State treasurer says, ‘the crisis is at our door.’
Missouri’s public employee pension system is in crisis, according to a recent report from state treasurer Eric Schmitt.
A decade ago, the Missouri State Employees’ Retirement System (MOSERS) had enough money to cover roughly 79 percent of its promised benefits, but as of July 2016, the funding level had dropped to about 69.6 percent. Now, the most recently actuarial value shows a 65.5 percent funding level. The trend is clear: Liabilities are outpacing the fund’s assets, and investment projections are continually being missed. Schmitt cautioned lawmakers that drastic changes needed to be made to correct the problem and prevent these unfunded liabilities from affecting the state credit rating.
Meanwhile, a package of new state pension laws were approved this summer. To address the high turnover rates among state workers, a measure was approved to allow prison guards, social workers, mental health aides, and others to qualify for pensions sooner (five years instead of 10). However, workers who qualify for a pension but leave state government after Jan. 1 will not receive cost-of-living adjustments on their first anniversary; these adjustments will begin on their retirement’s second anniversary.
Additionally, surviving spouses or children of workers who die before becoming eligible for retirement will not receive survivor benefits until the deceased worker would have been eligible. The law also puts new restrictions on using accumulated unused sick leave in the calculation of a pension payout.
Schmitt praised the law and said that it was a positive step toward reducing the state’s pension liability. What other steps will be taken to address this looming issue is unknown at this point.