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BOARD OF TRUSTEESDon Martin, Board ChairLori Neidel, Vice-ChairSenator Jason Crowell

Marty DrewelRepresentative Ward Franz

Senator Tim GreenLaura Davis

Representative Mike LearaAntwaun Smith

Commissioner Kelvin SimmonsState Treasurer Clint Zweifel

EXECUTIVE DIRECTORGary Findlay

MAILING ADDRESSPO Box 209

Jefferson City, MO 65102-0209

BUILDING LOCATION907 Wildwood Drive Jefferson City, MO

OFFICE HOURS7:30 a.m. - 4:30 p.m. • Monday - Friday

PHONE(573) 632-6100 • (800) 827-1063

AUTOMATED PHONE OPTIONSDeferred Compensation/MCHCP. ..........1Password Assistance .................................2Change Email/Mailing Address ...............3 Benefit Counselor ....................................4Investments .............................................5Dial Employee by Name .........................8Operator .................................................0

FAX(573) 632-6103

MISSOURI RELAY7-1-1 (Voice) • (800) 735-2966 (TTY)

EMAILmosers@mosers.org

WEBSITEwww.mosers.org

Graphic Designer - Tracy UpschulteWriter/Editor - Jade Elwess

Noteworthy News

3 Document Express Read important information in

Document Express - your MOSERS online mailbox.

3 Rumor Central Survey Members agree Rumor Central is a

trustworthy source of accurate, timely information.

3 Life Insurance Rates Life insurance premium rates will be

reduced beginning January 2012.

Life Planning

4 Seminars & Workshops Schedule now available for

PreRetirement Seminars and Money Matters Workshops. Enroll today!

Retirement & You

6 Pensions 103 Did you know MOSERS defined

benefit plan affects the local economy?

7 Retirement Plan Preferences A recent study shows that, given

a choice, public sector employees value a defined benefit plan and see it as an important part of their overall benefit package.

Board Corner

8 Contribution Rate Board of trustees certify 14.45%

rate for fiscal year 2013.

Special Insert

Summary Annual Financial Report Your retirement system remains

well funded and your promised benefits are secure.

PensionsPlus is published quarterly by the Missouri State Employees’ Retirement System. To obtain an alternative format of this publication, please contact MOSERS.

This publication is designed using stock photography. The photographs chosen are for illustrative purposes only; they do not imply any particular attitudes, behaviors, or actions on the part of any person who appears in the photographs.

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Document ExpressYou Have “Mail” – Don’t Leave it Unread! Are you opening your “mail”? Remember, if you get an email notification from MOSERS that says you have information in your Document Express, log in and read it. Documents are removed after 90 days to free up storage space on our servers. Once you access them, you can save them to your computer or print a copy for your records. You have access to your Document Express, even if you have previously chosen regular mail as your preferred publication delivery method.

Document Express is an online mailbox. It is fast, easy, and secure. Please help us ensure we have a correct email address for you so we can notify you by email as soon as documents are posted. There are three ways to update your email address:

• Sign on to MOSERS’ secure website, www.mosers.org, and update your information or

• Email mosers@mosers.org or

• Submit a Notification of Change form.

If you need assistance, please call (800) 827-1063 or (573) 632-6100.

The use of Document Express allows you to have fast, easy access to your documents and helps MOSERS save thousands of dollars each month in postage and printing costs. Our goal is to make it convenient for you and also save money when possible.

Life InsuranceNew Rates Effective January 1, 2012Beginning in January 2012, life insurance premium rates will be reduced. The new premium will be reflected in your January 31, 2012 pay.

Members will receive life insurance confirmation letters in December that include the new rates. These will be accessible for you to view, save, and print through your secure Document Express once you login to your secure Member Homepage.

