MoDOT & Patrol Employees’ Retirement System
In this update, Scott Simon, Executive Director of MPERS, explains the latest developments in the financial health of the retirement system and what they mean for members. With encouraging news about MPERS’ funded status and a noticeable shift in employer contribution rates, Scott provides clarity on how these changes reflect long-term progress and continued stability. Read the transcript below.
Welcome, everyone, to the 2025 MPERS Financial Status Update.
I am pleased to report that we have more good news regarding MPERS’ financial condition. I will briefly highlight those details and then shift attention to some changes that you, our covered members, have noticed.
MPERS’ funded status made another leap forward this year, rising from 70.6% to 75.7%. That number, 75.7%, represents the ratio of assets available to cover earned benefits, and it’s never been higher. We can and should celebrate this progress; however, we are not finished yet. Our ultimate goal is to be fully funded, and we are well on our way to achieving it.
I am confident in this progress because the MPERS Board of Trustees continues to support the aggressive funding policies that began turning things around almost 20 years ago. They have also supported an asset allocation strategy that has resulted in investment performance ranking near the top of other public pension systems across the country. It has been both exciting and rewarding to see these improvements firsthand.
What does this mean to you, MPERS-covered members? Hopefully, it builds confidence, trust, and security in the benefits you have or will earn from MPERS. It also means some of the details you routinely see are changing.
Many of you may have noticed that the employer contribution amount on your pay stub decreased in July. That is because the employer contribution rate for non-uniformed employees at MoDOT and the Highway Patrol dropped from approximately 50% to 37%. While that is a dramatic reduction, it is no reason for concern. This decline is a sign that MPERS’ funding policies are making progress and returning employer contribution rates back toward more normal and reasonable levels. A similar decline will also occur for the uniformed group, albeit at a more gradual pace.
In simple terms, the employer contribution rates for both non-uniformed and uniformed employee groups consist of two basic components: the normal cost and the unfunded liability. Normal cost is the amount needed to fund the benefits earned by employees in the current year. It is essentially the cost of keeping the plan on track for future obligations. The unfunded liability, or catch-up payment, refers to the shortfall between the plan’s current assets and the total amount needed to pay all earned benefits. It represents past funding gaps that must be made up over time.
When I say the employer contribution rates are headed toward more “normal” and “reasonable” levels, I am referring to the normal cost component of the employer contribution rate. The higher rates that we have grown accustomed to seeing have been necessary to address the funding shortfalls of the past. As we address these shortfalls, the employer rates normalize to a level closer to the normal cost shown in this chart.
When you see a lower employer contribution on your pay stub, it is good news and not a reason for concern. Remember, your benefit formula does not take into account the employer’s contribution rate.
Before I close, I want to mention that all Vital Sign results for the last fiscal year were green. If you are unfamiliar with Vital Signs, be on the lookout later this month for an update where you can see the annual Vital Sign results for MPERS. These key metrics paint a visual snapshot of system performance across key indicators.
That concludes this year’s update. Thank you for taking a few minutes to learn more about your retirement system. It is a pleasure to serve those who keep us safe.