Administration September 14, 2017

MOSERS Announces Lump-Sum Offering for Certain Members

The state is trying a pension risk transfer option commonly used by corporate plan sponsors.

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Pension risk transfer (PRT) moves are often reported for corporate defined benefit (DB) plan sponsors, but a state-sponsored pension plan has now announced the offering of a lump-sum window.

This month, the Missouri State Employees Retirement System (MOSERS) will send letters to 17,000 former Missouri state employees who are eligible for a future monthly retirement benefit. The letters will inform former state employees of their option to cash out their future retirement annuity as a lump-sum payment now rather than wait until they reach retirement eligibility. The program is completely voluntary.

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The MOSERS Board was authorized to offer what is calls the Buyout Program under Senate Bill 62 which was approved by the Missouri General Assembly and the Governor earlier this year.

The lump-sum buyout amount will be 60% of the present value of the member’s future normal retirement annuity. The present value is the amount required, as of October 1, 2017, to fund their future benefit payments.

The group of former state employees who are eligible for the Buyout Program have average years of service of nine years, and an average estimated monthly retirement benefit of $450. The average age of those members when they left state employment is 39, and their average age now is 48. MOSERS says the average lump-sum payment will be $18,450.

Those who elect to receive the lump sum will forfeit their future retirement annuity, service with MOSERS (including eligibility to transfer service between MOSERS and the MoDOT & Patrol Retirement System), and all future rights to receive retirement annuity benefits from MOSERS. They will not be eligible to receive any long-term disability benefits from MOSERS, and their spouses or dependents, if any, will not be eligible for any potential survivor benefits from MOSERS.

If they subsequently become an employee in a position covered by MOSERS, they will be considered a new employee under the Missouri State Employee Plan 2011 with no prior service and will not have the option to purchase the prior service that they forfeited in obtaining the lump-sum payment.
Products September 14, 2017

Fidelity to Launch Student Loan Repayment Benefit

Employers will be able to help employees pay off their student loan debt.

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Fidelity has launched the Student Debt Employer Contribution program, which enables employers to make after-tax contributions towards their workers’ student loans. Fidelity will pilot the program in the fourth quarter and do a full rollout in 2018.

Fidelity notes that 86% of young workers say they would remain with their current employers for five years if this service was offered to them.

“Employers turn to Fidelity as a trusted strategic partner, and it’s vital our customers have modernized, customized and creative programs to help their workforce be financially well today and into the future,” says Kevin Barry, president of Fidelity Workplace Investing. “The Student Debt Employer Contribution program addresses a growing need across all generations struggling with student loans, in a ‘one-stop’ experience for employers.”

Fidelity also offers people its Student Debt Tool, which offers information about federal repayment plans and private refinancing. Fidelity is making this tool available to people who are clients as well as those who are not.

For parents, Fidelity offers its College Savings Calculator, which helps them estimate how much they should be saving.

“We know student debt weighs heavily on people,” Barry says. “More than a third of Fidelity retirement plan participants surveyed have student debt, and 80% of those say it delays retirement planning. We can use Fidelity’s market leadership to help employers alleviate the financial burden on their employees and make a positive impact on the growing issue of student debt.”

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