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Sponsors seek expanded correction, buyout and political-expenditure limits for public pensions
Summary
House Bills 686 and 735 would expand correction-of-error options, reinstate annuity buyouts and ban pension funds' use of plan assets for political advocacy; sponsors said the changes offer member flexibility and protect plan assets.
House Bills 686 and 735 were presented jointly to the House Pensions Committee on Oct. 12, 2025. Sponsors said the measures would (1) expand how systems correct benefit calculation errors, (2) allow certain boards to offer one-time annuity buyouts for vested, deferred members, and (3) prohibit pension plans from using plan funds to advocate for or against ballot measures or candidates.
Representative Deaton (sponsor) told the committee the correction-of-error changes (cited in testimony as sections 100.4-4490 and 100.4-1060) would give members and plans additional, federally compliant options — including lump-sum or installment repayment — rather than only an actuarial reduction spread over remaining life expectancy. "It would provide more flexibility for the members," the sponsor said, noting the options could reduce administrative complexity and, in some cases, members’ interest charges.
The bills would also restore statutory authority for trustees at MOSERS and MPERS to offer a one-time cash buyout equal to a percentage of the present value of an annuity for vested but not-yet-eligible participants. Sponsor testimony said MOSERS previously offered the buyout when it was allowed and that the program reduced plan liability; MOSERS reported that an earlier buyout eliminated about $41 million in plan liability and that prior participation averaged roughly 25 percent of eligible term-vested members.
Section 105.695 in the sponsor’s draft would prohibit public pension systems from expending plan funds to advocate, support or oppose ballot measures or candidates. Sponsors and MOSERS’ executive director said many systems already maintain internal policies to prohibit political expenditures. Representative Deaton cited the existing statute that restricts political subdivisions (Section 115.646, RSMo) and a federal-court decision in the Western District upholding that statute in City of Maryland Heights v. State of Missouri to argue the restriction is a permissible regulation of the use of public funds rather than private speech.
Witnesses for the bills included executives from MOSERS, PSRS/PEERS, Loggers and MPERS, who generally said the bills align with existing policies and stated they would work with sponsors on technical drafting. MOSERS’ executive director said MOSERS already has a policy restricting political expenditures. MOSERS provided details on a prior buyout window: at the last valuation the plan had about 17,000 term-vested former members, with roughly 4,300 participating (about 25%) when the buyout was offered; average lump-sum payouts were about $14,000 and average forfeited deferred monthly benefit was $370.
Committee members sought clarification about correction-of-error mechanics, including how actuarial reductions are applied and whether an overpayment that is repaid through reduced monthly benefits could result in a net gain for the system if the member outlives actuarial expectations. Sponsors and executive directors explained the actuarial reductions account for interest and time value of money and said federal tax rules constrain how corrections can be structured; they agreed to provide additional analysis and counsel opinions to the committee.
On the political-expenditure restriction, members asked about the line between education and advocacy. Sponsors said the bills do not infringe individuals’ First Amendment rights to speak in a personal capacity but would prohibit using plan funds for campaign-style advocacy. The sponsor referenced the Maryland Heights litigation and said the statute regulates the use of public funds, not private speech. Witnesses acknowledged the line can be difficult and said funds typically aim to provide neutral education rather than political advocacy.
No committee vote was taken on either bill during the hearing. Sponsors and staff agreed to follow up with technical language edits and to provide requested legal analysis and crosswalks to ensure consistency across closed plans and other statutory chapters.