2012 Optional Life Insurance Rates

(Employee Deductions)

Age

Current Rate per $1,000

New Rate per $1,000

<3535-3940-4445-4950-5455-5960-6465-69

70 and over

.08

.12

.18

.26

.46

.801.241.983.48

.08

.10

.16

.24

.44

.781.201.943.40

Rumor CentralSurvey ResultsIn early November MOSERS conducted an email survey asking about views, use and understanding of our Rumor Central blog. We appreciate the nearly 21% response rate, and will use your comments and suggestions to make Rumor Central even better.

For those of you who DO know about and use Rumor Central as a tool to learn about and dispel rumors you hear about retirement issues, the sentiment is pretty clear. You love it! Here are a few of the results.

• 59% of respondents know how to submit a question.

• 82% of respondents know how to locate it from the MOSERS website.

• 71% of respondents find Rumor Central to be a useful tool in answering questions and dispelling rumors regarding retirement, life insurance and long-term disability benefits.

Stay in the loop by subscribing to the blog’s RSS feed, or by signing up for email notification when Rumor Central is updated. We’re here for YOUR benefit.

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2012 Educational Workshops and SeminarsPreRetirement Planning & Money Matters

PreRetirement Planning

2012 Seminar ScheduleFor Members of the MSEP & MSEP 2000

Is it crystal clear? Are you ready to retire? A closer look at your financial resources will help you make important decisions about retirement. Your MOSERS benefit payment is just one of the essential elements to consider when planning for retirement. Also think about your health, inflation, how long you might live, the people in your life, other costs during retirement, and income from different sources. How much is enough?

Get a fresh perspective on retirement and what it means for you. Register online or by mail for a PreRetirement Seminar that’s convenient for you!

MOSERS’ PreRetirement Planning seminars are designed for general state employees who are within five years of retirement eligibility (or already eligible). This seminar explains your MOSERS retirement benefit and decisions you will need to make at retirement.

• Seminars cost $10 per person.

• Your spouse or guest is welcome to attend with you, whether or not he/she is a state employee.

• Seminarsbeginat8:30a.m.andendat 4:00 p.m.

Shortened evening PreRetirement sessions will be available again in 2012 in some areas of the state. While the day sessions will also include information on health insurance through MCHCP and Deferred Compensation, the condensed evening sessions will not address these other benefits.

PreRetirement seminars are for members of MSEP and MSEP 2000 (not MSEP 2011, which includes employees who are first hired in a benefit eligible position on or after January 1, 2011). If you have questions regarding MSEP 2011, please contact a MOSERS benefit counselor.

Location Seminars Location Seminars

Cape Girardeau Mar 28 • May 9 • Jul 19 • Sep 26 Macon Jul 25

Chillicothe May16•Sep12 Poplar Bluff Aug 8

Columbia May 31 Rolla May3•Aug30

Farmington Feb22•Jun20•Aug9•Nov7 Sedalia Jun 14

Hannibal May 23 SpringfieldMar21•May2•Jun5*•Jun6•Jul11Aug 29 • Nov 14

Jefferson City

Feb15•Feb16*•Feb28•Mar6Mar20•Apr3•May1•May15May30•Jun12•Jun26•Jul10Jul24•Aug7•Aug21•Sep11Sep25•Nov6

St. Joseph Mar14•Jun27•Aug15

Joplin Jun 13 St. Louis AreaFeb29•Apr4•May10•Jun21•Jul18Aug22*•Aug23•Sep19•Oct31

Kansas City AreaMar7•May17•Jun28•Aug1*Aug2•Oct24 * Denotes Evening Seminars

For detailed information about MOSERS’ 2012 educational workshops and seminars select the Workshops & Seminars tab on MOSERS’ homepage.

Missouri State Employees’ Retirement System • Fiscal Year 20112

POSITIVE ATTITUDES Excellence. Always. That’s our attitude at MOSERS. We are genuine in our commitment to exceptional customer service and our promise to deliver secure retirement benefits to our members. We strive to make every experience you have with MOSERS a positive one. Why? Because when you’re happy, we’re happy. It’s just that simple.

