Missouri State Treasurer presented a report that outlines the funding status of the Missouri State Employees Retirement System (“MOSERS”). The report states that future benefits will cost at least $4 billion more “than what the state is prepared to fund.” The Treasurer reported that the plan was 67.5% funded .
The Treasurer’s reported cited poor investment returns 3.45% vs. a target return of 7.65%, high investment fees and 4% annual cost of living adjustment for employees who joined the plan prior to 2000.
Another factor that could shift the outlook for the plan is the discount rate utilized in calculating the funding level. It parallels the assumed investment return at 7.65%. If the funding level continues to decline, GASB accounting standards will force the use of a significantly lower discount rate and balloon the net pension liability.