Missouri Audit Reveals Systems In “Most Trouble”

Missouri Gateway Arch

Missouri’s auditor released an all-encompassing audit yesterday of Missouri’s 89 public pension systems. The auditor, Tom Schweich, said the good news was that some systems were performing much better than their peers across the nation.

But the audit also revealed 15 plans that were in the “most trouble.” From MissouriNet:

“We consider them to be a problem if their funding ratio is either below 70 percent, so it’s ten points below what’s considered reasonably safe,” says Schweich, “and anything below 95 percent of required contributions, because we think they should be funded at 100 percent … if it’s anything below 95 percent, that’s a downhill trend.”

Those 15 plans include the Missouri Department of Transportation and Highway Patrol employees’ retirement system and plans covering police and firefighters in Columbia, Joplin and Springfield, and plans covering Kansas City transportation authority and public school employees. Other plans on that list cover some employees of St. Louis County, Bridgeton and nonuniform employees of University City.

Missouri’s plans were 78 percent funded collectively, lower than the 80 percent cut-off that typically marks a “healthy” plan.

But Schewich said the audit showed many of Missouri’s pension systems to be healthier than their peers in other states. That doesn’t mean, however, that those systems are out of the woods by any stretch. From MissouriNet:

Schweich says the survey found that in funding ratio, annual contributions toward solvency, and pension costs as a percentage of payroll, “Missouri is above average but in none of these areas is Missouri safe.”

Missouri recorded a 94 percent contribution rate but the survey found 34 of Missouri’s plans didn’t receive the full contribution recommended by actuaries. The percentage of payroll costs devoted to pension plans rose between 2003 and 2012 in Missouri and nationally, but again Missouri fares better than the national average.

Schweich says the main reason some plans are below an “acceptable” fund ratio is the recession of 2008 and 2009. He says some had high investment return assumptions and some didn’t have employees contributing.

This report marks the first wide-reaching audit of Missouri’s pension systems in 30 years.


Photo by Paul Sableman

Missouri Law Bans Pension Advances, Helps Retirees Recoup Losses

Money bird's nest

Pension360 covered last week the rising business of pension advances—businesses that apply the concept of a payday advance to retirement benefits by giving retirees an option to receive their pension as a lump sum.

But Missouri recently passed a bill that outlaws the practice and gives retirees a chance to take legal action against the business that gave them their pension advance.

Today, the State Treasurer announced that the law goes into effect immediately. Reported by KFVS:

Missouri State Treasurer Clint Zweifel announced House Bill 1217 goes into effect on Thursday – meaning public retirees in Missouri are now protected from the predatory lending practice known as pension advances.

Zweifel says retired public employees who are drawn into these misleading agreements can now take legal action against the businesses offering them.

“Pension advances prey on the financially vulnerable, offering an up-front lump sum in exchange for part or all of a public pension, and they are generally accompanied by exorbitant fees and interest rates,” Treasurer Zweifel said.

“Pension advances are essentially payday loans on steroids in that the individuals taking them are borrowing against a pension instead of a paycheck. They put the individual’s retirement in jeopardy and cost them more money in the long run. Today marks a big win for consumer protection in Missouri, and I am proud of the bipartisan coalition of lawmakers who helped me make our state the first in the nation to ban this practice.”

Missouri is so far the only state to pass a law addressing pension advances.

Photo by RambergMediaImages via Flickr CC License