POSITIVE RESULTSAt MOSERS, we believe that what gets measured, gets managed. Cost Effectiveness Measurement Benchmarking, Inc. (CEM) plays an integral role in our organizational performance objectives and best practice reviews. This valuable service annually rates our performance relative to other pension plans in the U.S. and around the world. The results help us to identify ways in which we can meet and exceed our members’ customer service expectations in a cost-effective manner. This year our service has once again been ranked #1 among our peers and our cost was well below the peer average cost. Our focus is clear and we’re creating positive results.

POSITIVE PERFORMANCEVolatility in the financial markets is similar to ocean waves in a storm. Maneuvering through market ups and downs is accomplished through the strength and stability of MOSERS’ investment portfolio. The investment portfolio is built upon broad asset diversification and strong risk management practices. While MOSERS achieved a record high investment return of 21% in FY11, the key to keeping afloat is the ability to generate long-term positive results. Over the 20-year period ended June 30, 2011, MOSERS investment return was 9.1% (net of fees and expenses), exceeding the 8.5% actuarially assumed rate of return.

POSITIVE GOALSMOSERS provides a monthly lifetime benefit beginning at retirement. To achieve this financial objective, we must accumulate assets during a member’s working years which, when combined with income on investments, will be sufficient to pay benefits throughout retirement. In order for you to maintain your desired standard of living during retirement, you will also need personal savings and investments to supplement your benefit from MOSERS. Commitment to your financial future is a positive goal worth sharing.

POSITIVE BENEFITSRetirement is about financial security but it is also unveils the next chapter of your life story. Whether your retirement is in the distant future or just on the horizon, our knowledge and experience will help guide you safely to your destination. If we plan together today, you will reap positive benefits tomorrow.

2011 REPORT THEME

This year’s theme, “Pension Positive” reflects

the attitude and optimism of MOSERS

staff and their dedication to members of

the system. We are driven by our mission to

exceed customer expectations by providing

outstanding benefits services through

professional plan administration and sound

investment practices.

Missouri State Employees’ Retirement System • Fiscal Year 2011 3

LETTER FROM THE BOARD CHAIR

Missouri State Employees’ Retirement System

Phone:(573)632-6100•(800)827-1063MORelay:7-1-1(Voice)•(800)735-2966(TTY)

Email: mosers@mosers.org•Website:www.mosers.org

Mailing AddressPO Box 209 • Jefferson City, MO 65102-0209

Building Location 907 Wildwood Drive • Jefferson City, MO

October 17, 2011

Dear Members:

On behalf of the board of trustees, I am pleased to present the MOSERS Summary Annual Financial Report for the fiscal year ended June 30, 2011. This report provides information on the financial status of your retirement system while also highlighting changes that occurred during the year. The accounting portion of this report is derived from the MOSERS Comprehensive Annual Financial Report, which is prepared following all appropriate accounting principles and is attested to by the system’s certified public accountants.

The board is pleased to report that MOSERS’ investments generated a return of 21% (net of fees) this fiscal year. This one year return significantly exceeded the actuarial economic assumption return of 8.5% by 12.5%, and generated a total of $1.4 billion on behalf of members and Missouri taxpayers.

Long-term performance is the best indicator of success. For the past 15-year period ended June 30, 2011, MOSERS total fund return outperformed 95% of the public pension funds in the Rogerscasey universe of public pension plans with assets in excess of $1 billion. In addition, the MOSERS 15-year investment return exceeded the policy benchmark by 1.3%.

Your retirement system continues to achieve high marks in the delivery of customer service to our members. One of the ways operational performance is measured is through CEM Benchmarking Inc.’s Pension Administration Benchmarking Analysis. This year CEM evaluated 88 leading pension systems, including systems in the U.S., Canada, Australia, the Netherlands and Denmark, and identified 12 U.S. public pension plans as the most relevant peer group based upon membership size and system assets. The CEM survey rated MOSERS’ service delivery as the highest in our peer group with lower than average costs – the sixth time the system has received such a rating during an eleven-year period. The system is continually working on improvements in service delivery.

