If you are concerned about the economic events of the past year, you are not alone.  First and foremost, the understanding I hope you take away from reading this message is that your retirement benefits are secure!

Your Retirement Benefits

If you are a retiree of MPERS, your benefits will continue to be paid. Legally, your benefits cannot be changed or taken away.

It is, however, possible for legislation to be introduced and passed that would change retirement benefits for active members (going forward) and new hires. From a legal perspective, it is highly unlikely to impact or change benefits that have already been earned.

Funded Status of the System

Presently, MPERS has a funded ratio of 47.3%. This ratio is a very basic measure of the system's assets to its benefit liability. Today, we have about $.48 of every dollar needed to pay benefits. The good news is that we have a long-term horizon to accumulate the remainder of the money needed to pay the liabilities of the system. The MPERS Board of Trustees takes this under funded status very seriously and is working toward a goal of being 100% funded. Achieving this goal will take time, increased contributions, enhanced investment returns, and possibly benefit changes for future members of the system.

What Happened?

There is no single reason for the funding shortfall. Most recently, the December 21st Wall Street Journal reported, "in nearly 200 years of recorded stock-market history, no calendar decade has seen such a dismal performance as the 2000s." Decisions made by multiple groups over the years regarding benefit increases, plan assumptions, contributions, and investment policy, coupled with market declines in the past decade have resulted in an unfunded liability of approximately $1.6 billion.

The Plan of Action

When the system's funded status falls below 60%, state law requires our actuary to prepare an accelerated funding schedule for the Board's consideration. The accelerated funding schedule allows the unfunded liability (the employer's IOU to the system) to be paid off sooner. This is similar to making an extra mortgage payment on your house each year to reduce the loan period. In this case, the Board voted to require the employers to contribute an additional $5 million per year for 15 years. Paying more into the system today, so the money can be invested and earn investment proceeds, could ultimately reduce costs to the employers. At the September 2009 Board meeting, the MPERS Board voted to adopt the accelerated schedule to ensure that it can meet its commitments to members today, as well as in the future.

As a beneficiary, it is important for you to know the status of your retirement system. We want you to know that the Board and staff are very committed to improving the funded status of the system and ensuring that the promises made to you by your employer and the State of Missouri are fulfilled.