It's hard to find good news about the economy these days. Things are so uncertain and there continue to be more questions than answers. But one thing that hasn't changed is LAGERS' commitment to the people that depend on us.
Thousands of Missourians rely on LAGERS for their retirement security. These are the same people we rely upon to keep us safe, keep the lights on, maintain our streets and parks, and respond when we have emergencies. We are proud to maintain a fiscally sound system for them because we are proud of the work they do every day to keep our communities going strong. LAGERS benefits make an impact, not just for those on the receiving end, but for our great state as well.
Benefits That Make An Impact
LAGERS continues to deliver around $28 million in benefits to over 24,000 people each month, with $26 million staying right here in Missouri. The former public servants and their loved ones receiving these payments know their income is stable, and so, they are able to continue their spending habits even during difficult economic times. There is no doubt this spending has been important to Missouri's communities over the past several weeks and will be even more important to the recovery ahead.
The importance of these economy-stabilizing benefits cannot be overstated. Over the last few decades we have seen American's retirement security weakened in the private sector with companies placing more, if not all, of the responsibility on individuals to take care of their own financial futures. The situation gets worse with each economic downturn. The public sector is a different story, where most government workers have access to a viable retirement plan provided by their employer that will help support them when they exit the workforce.
Benefits That Are Paid For Ahead Of Time
The steady monthly income paid to LAGERS' benefit recipients is possible because LAGERS offers a defined benefit retirement plan to Missouri's local governments. Defined benefit plans provide retirees with a pre-determined (or "defined") benefit after meeting certain criteria. The main purpose of a defined benefit plan is to provide income during the retiree’s remaining years. Benefits are paid on a monthly basis and extend until the retiree’s death. Loved ones of the retiree may also receive benefits after the retiree passes away.
A defined benefit plan is “pre-funded.” This means that a retiree’s benefit is paid for before he or she reaches retirement. There are three sources of income to the plan, employer contributions, employee contributions, and the return of the plan’s investments. Contributions to the plan begin when a worker is hired and continue until the worker leaves employment. Those contributions are invested in the markets so that the returns from the investments can help pay for the future benefit. The returns that are generated from the LAGERS' investments account for around 67% of funding for the benefits.
Benefits That Are Earned By Serving Missouri's Communities
These benefits are not a gift. An employee earns a benefit from LAGERS only after years of public service in Missouri's communities. A local government worker must serve a minimum of five years before being eligible for a future benefit.
After five years, every month they continue to serve increases the amount of retirement income they receive in the future. In other words, the more work they put in to make Missouri's communities better, the more their retirement paycheck will be.
Now more than ever, we see how important local government workers are to our everyday lives. They are the ones that keep our communities going no matter what is thrown at them and LAGERS will be backing them for decades to come.