The board experienced some turnover this past year due to term endings and reappointments. On behalf of the board, staff, and members, I would like to thank Wayne Bill, Bob Patterson, Representative Bill Deeken, and David Steelman for their hard work and individual contributions to the system. Trustees serve many hours and it is truly a personal service with no remuneration. The board also welcomed Laura Davis, Marty Drewel, Representative Mike Leara, and Lori Neidel this year, and we look forward to serving and working with them.

I wish to thank all of the other MOSERS board members for their hard work and contributions to the system this year. The wide diversity and exceptional knowledge that the board of trustees brings to each board meeting is one reason for our system’s continued success. Additionally, the board thanks the MOSERS staff for maintaining a high level of expertise and professionalism required for excellence in our retirement system. Staff continues to focus on our members and maintain a pension plan that serves our membership well. The board and the staff look forward to continuing to meet your future needs. If you have any questions regarding this report or any other aspect of MOSERS, please contact us at MOSERS, P.O. Box 209, Jefferson City, MO 65102 or call 1-800-827-1063. You may also visit our website at www.mosers.org.

Sincerely,

Donald Martin, ChairBoard of Trustees

Missouri State Employees’ Retirement System • Fiscal Year 20114

As of As of Amount Percentage June 30, 2011 June 30, 2010 of Change Change

Cash and short-term investments $ 807,270,837 $ 630,869,896 $ 176,400,941 27.96%Receivables 27,244,113 45,578,213 (18,334,100) (40.23)Investments 7,073,472,800 6,199,292,141 874,180,659 14.10Invested securities lending collateral 643,085,121 192,640,173 450,444,948 233.83Capital assets 3,061,064 3,190,347 (129,283) (4.05)Other assets 50,454 50,312 142 0.28Total assets 8,554,184,389 7,071,621,082 1,482,563,307 20.96

Administrative expense payables 2,901,861 2,204,046 697,815 31.66Investment purchase payables 16,139,126 23,438,954 (7,299,828) (31.14)Foreign currency payable 863,785 0 863,785 100.00Investment income payable 8,218,700 25,586,275 (17,367,575) (67.88)Securities lending collateral 643,842,013 202,323,418 441,518,595 218.22Other liabilities 15,301,498 11,891,157 3,410,341 28.68Total liabilities 687,266,983 265,443,850 421,823,133 158.91

Net assets $7,866,917,406 $6,806,177,232 $1,060,740,174 15.58

Summary Comparative Statements of Plan Net Assets - Pension Trust Funds

Summary Comparative Statements of Changes in Plan Net Assets - Pension Trust Funds

Year Ended Year Ended Amount Percentage June 30, 2011 June 30, 2010 of Change Change

Contributions $ 294,737,248 $ 281,842,348 $ 12,894,900 4.58%Investment income - investing activities 1,411,602,826 868,603,852 542,998,974 62.51Investment income - securities lending activities 1,534,523 1,204,378 330,145 27.41Miscellaneous income 667,724 647,275 20,449 3.16Total additions 1,708,542,321 1,152,297,853 556,244,468 48.27

Benefits 622,913,485 567,514,834 55,398,651 9.76Service transfers and refunds 17,745,828 466,076 17,279,752 3,707.50Administrative expenses 7,142,834 7,145,958 (3,124) (0.04)Total deductions 647,802,147 575,126,868 72,675,279 12.64

Net increase (decrease) 1,060,740,174 577,170,985 483,569,189 83.78Net assets beginning of year 6,806,177,232 6,229,006,247 577,170,985 9.27Net assets end of year $7,866,917,406 $6,806,177,232 $1,060,740,174 15.58

FINANCIAL STATEMENTS

The Statements of Changes in Plan Net Assets summarize the flow of money in and out of the fund during the fiscal year.

The Statements of Plan Net Assets are summaries of what MOSERS owns and what it owes as of the end of the fiscal year.

Missouri State Employees’ Retirement System • Fiscal Year 2011 5

Investment Return Comparing the actual investment return relative to specific benchmarks is one means of evaluating the fund’s investment performance. The bar chart to the right illustrates MOSERS’ actual fund return relative to our policy benchmark.

