Retiree Benefit Security
On January 21, 2009, we scheduled a Board of Trustees meeting and work session with Missouri’s educational associations to review the nearly unprecedented decline in the investment markets in 2008 and explore what impact those declines could have on the Public School Retirement System (PSRS) and the Public Education Employee Retirement System (PEERS) of Missouri. At that meeting, PSRS/PEERS executive staff and advisors provided a summary of what has transpired in the investment markets, and invited the system’s actuary to present some projections of what the downturn could mean in terms of PSRS/PEERS funded status.
Following that meeting, several associations distributed summaries of the information provided at that meeting. While generally factual, some of the tone and conclusions presented have created a great deal of concern, angst and even fear about the financial security of PSRS/PEERS. Based on the calls and correspondence we have received, this has been especially true among PSRS retirees. Consequently, we would like to address those concerns.
As PSRS/PEERS Executive Director Steve Yoakum noted several times during the January meeting, retirement benefits for our current retirees are secure. As of the last actuarial valuation on June 30, 2008, the total liability for benefits promised to all PSRS retirees totaled $18.5 billion dollars while assets at that time were in excess of $27 billion. Even with the decline in the markets in the fall of 2008, the fund still has more than enough assets to adequately cover the benefit promises made to PSRS retirees.
Importantly, PSRS/PEERS has a contractual relationship with our retirees and they will continue to receive monthly benefits as promised. The Missouri Constitution has been construed to protect all public retirees, including PSRS/PEERS retirees, by prohibiting the retirement benefits they receive from being diminished or impaired.
The PSRS/PEERS benefit structure is defined within the Missouri state statutes. Therefore, benefit changes can only occur through legislation, not by action or policy of the PSRS Board of Trustees. At PSRS/PEERS, we administer the benefits in accordance with the statutes but we do not design the benefit structure of the plan. We have and will continue to provide information to the legislature including the cost of changes and the impact to our members; however, we rarely advocate benefit changes. PSRS/PEERS role is to provide technical analysis and cost projections of possible plan modifications to allow policy-makers to understand all the ramifications of possible changes, then prudently implement the benefit structure once it has been defined within the law.
Historically, Missouri’s educational associations have taken an active role in setting policy and designing the retirement benefits to attract and retain quality educators for Missouri’s schools. We expect the educational associations to again take an active role in this situation, hence the sharing of information with them at the January meeting. Though we don’t expect any changes in the near future, as always, PSRS/PEERS will work diligently to provide information, projections and determine the impact of any proposed changes.
As was indicated during the January meeting, because of the magnitude of the decline in the world’s investment markets, we are facing challenges unlike those we have ever faced and we are not unique in this situation. Pension plans across the nation are facing some of the same challenges. However, PSRS and PEERS remain financially able to pay the benefit promises made to our retirees. One of our primary goals and biggest challenge will be to continue to fund and operate the plans to provide future generations of Missouri educators the same level of security enjoyed by our retirees today.
If you have questions about this topic or would like more information, please contact us by calling our toll free telephone number (800) 392-6848 or emailing us at email@example.com.