Sustainability of MOSERS

I have recently read articles that indicate a decline in MOSERS viability, ie. their ability to cover promised benefits into the future. I am also concerned about the increased incentives for early retirement. So I wonder how much I should be concerned.

There have been no recent incentives for early retirement for active state employees. Any such incentives would require legislative action.

With regard to MOSERS’ ability to cover promised benefits into the future, we received a similar question and have a May 1 post about MOSERS’ funding status on Rumor Central. As of June 30, 2017, retirement benefits for general state employees are 67.5% pre-funded. Money to pay retirement benefits comes from:

• employer contributions
• employee contributions (if first employed on or after 1/1/2011), and from
• investment returns.

Over that past 20 years, 61% of the assets in the MOSERS Trust Fund have come from investment returns. Beginning in FY17, the MOSERS Board adopted a funding policy to gradually lower MOSERS’ investment return assumption. This more accurately reflects capital market expectations and confirms the Board’s commitment to sound financial practices. (In other words, the board decided that we should expect less income from investments. So, the income that we are not expecting from investment income will have to come from the employer/the state.) It results in higher annual employer contribution requirements (and a lowered funded status) in the short-term. However, it is the board’s expectation that these changes will strengthen MOSERS’ financial position and will ultimately enhance the retirement security of our members. (See Chairwoman’s Message for more information.)