The investment return for the year was 21% net of all fees and expenses, generating profits of $1.4 billion. While this year’s return was made up of strong underlying performance across all asset classes, for the first time in 11 years it trailed the return of our policy benchmark which was 21.7%.

*Thepolicybenchmarkprovidesanindicationofthereturnsthatcouldbeachievedbya portfolio invested passively in the broad market with percentage weights allocated to each asset class in MOSERS’ policy asset allocation.

Investment RiskVolatility is what investors traditionally consider to be “the” risk of investing. To protect MOSERS’ assets against this risk, the investment portfolio is diversified across a myriad of asset classes and investment strategies to mitigate the potential impact of negative economic circumstances. Diversification provides a stability of investment returns during market downturns.

MOSERS’ investment professionals skillfully navigate volatile markets and the results show long-term investment returns higher than could be achieved investing passively in the markets and with a lower level of risk than the market benchmarks.

21.0

3.96.2 7.1

8.3

21.7

3.54.8 5.8

7.0

0%

5%

10%

15%

20%

25%

MOSERS' Total Portfolio Return

Policy Benchmark*

15 year10 Year5 year3 Year1 Year

Total Fund Actual Return vs. Benchmark Returns

MOSERS’ investment portfolio is widely diversified to control risk under a variety of economic outcomes, which may play out over time.

20.517.7

7.39.3

5.3

9.1

4.7

15.9

10.2

0%

5%

10%

15%

20%

25%

Private Investments

Real Assets

Market Neutral

TIPSHighYield

Core Fixed

Income

Emerging Markets

Int’l Developed

Domestic

Total Fund Asset Allocation

Public Equity Public Debt Alternative Investments

INVESTMENT PERFORMANCE

Over the 15-year period ended June 30, 2011, the portfolio returned 8.3%, exceeding our policy benchmark by 1.3% per year. This “excess” above what would have been earned had the portfolio been invested passively, generated additional profits of $1.4 billion for the fund - a very positive result for our members and taxpayers.

The Statements of Changes in Plan Net Assets summarize the flow of money in and out of the fund during the fiscal year.

Missouri State Employees’ Retirement System • Fiscal Year 20116

Member Snapshot

June 30, 2011, Actuarial Valuations MSEP* Judicial Plan

Active MembersAverage age 45.9 55.8Average years of service 11.4 11.8Average annual salary $36,306 $115,008

Retired MembersAverage age 69.2 75.1Average annual benefit $14,882 $54,484

Total MembershipActive 51,660 399Terminated-vested 17,712 45Retired 35,315 486

* Includes members in both the MSEP and MSEP 2000.

Retirement Funding (All Plans Combined) Your retirement benefits are funded by contributions from the state of Missouri and by investment income. In order to ensure your benefits are available to you, MOSERS is constantly evaluating the assets (gold bar) relative to the value of the liabilities (blue bar). The percentages shown in the bar chart to the right indicate the extent to which the system was funded as of a given year.

Members Retiring During the Fiscal Year Ended June 30, 2011*

Years Credited Service by Category All <5 5-10 10-15 15-20 20-25 25-30 30+ Members

Average monthly benefit $ 367 $ 336 $ 492 $ 819 $1,220 $1,652 $2,142 $1,006 Average final average salary $1,442 $2,631 $2,507 $3,063 $3,234 $3,523 $3,884 $3,063 Number of retirees 4 601 498 444 495 495 280 2,817

* Includes members in both the MSEP and MSEP 2000.

ACTUARIAL SUMMARY

All Plans Combined - Valuation Assets as Percents of Pension Liabilities

$0

$2

$4

$6

$8

$10

$12

Accrued Liabilities Valuation Assets

2011201020092008200720062005200420032002

92.5% 87.9% 82.0% 82.3% 82.8%84.3%

83.4% 80.7% 78.3% 77.2%

% equals Funded Ratio

Billi

ons

Missouri State Employees’ Retirement System • Fiscal Year 2011 7

Distribution of Benefit Recipients by Location

The map above shows the number of retirees, or their beneficiaries, residing in each state. Approximately 89% of MOSERS retirees live in Missouri. The annual retirement benefits paid to these individuals (about $470 million) provide a steady, continuous and significant stimulus to Missouri’s state and local economies.

