House Bill 1682: An Experimental Investment Strategy that Weakens Worker Retirement

Recent legislation filed by Rep. Andrew Koenig would move new state employees and highway workers into a hybrid pension plan.  These hybrid plans cost more to fund and produce less investment income than traditional defined benefit (DB) plans.  This specific plan seeks to cut guaranteed pensions by 41%.Seniors

The fiscal note provided by the Missouri State Employee Retirement System (MOSERS) shows that under the proposed hybrid plan, the state would be forced to kick in approximately $20 million more in employer contributions (1.69% of total MOSERS payroll) over the next three years.  Actuaries project that over a ten-year time horizon, contribution expenditures will increase by approximately $151 million.

Public pensions in Missouri are among the healthiest in the nation and consistently perform at or above the financial markets.  The experimental hybrid model creates uncertainty for young workers, limits benefits, abolishes a system for public worker recruitment and retention critical for the delivery of essential public services, and increases costs for taxpayers.