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MOSERS board-certified contribution increase prompts questions from House committee as system seeks to accelerate funding
Summary
Missouri State Employees' Retirement System officials told the House Budget Committee the plan is 55% funded and that the system's board certified a higher contribution rate (state share moving toward 30.25%) under a policy intended to accelerate funding and raise the funded ratio over 20 years.
Missouri State Employees' Retirement System (MOSERS) officials told the House Budget Committee the pension system is currently about 55% funded and that the MOSERS board has adopted an employer contribution policy that raises the state's contribution stepwise to accelerate progress toward full funding.
Abby Spieler, MOSERS executive director, briefed the committee on funding mechanics and the reasons behind a board decision to increase the minimum contribution rate. "The system is 55% funded," Spieler said. She said the board has adopted a minimum contribution policy designed to accelerate the plan toward full funding over a two-decade horizon and that the board's phased changes should move the funded ratio higher sooner than under previous policy.
Mosers officials said assumptions adopted by the board contributed to the funding challenges: the board reduced the assumed long-term investment return from 8.5% to 6.95%, a move MOSERS officials said better reflects present markets but which increases near-term actuarial costs and reduces the funded ratio on paper. The board and system staff emphasized the policy's purpose is to shore up long-term fiscal health by increasing employer contributions now.
The committee asked for more detailed actuarial materials and benchmarks. MOSERS confirmed that members hired since Jan. 1, 2011, contribute 4% of pay into the system, and officials said the board's current phased approach has multiple steps; at the time of the hearing the state was at an intermediate step (30.25% employer rate for the covered group) with an eventual target discussed by the board of up to 32% under the minimum funding policy.
Lawmakers asked whether MOSERS compares contributions and benefit designs with neighboring states and private sector norms; Spieler said MOSERS periodically reviews peer practices and is prepared to provide comparative data on member contribution levels and funding policies.
Committee members requested follow-up: the most recent MOSERS valuation, details underlying the change in the assumed investment return, and a schedule of the board's minimum-contribution steps so legislators can assess the impact on the state budget.