• Alaska .....................................10 • APO .........................................4• Argentina ..................................1• Australia ...................................2• Bermuda ...................................1• Canada .....................................8• Colombia, South America ........1• Costa Rica ................................1• Germany ..................................2• Guam .......................................1

• Hawaii ......................................8• Ireland ......................................1• Israel .........................................2• Italy ..........................................2• Mexico .....................................1• Marshall Islands ........................1• Nigeria .....................................1• P.R. China ................................1• Panama .....................................1• Philippines ................................1

• Puerto Rico...............................1• Slovak Republic ........................1• Sri Lanka ..................................1• Sweden .....................................1• Thailand ...................................1• The Netherlands .......................1• United Arab Emirates ...............1• United Kingdom ......................2• Wales UK .................................1

STATISTICAL INFORMATION

This Summary Annual Financial Report is derived from the information contained in MOSERS’ Comprehensive Annual Financial Report (CAFR) but does not include all funds administered by MOSERS or certain other information required for conformity with Generally Accepted Accounting Principles (GAAP). MOSERS’ CAFR is produced in conformity with GAAP. Contact MOSERS to request a copy of the CAFR, or explore it on our website at www.mosers.org. To request an alternative format, please contact MOSERS at (573) 632-6100 or (800) 827-1063. MOSERS is an equal opportunity employer.

PO Box 209Jefferson City, MO 65102-0209

PRSRT STDU.S. Postage

PAIDJefferson City, MO

Permit No. 327

The Government Finance Officers Association of the United States and Canada (GFOA) presented an Award for Outstanding Achievement in Popular Annual Financial Reporting to MOSERS for its summary annual report for the fiscal year ended June 30, 2010.

This prestigious national award recognizes popular reports for creativity, presentation, understandability, and reader appeal and is valid for a period of one year. We believe the current summary annual report continues to meet these program standards and we are submitting it to the GFOA for evaluation.

Contact Information

Office Location907 Wildwood Drive

Jefferson City, MO 65109Telephone

(573) 632-6100 or (800) 827-1063Website

www.mosers.orgBusiness Hours

7:30 a.m. - 4:30 p.m.Monday - FridayMailing Address

PO Box 209Jefferson City, MO 65102-0209

Missouri Relay7-1-1 (Voice)

or (800) 735-2966 (TTY)E-mail

mosers@mosers.org

OUTSTANDING ACHIEVEMENT

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Money Matters is a series of workshops, designed for state employees at any career stage who want to know more about managing their finances. Two workshops are offered in 2012 with different content, so choose the one that meets your individual needs. You do not need to take the classes in any specific order.

• Money Matters workshops are FREE.

• They begin at 8:30 a.m. and end at noon.

How to Enroll for 2012Seminars & WorkshopsEnrollment Begins December, 2011

Enroll Online (www.mosers.org)• Check your email address to make

sure it is up to date. If you are signed up for email notifications, and we have your correct email address, you will receive your seminar information by email.

• Go to the Secure Member Login and enter your social security number or Member ID along with your MOSERS password. This step is to verify that you are recognized as a member in our system before you pay or enroll. If you have never set up your password or have forgotten it, click the Register or Forgot Password link and follow the instructions.

• Once you are on your member homepage, scroll down to the Seminar Enrollment options. Click a seminar option and enter your zip code and the date range you prefer.

• Click the Submit button to see the locations near you that have openings. Click the Enroll Now button and follow the instructions to register for the seminar.

Enroll by MailUsing the form inside the Money Matters or PreRetirement brochure, complete your information, detach and return to MOSERS. Don’t forget to include a check for PreRetirement registration.

