I have an employee who was hired June 2011. He has a question about the 5 year vesting. Since 5 year vesting is back he would like to know if Moser’s will start contributing to retirement or if he will still have to make those contributions through his payroll.
MSEP 2011 members will still have to contribute 4% of pay to their future retirement benefit. Other than the vesting period changing from 10 years to 5 years for MSEP 2011 members employed on or after January 1, 2018, the provisions of SB 62 have NO impact on members of MSEP 2011 who work in a MOSERS benefit-eligible position until they reach normal retirement eligibility.
Money to pay current and future MOSERS pension benefits comes from:
- Contributions from employees who are members of the MSEP 2011 or Judicial Plan 2011 (4% of pay for MOSERS members; typically 5-10% nationally*),
- Earnings on investments of money in the MOSERS trust fund (61% of assets in the MOSERS trust fund have come from investment earnings), and
- Contributions from employers (state agencies) as a percent of active employee payroll.
Below is a simplified example of what future retirement benefit might look like over time. The benefit would be even more with compounding cost-of-living adjustments (COLAs), which are included in MSEP 2011, but not shown here for simplicity. The benefit formula is:
Final Average Pay x Credit Service x Multiplier = Monthly Base Benefit
*Understanding Public Pensions, April 2017, Center for State & Local Government Excellence, AARP