MoDOT & Patrol Employees’ Retirement System
Understanding the Role of Employer Contributions at MPERS
At MPERS, we are committed to delivering secure, lifetime retirement benefits to our members. A key part of this commitment is the employer contributions that fund your pension. Here’s a closer look at how these contributions work and why they are essential to your retirement security.
Where Do Employer Contributions Come From?
Employer contributions are the funds that MoDOT and MSHP allocate to MPERS on behalf of their employees. These contributions are critical to the defined benefit (DB) plan, ensuring that there are sufficient resources to pay out retirement benefits over the long term.
How Are Employer Contributions Determined?
The amount of employer contributions is calculated based on several factors, including the number of active employees, their salaries, and the actuarial assumptions about future benefits and investment returns. This ensures that the contributions are sufficient to meet the promised benefits without overburdening the employer.
The Funding Formula: C + I = B + E
- C (Contributions): This includes both employer and employee contributions.
- I (Investment Returns): The returns generated from investing the contributions.
- B (Benefits): The retirement benefits paid out to retirees.
- E (Expenses): The administrative and operational costs of managing the pension plan.
In essence, the formula shows that the contributions (C) and investment returns (I) must be sufficient to cover the benefits (B) and expenses (E). This balanced approach ensures the long-term sustainability of the pension plan.
How MPERS Invests Your Contributions
MPERS employs a diversified investment strategy to maximize returns while managing risk. By pooling resources and investing collectively, MPERS can achieve economies of scale and reduce overhead costs. This means more of every dollar goes toward funding your future benefits.
Why Employer Contributions Matter
Employer contributions are not just a financial obligation—they are a promise to you. They ensure that your retirement benefits are secure and that MPERS can continue to provide the lifetime income you’ve earned. With strong investment performance and disciplined funding policies, MPERS is well-positioned to meet its commitments to current and future retirees.
MPERS is built to last—and built to serve you better.