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.
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.