JEFFERSON CITY — Missouri government will chip in nearly $330 million next year to pay for state worker pensions, the increased cost largely caused by lower investment return and longer life expectancies.
The governing board for the Missouri State Employees Retirement System approved a 20 percent increase — or $55 million — to help cover the cost for state workers' retirements. The retirement system, called MOSERS, covers about 51,300 state workers and 37,300 retirees. The increase takes effect July 2013, and the decision is binding on the legislature.
The St. Louis Post-Dispatch reports the pension system lost $1.8 billion from the stock market's downturn from 2008-2009 while retired workers are living longer and therefore receiving pension payments for longer. In addition, some state workers are delaying retirement, which means they receive larger pensions after working more years.
The state budget included more than $270 million for the retirement system during the current year. State Budget Director Linda Luebbering said next year's increased state payment was not surprising, the Jefferson City News Tribune reported.
"The board has been discussing this for a while, and we were aware that the rate would be increasing," Luebbering said. "It has been on our radar screen."
During the budget year that ended June 30, the retirement system made 2.24 percent from its investments. Officials predict the investments will earn 8 percent next year.
State Treasurer Clint Zweifel was the lone MOSERS board member to oppose a larger government payment. Zweifel, a Democrat running for re-election this year, said the pension fund still could fall short even with the state's extra contribution because of overly optimistic investment expectations.
Zweifel said rising pension costs demand that officials examine the affordability of pensions.
The 11-member retirement system board is composed of four lawmakers, two gubernatorial appointees, two state employees, one retired state worker, the state commissioner of administration and the state treasurer.
Republican treasurer candidate Cole McNary said state pensions have been underfunded for years and charged that Zweifel should have shown more leadership while serving on the retirement system board. McNary, a state House member from St. Louis County, is expected to lay out a plan for state pension funds during a news conference Tuesday at the Missouri Capitol.
Missouri made recent changes to the state worker pensions. Under a law passed in 2010, new workers hired starting Jan. 1, 2011, must contribute 4 percent of their salaries into the retirement system. Employees hired before then pay nothing.
In addition, qualifying for a pension now requires spending a decade working for the state instead of five years. The minimum retirement age was increased from 62 years old to 67 years old for most employees. About 5,832 state employees are in the scaled-back retirement plan.