Please Note: If you do not receive a confirmation postcard in the mail within one week of registering, please contact MOSERS at (800) 827-1063, ext. 6196 to ensure you are registered.

Location

Workshop 1Because Money Doesn’t Grow On Trees

Workshop 2Because The Early Bird Gets The Worm

Cape Girardeau Mar 29 Sep 27

Farmington Feb 23 Nov 8

Jefferson CityMar13•May22Jul17•Aug14•Sep18

Mar27•Jun19Jul31•Aug28•Oct30

Kansas City Area Mar 8 Sept 13

Kirksville May 24 Jul 26

Springfield Mar22•Jul12 Jun7•Nov15

St. Joseph Mar 15 Aug 16

St. Louis Area Mar1•Sep20 Apr5•Nov1

WORKSHOP 1Because Money Doesn’t Grow On Trees emphasizes steps you can take today to strengthen your financial future.

Workshop Agenda Includes:

• Managing Credit & Debt

• Creating a Financial Plan

• Saving & Investing Alternatives

WORKSHOP 2Because The Early Bird Gets The Worm focuses on long-term planning and protecting your assets.

Workshop Agenda Includes:

• Refining Your Financial Plan

• Securing Retirement Resources

• Life Insurance & Estate Planning

• Saving & Investing Alternatives

2012 Workshop ScheduleFor Members of the MSEP & MSEP 2000

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| Ret i rement & You |

Pensions 103 (part 3 of our 3-part series)Understanding Your Defined Benefit Plan

Pension Facts• The buck stays here. 93% of

retirement benefit dollars paid out to retirees remain in Missouri, and are spent on housing, goods, and services here. Every $1 paid to retirees and beneficiaries by public pension plans in Missouri generates more than $1.46 in impact for local, state, and national economies. If you spend a dollar of your retirement benefit at a market on food, the market owner pays for produce to be delivered to the store with that dollar. The delivery person pays to fuel his truck with the same dollar, and so on.

How much do you know about your pension? You should know that

MOSERS retirement security benefits everyone. In previous issues,

in parts 1 and 2 of our series, we reviewed how pensions work and

gave you a better understanding about the long-term impact of

pension policies. Now, how do pensions affect your local economy?

Pensions support the local economy.

Pension policies have long-term impact.

Pensions work.

MOSERS retirement security benefits everyone!

parks, nursing homes, schools, crisis centers, hospitals, health fairs, blood drives, and museums. They quilt, make jellies, give piano lessons, write for local newspapers, and provide transportation for those who cannot drive. Some retirees even run marathons. They hold positions in local governments all over the state. Retirees mentor and donate to a variety of charitable causes. Retirees are generous with their time and resources.

What is the long-term impact of pension policies?MOSERS has more than 50 years of experience regularly and consistently exceeding customer expectations, efficiently administering the retirement program, and gaining excellent investment returns. Traditional defined benefit plans are designed to be resilient and weather market volatility.

Do pensions work? YES! The cost and benefit of public pensions are shared. Traditional pensions are the most economical way to provide reliable financial security. Public pension plans are transparent and accountable. Defined benefit retirement plans are in it for the long-term.

• Public pensions, such as the plan MOSERS administers, provide Main Street benefits. Each $1 paid in employer contributions to Missouri public pension plans generates $6.92 in economic activity in your community. In their Pensionomics report, the National Institute on Retirement Security explains that this reflects the fact that taxpayer contributions are just one source of financing for retirement benefits. Those contributions are multiplied when employee contributions and investment earnings are also used to fund pension benefits. Pensions offer retirees financial dignity after a career of service. The average annual MOSERS retiree benefit payment is $15,400, a modest income stream to meet basic needs for life.

