Public Pensions Archives - Show-Me Institute

Policy Solutions for Missouri’s Government Employee Pensions

Mon, 09 Apr 2018 10:00:00 +0000

The Missouri State Employees Retirement System (MOSERS) has seen its funding health decline in recent years even as the required government contributions to the plan have increased. Policymakers are searching for ways to reform public employee pensions in order to control costs and mitigate risks to government budgets while at the same time maintaining retirement programs that serve retirees. In this essay, Andrew Biggs examines several reform options, including shifting future employees to defined-contribution accounts, and discusses ways that each option would alter current MOSERS policies.

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Teachers’ Opinions on Missouri’s Public School Retirement System

Mon, 23 Oct 2017 10:00:00 +0000

For years, Show-Me Institute analysts have written about reforming teachers’ pensions. Multiple research projects have demonstrated that poorer districts subsidize pensions in wealthier districts, that pension funds are taking on riskier and riskier investments to chase higher returns, and that pension plans have huge unfunded liabilities.

Given that teachers will be a constituency that would be significantly affected by any changes to pensions in the state, we thought it wise to ask them what they think, both about their current pensions as well as possible alternative arrangements. We worked with both district and charter school leaders to cast a wide net and include as broad a range of viewpoints as we could.

Unfortunately, not long after we put our survey in the field, one of the state’s teachers’ unions instructed its members not to participate in our data collection. It’s unfortunate, but at this stage, not unexpected.

While it significantly curtailed our sample, 53 teachers did choose to respond, and we thought their voices deserved to be heard—even when they disagreed with some of the stances that Show-Me Institute writers have taken in the past. Accordingly, in addition to the complete survey results we have included an appendix with every open response that teachers gave—the good, the bad, and the ugly.

We encourage you to give the paper a read. Teachers have complicated and often conflicting views on their pensions as well as alternatives. Understanding those views will improve public pension policy.

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Is Missouri’s Teacher Pension System Unfair?

Wed, 09 Aug 2017 10:00:00 +0000

Teachers who participate in Missouri’s Public School Retirement System (PSRS) throughout a lengthy career will end up with fairly generous retirement benefits. And while it’s good to know that long service at a demanding job is rewarded, we need to remember that not everyone who embarks on a teaching career will stay at the job for decades. For teachers who leave the profession after 5 or even 15 years, it’s worth asking how the benefits they receive match up with the amount they contribute to the system during their time on the job.

Other questions addressed in James Shuls’ new essay are related to the formula that the PSRS uses to determine retirement benefits, using the average salary earned over the last 3 years of service in the calculation. What affect does this approach have on teachers whose salary is relatively flat over time compared to those who get big pay increases at the end of their careers? Does the retirement system widen the compensation gap between teachers working in wealthy districts and those working in poorer areas?

The common denominator in all of these questions is fairness: How many (and which) teachers are receiving benefits that are proportional to the amount they contribute to the system over the years? To learn some possible answers, click on the link below to read the essay.

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Testimony: Senate Bill 228 and Modification of the Year 2000 Retirement Plan

Tue, 24 Jan 2017 12:00:00 +0000

On January 25, 2017, Show-Me Institute Policy Researcher Michael Highsmith submits testimony to the Missouri Senate Health and Pensions Committee regarding Senate Bill 228. Click on the link below to read the entire testimony.

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The Funding Status of State and Local Government Pensions in Missouri

Mon, 04 Jan 2016 12:00:00 +0000

Most economists believe that the official funding numbers published by public employee pension plans substantially overstate these plans’ financial health and understate their unfunded liabilities. This is in part because the plans use standard actuarial valuation to determine the plans' liabilities. An alternative approach, and one favored by most economists, would be to use "fair market valuation" instead. This essay compares the funding levels and unfunded liabilities of Missouri Government Employee pension plans using both standard and fair-market approaches.

Read the full essay 20151207 – The Funding Health of Local Government Pensions in Missouri – Biggs.pdf.

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Betting on the Big Returns: How Missouri Teacher Pension Plans have Shifted to Riskier Assets

Wed, 22 Jul 2015 10:00:00 +0000

Defined-benefit public employee pensions are increasingly relying on investment returns, rather than employee and employer contributions, to pay for the guaranteed benefits to pensioners. This makes the selection of a plan’s investment strategy important. Nationally, public employee pension plans have shifted investments from low-risk, low-return strategies which rely on fixed-income investments to high-risk, high-return strategies which include more equities and alternative investments. This essay examines the Comprehensive Annual Financial Reports (CAFR) of Missouri’s public school teacher pension programs. Using information from each plan’s CAFR, we find that the plans have followed the national trend and have increasingly shifted away from fixedincome and cash investments.

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