New state pension law going into effect

July 14--JEFFERSON CITY -- Prison guards, social workers, mental health aides and others on the state government payroll will qualify for pensions in half the time as part of a package of laws approved Friday.

The measure is designed to address high turnover rates among state workers, primarily because Missouri ranks last in the nation when it comes to paying its workers.

As part of a change in law in 2010, employees had to work for 10 years before qualifying for a pension. The new law signed by Gov. Eric Greitens Friday allows workers to qualify for retirement benefits at age 67 after working five years.

The changes, however, do come with some trade-offs in order to keep the Missouri State Employee Retirement System solvent.

Workers who qualify for a pension, for example, but leave state government after Jan. 1, will no longer receive cost-of-living adjustments upon their first anniversary. The first raise will come on the second anniversary of their retirement.

If a worker dies before becoming eligible for retirement, the surviving spouse or children will not receive survivor benefits until the deceased member would have been eligible for normal retirement.

And, MOSERS is placing new restrictions on using accumulated unused sick leave in calculating a pension payout.

The changes go into effect on Jan. 1, 2018.

A separate provision of the pension changes includes a buyout proposal for an estimated 19,000 former state workers.

The legislation gives the MOSERS board the authority to establish and offer a buyout program for former workers who qualify for a pension but are too young to begin receiving it. But it does not require the board to offer the plan.

In general, the buyout would allow the system to give lump sum payments to former workers in lieu of paying them monthly retirement benefits when they reach retirement age.

Treasurer Eric Schmitt, a member of the MOSERs board, praised the new law.

"Reducing our state's pension liability is about protecting taxpayers from a budget disaster like the one Illinois is going through. The signing of Senate Bill 62 into law by Governor Greitens marks a positive step toward reducing our state's pension liability, and I look forward to working with fellow MOSERS board members to implement it," Schmitt said in a statement Friday.

The pension overhaul came in the wake of a 2016 report that found Missouri state workers are the lowest paid in the nation. In addition, the lengthy qualifying period for a pension left workers with little incentive to stay on the job.

The average benefit payable to state retirees is approximately $15,000 per year, according to the Missouri State Employees' Retirement System, which manages retirement plans, life insurance and disability benefits for 116,000 present and former state employees and their beneficiaries.

The legislation is Senate Bill 62.

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