay, based off this information, since I am working on my back-drop currently, an increase in pay will NOT increase my retirement? I am planning on working overtime as a Correctional Officer, will this have an effect on the amount of money I receive in my retirement? Yes or No...

    You are correct that pay earned during your BackDROP period will not count towards calculating your retirement benefit. Your monthly benefit will be calculated using your final average pay (FAP) and credited service as of your BackDROP date (the day your BackDROP period begins).

    Any pay or service you get during your BackDROP period is not counted when calculating your monthly benefit payment. To be clear, any overtime pay you receive during your BackDROP period will not be considered in calculating your final average pay. But keep in mind, you are not required to take BackDROP, regardless of how long you work beyond normal retirement eligibility, and you don’t have to notify MOSERS of any decisions about BackDROP until you retire. You may elect not to take BackDROP if you want all your service and pay to count and, likely, increase your monthly benefit.

    Our BackDROP page, with a BackDROP graphic near the bottom, may help you visualize how it works or you can read the BackDROP brochure for more information. BackDROP can be complicated to understand, so MOSERS benefit counselors are available to help by phone or through an in-person appointment. Call (800) 827-1063 to discuss your options. Counselors can also provide you with benefit estimates with and without the BackDROP so you can compare.

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  • Funded Status

    Jul 31, 2018, 8:11 AM By MOSERS

    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 Comprehensive Annual Financial Report - 2017).

    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.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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  • State Contribution to Retirement?

    Jul 30, 2018, 8:41 AM By MOSERS

    Does the State of Missouri contribute any matching funds to the retirement program?
    I am receiving conflicting information, that there are and are not matching funds. I've been told 0 and "up to 3%."

    As a MOSERS benefit-eligible member, you have a defined benefit pension plan, which provides lifetime monthly benefit payments to you after you retire. It is based on the formula:

    Final Average Pay x Credited Service x a Multiplier = Your Monthly Base Benefit

    Remember, it is this formula, NOT contributions, that determines your monthly retirement benefit.

    There are three sources of income that fund your MOSERS defined benefit pension plan:>/p>

    1. Contributions from members of the MSEP 2011 and the Judicial Plan 2011, which are 4% of pay,
    2. Your employer’s contributions, which are currently, 20.21% of covered payroll, and
    3. MOSERS’ investment income. 

    You can read more about plan funding on our website. If you leave state employment prior to normal retirement eligibility, you may request a refund of your employee contributions plus interest. (Your employee contributions consist of #1 above; #2 and #3 remain in the MOSERS trust fund.) Interest on employee contributions is calculated using the 52-week Treasury bill rate.

    You may also participate in the State of Missouri Deferred Compensation Plan (MO Deferred Comp), which is a supplemental retirement savings program. Currently, the State does not match any contributions to MO Deferred Comp, but there are many other reasons that MO Deferred Comp is an important part of your benefit package.

    Watch our New Employee Orientation video or a quick overview of your MOSERS benefits.

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  • COLA for 2019?

    Jul 26, 2018, 4:06 PM By MOSERS

    When we will I know when I am getting an annual COLA for 2019? I thought it was mid-July when MOSERS announced it.

    MOSERS will be able to determine the 2019 COLA in January 2019. The rate calculation is based on 80% of the percentage increase in the average Consumer Price Index from one year to the next with a maximum increase of 5% (minimum 0%). The information necessary to make that calculation will be available in January 2019 and based on a comparison of changes from 2017 to 2018.

    In January 2018, we determined that the COLA for 2018 is 1.704%. Each year, you will receive a COLA on the anniversary of your retirement date, unless one of these exceptions applies to you:

    • Retirees who converted from MSEP to MSEP 2000 during the conversion window in 2000 have COLAs payable each year in July.
    • Retirees who elected a BackDROP* will have COLAs payable each year on the anniversary of their BackDROP date rather than on the anniversary of their retirement date.
    • MSEP 2011 members hired after January 1, 2018 who leave state employment prior to retirement eligibility, will receive their first COLA in retirement on the second anniversary of their retirement.

    We will send you a notice, either in the mail or in your MOSERS Document Express online mailbox, when the COLA is applied to your monthly benefit payment.

    *BackDROP is available only to general state employees who are members of MSEP & MSEP 2000 and who work at least two years beyond normal retirement eligibility.

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  • BackDROP Payment

    Jul 26, 2018, 3:57 PM By MOSERS

    If you opt to have the cash pay-out of your backdrop, how long does it take after your retirement date to receive it?

    Your BackDROP* payment (either cash or rollover) will be paid on the last working day of the month your retirement is effective, along with your first monthly retirement benefit payment. For example, if your retirement date is May 1, your BackDROP payments will be made on the last working day of May. This is assuming you have completed all necessary forms, including your BackDROP Distribution form, when you retire online or on paper.

    Please be sure to read the Special Tax Notice brochure on our website to learn about various tax consequences if you take some or all of your BackDROP payment in cash.

    *BackDROP is an option that allows eligible members to receive a lump-sum payment in addition to an ongoing monthly payment. It is available only to general state employees who are members of MSEP & MSEP 2000 and who work at least two years beyond normal retirement eligibility.

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  • MOSERS Board of Trustees

    Jul 25, 2018, 10:09 AM By MOSERS

    Do Board Members receive any compensation for there time?

    No, they do not receive compensation for serving on the board, but are reimbursed “for necessary expenses incurred in the performance of their duties for the system” per chapter 104.470 (3) of the Revised Statutes of Missouri.

    As a reminder, there is an election this year for 2 new MOSERS board members to represent active members and one member to represent retired members. These members will serve 4-year terms beginning in January 2019. We have posted the candidate statements on our website and Election America will send ballots to eligible members in August to notify them about voting by mail, phone or online.

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  • Overtime & Final Average Pay (FAP)

    Jul 24, 2018, 10:32 AM By MOSERS

    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 2017-06-30 Actuarial Valuation MSEP). 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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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.