You’ve probably been hearing chatter in the media about the recent Congressional Spending Bill, which includes provisions that may allow certain multiemployer pension benefits to be cut. Many of the articles in the news are unclear about which plans are affected by this particular bill and have raised further questions from our members about the security of their LAGERS benefit.
First and foremost, the current Congressional debate would not apply to public sector pension plans, like LAGERS. The federal government maintains greater oversight of private sector plans, and this legislation, in particular, targets private, multi-employer plans that are ‘severely underfunded.’ Fortunately for LAGERS members, the control of LAGERS remains with the State, and member benefits are governed by the state statutes under which they were created. There are currently no proposals to make any changes to current or future benefits or to LAGERS structure before the Missouri General Assembly.
Regardless of whether or not the current national debate will impact LAGERS benefits, the natural follow up question is, how secure is my benefit in the future? While there always remains the possibility that Congressional changes could set a precedent that eventually trickles down through state legislation, here are a few important thoughts to keep in mind about LAGERS:
LAGERS benefits are statutorily and constitutionally protected in Missouri.
LAGERS benefit guarantees can be found both within LAGERS' governing statutes as well as Missouri’s constitution, providing multiple levels of protection to your accrued benefit. Any changes in benefits or plan design would require a change in the law, initiated by Missouri’s general assembly. Currently, those change made by an employer or through a change in Missouri’s statute, could only impact a member’s service prospectively, meaning that any benefits earned prior to the change are guaranteed at the highest earned level.
LAGERS is an extremely well-funded plan.
Even if Missouri’s general assembly someday decided to follow Congress’ lead and look at allowing Trustees of our public plans in Missouri to make benefit reductions to prevent full termination of a plan in the event of financial insolvency, LAGERS would most likely still not be affected by that legislation. Here’s why: If you read about what is going on at a national level, the plans targeted are those few which are nearing financial insolvency, most likely due to that fact that the fund has not consistently been making their actuarially required contributions. LAGERS has extremely sound plan design and 100% of our over 650 employers across the state are required to make their full actuarially required contributions each and every month…no exceptions.
The results of great plan design is ultimately stable funding and benefit security not just today, but tomorrow, 50 years from now, and beyond. When employers make their full contribution each month, benefits can be pre-funded. This means that when a LAGERS member is ready to retire, 100% of the benefit that they will receive for the rest of their life has already been paid for and set aside in a Trust that can be used solely for the purpose of paying retirement benefits. How’s that for security?
LAGERS staff monitors all legislative action, both at the state and federal level.
LAGERS staff takes the security of our members’ benefits and future benefits very seriously. People who work hard their entire life should be able to retire with a little security, a little dignity, and plenty of peace of mind that their benefit will always be there for them. Our staff constantly monitors these debates and works tirelessly to ensure that we are educating our legislators on this important issue.
Wondering if there is anything you can do to help? Retirement security isn’t just an issue for the already retired. A 20-something will eventually be just as impacted by changes to current retirement benefits. So regardless of whether you are just starting your career, or you’re already enjoying your hard-earned benefit, make sure you are staying connected with LAGERS and engaged with your legislators. Follow us on Social Media to ensure that you are getting the latest updates from LAGERS staff, and as always, we love to hear from you; whether it’s with a question, or if you just want to let everyone know how much you LOVE your LAGERS!!