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Funded Status

Jul 31, 2018, 08:11 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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