• Retirees give back. Retirees pay their share of taxes to support and sustain jobs and tax bases in their home towns. In FY11, when MOSERS paid nearly $517 million in benefits, members had almost $49.5 million in federal taxes and $13 million in state taxes withheld from their benefit payments. Public retirees are your neighbors and friends. They volunteer in churches,

7

| Ret i rement & You |

Retirement Plan Preferences Defined Benefit vs. Defined ContributionThe National Institute on Retirement Security (NIRS) released a new study in September on retirement plan preferences called Decisions, Decisions: Retirement Plan Choices for Public Employees and Employers. They looked at seven public state retirement systems that gave their new hires a choice between enrolling in a DB (defined benefit plan – like your MOSERS benefit) or DC (defined contribution) plan. Over a period of 12 years, employees chose the DB option the majority of the time. In the most current year included in the study, North Dakota Public Employees Retirement System had a 98% rate of DB plan enrollment, and Montana Public Employee Retirement Administration had 97%. Florida Retirement system had the lowest DB enrollment at 75%.

What are the reasons employees are overwhelmingly picking the DB option over the DC option? One reason is the reassurance of a lifetime benefit that the DB plans provide. Retirees get a monthly benefit payment that helps them budget for their expenses, and there isn’t a fear of the benefit running out. With a DC plan, many retirees don’t understand how to withdraw their money upon leaving employment, or they take a lump sum that often runs out far sooner than anticipated.

The monthly benefit from a DB plan is determined by a set formula taking into account years of service and final average pay, rather than being affected by fluctuations in the stock market.

Investment returns in the DB plans included in the study were shown to be higher than DC plan options. Nebraska’s system had a DC option from 1964 to 2003, while also offering a DB plan for certain employees during the same time period. Over 20 years, “the average return in the DB plans was 11% and the average return in the DC plans was between 6% and 7%.” The probable cause for this is the DC plan participants erred on the side of caution and invested in conservative products. Most individuals are not as adept at investing their own money as a professional manager. With a DB plan, there is also the advantage of pooling all of the participants to get lower fees and shifting the risk away from the individual.

The study also showed that switching to a DC plan from a DB plan can actually increase costs to both employers and their members. Contributions from employers and taxpayers will have to go up to keep the same benefit levels in a move to DC structure. Also, maintaining two plans until the DB plan is phased out will increase administrative costs. West Virginia Teachers Retirement

System closed their DB plan to new members in 1991. They found that the 4,500 members who were moved into the new DC plan struggled with low investment returns in their accounts after the stock market downturn around the year 2000, while TRS’ returns in the DB plan were doing better. This study shows that, given a choice, public sector employees value the DB option and see it as an important part of their overall benefit package. The lower administrative cost is invaluable to the employer, in conjunction with recruiting and retaining talented employees.

Source: “Decisions, Decisions: Retirement Plan Choices for Public Employees and Employers” at www.nirsonline.org.

PO Box 209Jefferson City MO 65102-0209

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Permit No. 327

PensionsPlus Newsletter

| Board Corner |

Contribution Rate Board Certifies 14.45% Rate for Fiscal Year 2013 On September 15, 2011 the MOSERS Board of Trustees voted to certify the state’s contribution rate for the fiscal year beginning July 1, 2012 at 14.45% of payroll. While this is a slight increase, it is not expected to result in a corresponding increase in real dollars due to the fact that the state’s payroll declined last year. The contribution rate is the percentage of the state’s annual payroll, computed by MOSERS’ actuaries, that is necessary to fund the system in accordance with actuarial principles of level percent-of-payroll financing.

This contribution rate percentage translates into a dollar amount that the state of Missouri appropriates to MOSERS during the annual budget process. The state of Missouri has consistently fully funded MOSERS’ annually required contribution (ARC), as determined by the actuary. In other words, the state of Missouri has never funded less than what the actuaries have determined to be the appropriate annual amount necessary to fund the system. MOSERS’ investment portfolio generated a net return of 21.0% for the fiscal year ended June 30, 2011.

Pension Policies Have a Long-Term Impact MOSERS has a solid track record of excellent investment returns, outstanding customer service and efficient administration. The measured action taken by the board ensures that MOSERS will remain well funded. Traditional pensions are the most economical way to provide reliable financial security.